DraftKings, Inc. (DKNG) Made Misstatements Regarding its Business Prospects
DraftKings, Inc. was incorporated through a business combination with DEAC, a special purpose acquisition company. In the process, the Company also acquired all of the issued and outstanding share capital of SBTech, which became a wholly owned subsidiary of DraftKings. During the class period, DraftKings failed to disclose that (i) SBTech had a history of unlawful operations; (ii) accordingly, DraftKings’ merger with SBTech exposed the Company to dealings in black-market gaming; (iii) the foregoing increased the Company’s regulatory and criminal risks with respect to these transactions; (iv) as a result, the Company’s revenues were, in part, derived from unlawful conduct and thus unsustainable; (v) accordingly, the benefits of the merger were overstated; and (vi) therefore, the Company’s public statements were materially false and misleading.
On June 15, 2021, Hindenburg Research published a report alleging that the merger with SBTech exposed DraftKings to dealings in black-market gaming. Citing “conversations with multiple former employees, a review of SEC and international filings, and inspection of back-end infrastructure at illicit international gaming websites,” Hindenburg alleged that “SBTech has a long and ongoing record of operating in black markets,” estimating that 50% of SBTech’s revenue is from markets where gambling is banned.” On this news, DraftKings’ stock price fell $2.11 per share, or over 4% to close at $48.51 per share on June 15, 2021.
If you purchased shares of DraftKings Inc. (DKNG) between December 23, 2019 and June 15, 2021, you have until August 31, 2021, to ask the court to appoint you lead plaintiff for the class.
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