DraftKings slammed by Hindenburg Research, shares down 7%


Hindenburg Research, an funding analysis agency with a spotlight in activist short-selling which additionally publishes experiences on alleged fraud by different corporations, has chosen DraftKings (DKNG) as its subsequent goal. Shares are down round 7% in pre-market after Hindenburg announced that it could be taking a brief place on the American sports activities betting operator.

“This report is written by someone who is short on DraftKings stock with an incentive to drive down the share price,” a statement Yahoo Finance received from a DraftKings representative read. “Our business combination with SBTech was completed in 2020. We conducted a thorough review of their business practices and we were comfortable with the findings. We do not comment on speculation or allegations made by former SBTech employees.”

In its report titled “DraftKings: A $21 Billion SPAC Betting It Can Hide Its Black Market Operations,” printed this morning, Hindenburg describes the corporate as having skilled “one of the more successful deals in a recent wave of SPAC transactions marred by scandal and bad actors.”

DraftKings, which went public in early 2020 after a merger between DraftKings, its SPAC, and SBTech, a gaming know-how firm based mostly in Bulgaria, has since skilled features in its share value of round 400%.

“Unbeknownst to investors, DraftKings’ merger with SBTech also brings exposure to extensive dealings in black-market gaming, money laundering and organized crime,” the report learn. “Based on conversations with multiple former employees, a review of SEC & international filings, and inspection of back-end infrastructure at illicit international gaming websites, we show that SBTech has a long and ongoing record of operating in black markets.”

According to the report, Hindenburg estimates that roughly 50% of SBTech’s income is generated from markets during which playing is outlawed, citing DraftKings’ SEC filings, correspondence with former staff, and different supporting paperwork.

The report then goes on to cowl the operations of BTi/CoreTech, which Hindenburg describes as a “distributor entity” with round 50 staff which SBTech makes use of to “distance itself from its black-market dealings.”

“Illicit customer relationships were shuffled into a newly formed ‘distributor’ entity called BTi/CoreTech, with ~50 SBTech employees shifted across town to the new entity,” the report learn.

Past targets of Hindenburg embrace Nikola (NKLA), Chinese crypto agency Ebang (EBON), Clover Health (CLOV), and Loop Industries (LOOP).

Note: This article has been up to date to incorporate an announcement from DraftKings.

Thomas Hum is a author at Yahoo Finance. Follow him on Twitter: @thomashumTV

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