DraftKings to Issue $1.15B in Convertible Notes

DraftKings is offering up to $1.15 billion in convertible notes, adding fuel to rumors that it is seeking to grow its reach through mergers and acquisitions.

Convertible notes — essentially bonds that can be turned into stocks — have become a popular method of raising capital, with Peloton, Square, Uber, and Tesla all recently issuing that form of debt.

DraftKings will issue $1 billion, and offer an additional $150 million in convertible notes to its underwriters. Terms such as interest on the notes will be determined in negotiations with investors who purchase them.

Because DraftKings already has ample cash reserves of $1.8 billion, the fund raise stokes speculation that the betting and fantasy sports company could be looking to acquire other businesses in gambling and adjacent sectors. 

• DraftKings is believed to be among the suitors for TheScore, a Canadian sports betting and media company. 
• DraftKings is reportedly also eyeing Meadowlark Media, the X Games, and poker company Run It Once as potential acquisition targets.

Sportsbooks have invested heavily in acquiring new customers, because people tend to be brand loyal once they have established a relationship with a betting hub.

DraftKings’ stock, like other gambling stocks, has had a fantastic year, growing nearly sixfold since last March.