Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2023 | May 03, 2023 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-41379 | |
Entity Registrant Name | DRAFTKINGS INC. | |
Entity Incorporation, State or Country Code | NV | |
Entity Tax Identification Number | 87-2764212 | |
Entity Address, Address Line One | 222 Berkeley Street | |
Entity Address, Address Line Two | 5th Floor | |
Entity Address, City or Town | Boston | |
Entity Address, State or Province | MA | |
Entity Address, Postal Zip Code | 02116 | |
City Area Code | 617 | |
Local Phone Number | 986-6744 | |
Title of 12(b) Security | Class A Common Stock, $0.0001 par value | |
Trading Symbol | DKNG | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001883685 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Class A Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 461,865,825 | |
Class B Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 393,013,951 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 1,087,668 | $ 1,309,172 |
Cash reserved for users | 436,935 | 469,653 |
Receivables reserved for users | 124,536 | 160,083 |
Accounts receivable | 41,423 | 51,097 |
Prepaid expenses and other current assets | 115,194 | 94,836 |
Total current assets | 1,805,756 | 2,084,841 |
Noncurrent Assets: | ||
Property and equipment, net | 62,273 | 60,102 |
Intangible assets, net | 754,509 | 776,934 |
Goodwill | 886,373 | 886,373 |
Operating lease right-of-use assets | 60,804 | 65,957 |
Equity method investment | 9,961 | 10,080 |
Deposits and other non-current assets | 159,598 | 155,865 |
Total assets | 3,739,274 | 4,040,152 |
Current liabilities: | ||
Accounts payable and accrued expenses | 508,725 | 517,587 |
Liabilities to users | 670,456 | 686,173 |
Operating lease liabilities, current portion | 3,975 | 4,253 |
Other current liabilities | 48,733 | 38,444 |
Total current liabilities | 1,231,889 | 1,246,457 |
Noncurrent liabilities: | ||
Convertible notes, net of issuance costs | 1,251,758 | 1,251,103 |
Non-current operating lease liabilities | 66,466 | 69,332 |
Warrant liabilities | 27,715 | 10,680 |
Long-term income tax liability | 69,238 | 69,858 |
Other long-term liabilities | 74,428 | 70,029 |
Total liabilities | 2,721,494 | 2,717,459 |
Commitments and contingent liabilities (Note 12) | ||
Stockholders' equity: | ||
Treasury stock, at cost; 10,089 and 8,690 shares as of March 31, 2023 and December 31, 2022, respectively | (359,491) | (332,133) |
Additional paid-in capital | 6,869,647 | 6,750,055 |
Accumulated deficit | (5,528,949) | (5,131,801) |
Accumulated other comprehensive income | 36,488 | 36,488 |
Total stockholders’ equity | 1,017,780 | 1,322,693 |
Total liabilities and stockholders’ equity | 3,739,274 | 4,040,152 |
Class A Common Stock | ||
Stockholders' equity: | ||
Common stock | 46 | 45 |
Class B Common Stock | ||
Stockholders' equity: | ||
Common stock | $ 39 | $ 39 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Treasury stock, shares (in shares) | 10,089 | 8,690 |
Class A Common Stock | ||
Common shares, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common shares, shares authorized (in shares) | 900,000 | 900,000 |
Common shares, shares issued (in shares) | 471,723 | 459,265 |
Common shares, shares outstanding (in shares) | 461,634 | 450,575 |
Class B Common Stock | ||
Common shares, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common shares, shares authorized (in shares) | 900,000 | 900,000 |
Common shares, shares issued (in shares) | 393,014 | 393,014 |
Common shares, shares outstanding (in shares) | 393,014 | 393,014 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Statement [Abstract] | ||
Revenue | $ 769,652 | $ 417,205 |
Cost of revenue | 521,740 | 313,379 |
Sales and marketing | 389,133 | 321,452 |
Product and technology | 88,088 | 81,352 |
General and administrative | 160,476 | 216,606 |
Loss from operations | (389,785) | (515,584) |
Other income (expense): | ||
Interest income | 11,795 | 801 |
Interest expense | (655) | (653) |
(Loss) gain on remeasurement of warrant liabilities | (17,035) | 12,681 |
Other income, net | 19 | 37,882 |
Loss before income tax provision and loss from equity method investment | (395,661) | (464,873) |
Income tax provision | 1,368 | 469 |
