DraftKings Inc.

DraftKings Inc.

Ticker: DKNG

Class Period Start: 12/23/2019

Class Period End: 06/15/2021

Registration Deadline: 08/31/2021

DraftKings Inc. (“DraftKings” or the “Company”) is a digital sports entertainment and gaming company known for its industry-leading daily fantasy sports and mobile sports betting platforms. On April 23, 2020, DraftKings has entered into a definitive business combination agreement (the “Business Combination”) with Diamond Eagle Acquisition Corp. (Nasdaq: DEAC) (“Diamond Eagle”), a publicly traded special purpose acquisition company. Through the Business combination, DraftKings became a public company and acquired SBTech, an international turnkey provider of cutting-edge sports betting and gaming technologies.

On June 15, 2021, before the market opened, Hindenburg Research published a report calling DraftKings “a $21 billion SPAC betting it can hide its black-market operations.” The report cited concerns over its merger with SBTech, a Bulgaria-based gaming technology company that allegedly deals in black market gaming, money laundering, and organized crime. Hindenburg Research estimated that 50% of SBTech’s revenue comes from markets where gambling is banned.

On this news, DraftKings’s stock price fell $2.11 per share, or approximately 4.17%, to close at $48.51 per share on June 15, 2021, thereby injuring investors.

A securities class action has been filed against DraftKings on behalf of shareholders that purchased DraftKings shares between December 23, 2019 through June 15, 2021.  This case has been filed in the U.S. District Court for the Southern District of New York.

The complaint filed alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors that: (1) SBTech had a history of unlawful operations; (2) accordingly, DraftKings’ merger with SBTech exposed the Company to dealings in black-market gaming; (3) the foregoing increased the Company’s regulatory and criminal risks with respect to these transactions; (4) as a result of all the foregoing, the Company’s revenues were, in part, derived from unlawful conduct and thus unsustainable; (5) accordingly, the benefits of the Business Combination were overstated; and (6) as a result, Defendants’ statements about its business, operations, and prospects, were materially false and misleading and/or lacked a reasonable basis at all relevant times.

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