DraftKings Sold at Least $100M in Stock, According to SEC

• Stock sale could be tied to recently announced Railbird acquisition
• Regulatory document indicates DraftKings sold “over $100 million” of equity

DraftKings (NASDAQ: DKNG) appears to be have sold of over $100 million worth of stock, according to a new regulatory filing.

A Form D Notice of Exempt of Offering of Securities filed with the Securities and Exchange Commission (SEC) indicates the Boston-based gaming company sold at least $100 million worth of shares on Oct. 21. That’s the same day the sportsbook operator announced the acquisition of Railbird Technologies, the parent company of prediction markets firm Railbird Exchange.

Form D is used to file a notice of an exempt offering of securities with the SEC. The federal securities laws require the notice to be filed by companies that have sold securities without registration under the Securities Act of 1933 in an offering made under Rule 504 or 506 of Regulation D or Section 4(a)(5) of the Securities Act,” according to the SEC.

Financial terms of that transaction weren’t revealed and DraftKings didn’t overtly say in the SEC filing that the share sale was related to the Railbird deal. The deal after the purchase was announced, reports surfaced that DraftKings is paying as much as $250 million for the prediction markets firm.

That acquisition sets the stage for the gaming company to roll out DraftKings Predictions in the coming months. It’s rumored the buyer was the lone suitor for Railbird.

Share Sale Jibes with Past DraftKings Deals

Although not confirmed, it’s likely the share sale is being used to fund a portion of the Railbird. It’s also rumored the buyer doled out an upfront cash payment of $50 million.

Last year, DraftKings spent about $1 billion on acquisitions when combining the rumored $70 million paid for Sports IQ Analytics to $170 million (potentially) for Simplebet and the $750 million the operator paid for internet lottery provider Jackpocket. DraftKings has been quieter on the deal-making front this year, but the Railbird acquisition was seen as essential to allaying investors’ concerns that the company was sitting idly by as event contract exchanges generate significant volume on sports derivatives.

Speaking of Investors’ Concerns

While the share sale is being used to fund a potentially lucrative and likely necessary acquisition, it still represents dilution to current DraftKings investors. Some investors may argue the offering is ill-timed as the stock is down 38.27% over the past 90 days and its Wednesday close at $27.92 was its first below $28 in two years.

The gaming company steps into the earnings confessional Thursday after the close of US markets with analysts forecasting a per share loss of 41 cents on the basis of generally accepted accounting principles (GAAP) and revenue of $1.20 billion.