Loss from equity method investment | 119 | 2,351 |
Net loss attributable to common stockholders | $ (397,148) | $ (467,693) |
Loss per share attributable to common stockholders: | ||
Basic (in dollars per share) | $ (0.87) | $ (1.14) |
Diluted (in dollars per share) | $ (0.87) | $ (1.14) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock Class A Common Stock | Common Stock Class B Common Stock | Additional Paid in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Treasury Stock Amount |
Beginning balance (in shares) at Dec. 31, 2021 | 407,781 | 393,014 | |||||
Beginning balance at Dec. 31, 2021 | $ 1,678,528 | $ 41 | $ 39 | $ 5,702,388 | $ (3,753,814) | $ 36,488 | $ (306,614) |
Increase (Decrease) in Stockholders' Equity | |||||||
Exercise of stock options (in shares) | 913 | ||||||
Exercise of stock options | 1,770 | 1,770 | |||||
Stock-based compensation expense | 187,077 | 187,077 | |||||
Purchase of treasury stock (in shares) | (793) | ||||||
Purchase of treasury stock | (14,083) | (14,083) | |||||
Restricted stock unit vesting (in shares) | 9,327 | ||||||
Restricted stock unit vesting | 1 | $ 1 | |||||
Net loss | (467,693) | (467,693) | |||||
Ending balance (in shares) at Mar. 31, 2022 | 417,228 | 393,014 | |||||
Ending balance at Mar. 31, 2022 | 1,385,600 | $ 42 | $ 39 | 5,891,235 | (4,221,507) | 36,488 | (320,697) |
Beginning balance (in shares) at Dec. 31, 2022 | 450,575 | 393,014 | |||||
Beginning balance at Dec. 31, 2022 | $ 1,322,693 | $ 45 | $ 39 | 6,750,055 | (5,131,801) | 36,488 | (332,133) |
Increase (Decrease) in Stockholders' Equity | |||||||
Exercise of stock options (in shares) | 12,458 | 701 | |||||
Exercise of stock options | $ 2,192 | 2,192 | |||||
Stock-based compensation expense | 117,400 | 117,400 | |||||
Purchase of treasury stock (in shares) | (1,399) | ||||||
Purchase of treasury stock | (27,358) | (27,358) | |||||
Restricted stock unit vesting (in shares) | 11,757 | ||||||
Restricted stock unit vesting | 1 | $ 1 | |||||
Net loss | (397,148) | (397,148) | |||||
Ending balance (in shares) at Mar. 31, 2023 | 461,634 | 393,014 | |||||
Ending balance at Mar. 31, 2023 | $ 1,017,780 | $ 46 | $ 39 | $ 6,869,647 | $ (5,528,949) | $ 36,488 | $ (359,491) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Operating Activities: | ||
Net loss | $ (397,148) | $ (467,693) |
Adjustments to reconcile net loss to net cash flows used in operating activities: | ||
Depreciation and amortization | 48,213 | 32,225 |
Non-cash interest expense | 157 | 654 |
Stock-based compensation expense | 117,400 | 187,077 |
Loss from equity method investment | 119 | 2,351 |
Loss (gain) on remeasurement of warrant liabilities | 17,035 | (12,681) |
Loss (gain) on marketable equity securities and other financial assets | 136 | (37,433) |
Deferred income taxes | 2,254 | 256 |
Other expenses, net | (2,726) | (768) |
Change in operating assets and liabilities: | ||
Receivables reserved for users | 35,547 | (3,997) |
Accounts receivable | 9,674 | (2,347) |
Prepaid expenses and other current assets | (10,069) | (30,887) |
Deposits and other non-current assets | (3,464) | (493) |
Operating leases, net | 1,864 | (125) |
Accounts payable and accrued expenses | (6,292) | (16,087) |
Liabilities to users | (15,717) | (8,099) |
Long-term income tax liability | (620) | (178) |
Other long-term liabilities | 2,145 | 1,507 |
Net cash flows used in operating activities | (201,492) | (356,718) |
Investing Activities: | ||
Purchases of property and equipment | (7,094) | (8,614) |
Cash paid for internally developed software costs | (19,419) | (13,195) |
Acquisition of gaming licenses | (1,362) | (267) |
Other investing activities, net | 311 | (989) |
Net cash flows used in investing activities | (27,564) | (23,065) |
Financing Activities: | ||
Purchase of treasury stock | (27,358) | (14,083) |
Proceeds from exercise of stock options | 2,192 | 1,770 |
Net cash flows used in financing activities | (25,166) | (12,313) |
Net decrease in cash and cash equivalents and restricted cash | (254,222) | (392,096) |
Cash and cash equivalents and restricted cash at the beginning of period | 1,778,825 | 2,629,842 |
Cash and cash equivalents and restricted cash, end of period | 1,524,603 | 2,237,746 |
