Bragar Eagel & Squire, P.C., a nationally recognized shareholder rights law firm, announces that a class action lawsuit has been filed against DraftKings, Inc. (NASDAQ: DKNG) in the United States District Court for the Southern District of New York on behalf of those who purchased or otherwise acquired DraftKings publicly traded securities between December 23, 2019 and June 15, 2021, inclusive (the “Class Period”). Investors have until August 31, 2021 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
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On June 15, 2021, Hindenburg Research (“Hindenburg”) published a report addressing DraftKings, alleging that the Company’s 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.”
Following publication of the Hindenburg report, DraftKings’ stock price fell $2.11 per share, or 4.17%, to close at $48.51 per share on June 15, 2021.
DraftKings operates as a digital sports entertainment and gaming company in the U.S. It operates through two segments, Business-to-Consumer and Business-to-Business. The Company provides users with daily sports, sports betting, and iGaming opportunities. It is also involved in the design, development, and licensing of sports betting and casino gaming platform software for online and retail sportsbook, and casino gaming products. The Company distributes its product offerings through various channels, including traditional websites, direct app downloads, and direct-to-consumer digital platforms.
DraftKings was incorporated in Nevada as DEAC NV Merger Corp., a wholly owned subsidiary of its legal predecessor, DEAC, a special purpose acquisition company, or SPAC. On April 23, 2020, DEAC consummated transactions contemplated by a Business Combination Agreement (the “Business Combination”) dated December 22, 2019, as amended on April 7, 2020, and, in connection therewith, (i) DEAC merged with and into the Company, whereby the Company survived the merger and became the successor issuer to DEAC, (ii) the Company changed its name to “DraftKings Inc.,” (iii) the Company acquired DraftKings Inc., a Delaware corporation (“Old DK”), by way of a merger, and (iv) the Company acquired all of the issued and outstanding share capital of SBTech (Global) Limited (“SBTech”). Upon Case 1:21-cv-05739 Document 1 Filed 07/02/21 Page 2 of 34 3 consummation of the preceding transactions, Old DK and SBTech became wholly owned subsidiaries of the Company.
The complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operations, and compliance policies. Specifically, Defendants made false and/or misleading statements and/or 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 of all the foregoing, the Company’s revenues were, in part, derived from unlawful conduct and thus unsustainable; (v) accordingly, the benefits of the Business Combination were overstated; and (vi) as a result, the Company’s public statements were materially false and misleading at all relevant times.
If you purchased or otherwise acquired DraftKings shares and suffered a loss, are a long-term stockholder, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker, Melissa Fortunato, or Marion Passmore by email at investigations@bespc.com, telephone at (212) 355-4648, or by filling out this contact form. There is no cost or obligation to you.
About Bragar Eagel & Squire, P.C.:
Bragar Eagel & Squire, P.C. is a nationally recognized law firm with offices in New York, California, and South Carolina. The firm represents individual and institutional investors in commercial, securities, derivative, and other complex litigation in state and federal courts across the country. For more information about the firm, please visit www.bespc.com. Attorney advertising. Prior results do not guarantee similar outcomes.
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