Draftkings Inc. f/k/a Diamond Eagle Acquisition Corp.

Case Details

Class Period: December 23, 2019 - June 15, 2021
Date Filed: July 02, 2021
Case Number: 1:21cv05739
Jurisdiction: New York Southern District Court
icon-casetype Case Type: Securities Case
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Case Summary

The complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Companys 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 Companys regulatory and criminal risks with respect to these transactions; (iv) as a result of all the foregoing, the Companys 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 Companys public statements were materially false and misleading at all relevant times. On June 15, 2021, Hindenburg Research (Hindenburg) published a report addressing DraftKings, alleging that the Companys merger with SBTech exposed DraftKings to dealings in black-market gaming. Citing conversations with multiple former employees, a review of Securities and Exchange Commission 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 SBTechs 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.