Disclosure of cash, cash equivalents and restricted cash: | ||
Cash and cash equivalents | 1,087,668 | 1,772,892 |
Cash reserved for users | 436,935 | 464,854 |
Total cash, cash equivalents and restricted cash, end of period | 1,524,603 | 2,237,746 |
Supplemental Disclosure of Noncash Investing and Financing Activities: | ||
Investing activities included in changes in accounts payable and accrued expenses | (679) | 7,604 |
Supplemental Disclosure of Cash Activities: | ||
Decrease in cash reserved for users | (32,718) | (12,096) |
Cash paid for interest | $ 0 | $ 0 |
Description of Business
Description of Business | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business We are a digital sports entertainment and gaming company that provides users with online sports betting (“Sportsbook”), online casino (“iGaming”) and daily fantasy sports (“DFS”) product offerings, as well as DraftKings Marketplace (“Marketplace”), retail sportsbook, media and other consumer product offerings. We are also involved in the design and development of sports betting and casino gaming software for online and retail sportsbooks and iGaming operators. In May 2018, the Supreme Court (the “Court”) struck down on constitutional grounds the Professional and Amateur Sports Protection Act of 1992 (“PASPA”), a law that prohibited most states from authorizing and regulating sports betting. Since the Court’s decision, many states have legalized sports betting. As of March 31, 2023, 33 U.S. states, the District of Columbia and Puerto Rico have legalized some form of sports betting. Of those 35 legal jurisdictions, 28 have legalized online sports betting. Of those 28 jurisdictions, 24 are live, and DraftKings operates in 21 of them. The U.S. jurisdictions with statutes legalizing iGaming are Connecticut, Delaware, Michigan, New Jersey, Pennsylvania and West Virginia. As of March 31, 2023, we operate our Sportsbook product offering in Arizona, Colorado, Connecticut, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Oregon, Pennsylvania, Tennessee, Virginia, West Virginia, Wyoming and Ontario, Canada, and we operate retail sportsbooks in Colorado, Connecticut, Illinois, Iowa, Kansas, Louisiana, Michigan, Mississippi, New Hampshire, New Jersey and Washington. As of March 31, 2023, we operate our iGaming product offering in Connecticut, Michigan, New Jersey, Pennsylvania, West Virginia and Ontario, Canada. The Company also has arrangements in place with land-based casinos to expand operations into additional states upon the passing of relevant legislation, the issuance of related regulations and the receipt of required licenses. On May 5, 2022 (the “GNOG Closing Date”), DraftKings Inc. (formerly New Duke Holdco, Inc.) consummated the acquisition of Golden Nugget Online Gaming, Inc., a Delaware corporation (together with its subsidiaries unless the context requires otherwise, “GNOG”), pursuant to a definitive agreement and plan of merger, dated August 9, 2021 (the “GNOG Merger Agreement”), in an all-stock transaction (the “GNOG Transaction”). In connection with the GNOG Transaction, DraftKings Inc. undertook a holding company reorganization whereby (i) each share of DraftKings Holdings Inc. (formerly DraftKings Inc.), a Nevada corporation (“Old DraftKings”), Class A common stock and Class B common stock was converted on a one-for-one basis into a share of DraftKings Inc. Class A common stock and Class B common stock, respectively, and (ii) DraftKings Inc. became the going-forward public company and the direct parent company of both Old DraftKings and GNOG. DraftKings Inc. is the registrant filing this Quarterly Report on Form 10-Q as the successor registrant for Old DraftKings. Unless otherwise indicated or the context otherwise requires, the terms “DraftKings”, the “Company”, “we”, “us” and “our” refer to DraftKings Inc. (or, in respect of periods prior to the GNOG Closing Date, Old DraftKings), together with its consolidated subsidiaries. |
Summary of Significant Accounti
Summary of Significant Accounting Policies and Practices | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies and Practices | Summary of Significant Accounting Policies and Practices Basis of Presentation and Principles of Consolidation These unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim reporting. As such, certain notes or other information that are normally required by U.S. GAAP have been omitted if they substantially duplicate the disclosures contained in the Company’s annual audited consolidated financial statements. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and related notes as of and for the fiscal year ended December 31, 2022, which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC on February 17, 2023 (the “2022 Annual Report”). These condensed consolidated financial statements are unaudited; however, in the opinion of management, they include all normal and recurring adjustments necessary for a fair presentation of the Company’s condensed consolidated financial statements for the periods presented. Results of operations reported for interim periods are not necessarily indicative of results for the entire year, due to seasonal fluctuations in the Company’s revenue as a result of timing of various sports seasons, sporting events and other factors. The Company consummated the GNOG Transaction on the GNOG Closing Date. In the GNOG Transaction, the Company was determined to be the accounting acquirer and, as such, the acquisition is considered a business combination under Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”), and was accounted for using the acquisition method of accounting. These unaudited condensed consolidated financial statements include the accounts and operations of the Company, except that, due to the timing of the consummation of the GNOG Transaction, these unaudited condensed consolidated financial statements exclude the operations of GNOG prior to the GNOG Closing Date. All intercompany accounts and transactions are eliminated upon consolidation. Certain amounts, which are not material, in the prior year’s consolidated financial statements have been reclassified to conform to the current year presentation. Segments The Company regularly reviews its operating segments and the approach used by the chief operating decision maker (“CODM”) to evaluate performance and allocate resources. As a result of the Company’s acquisition of DK Crown Holdings Inc. (formerly DraftKings Inc.), a Delaware corporation (“DK DE”), and SBTech (Global) Limited (“SBTech”) and the consummation of the transactions contemplated by the business combination agreement, dated December 22, 2019 (as amended), in April 2020, the Company began to identify two distinct operating segments: a business-to-consumer (“B2C”) segment, which included its Sportsbook, iGaming and DFS product offerings, as well as media and other consumer product offerings, and a business-to-business (“B2B”) segment, which had principal activities involving the design and development of gaming software. However, beginning in the fourth quarter of 2022, as a result of the Company’s integration of the technology and expertise of SBTech, the Company began to view the B2B segment primarily as a cost center of the B2C segment and, therefore, began to operate its business and report its results as a single operating segment. The Company’s determination that it operates as a single segment is consistent with the financial information regularly reviewed by the CODM for purposes of evaluating performance, allocating resources and planning and forecasting for future periods. The Company’s CODM allocates resources and assesses financial performance on a consolidated basis. Prior periods have been reclassified to conform with the new segment presentation. Recently Issued Accounting Pronouncements Not Yet Adopted In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”), which clarifies the guidance in Accounting Standards Codification Topic 820, Fair Value Measurement (“Topic 820”), when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security and introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. ASU 2022-03 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and early adoption is permitted. While the Company is continuing to assess the timing of adoption and the potential impacts of ASU 2022-03, it does not expect ASU 2022-03 to have a material effect on the Company’s consolidated financial condition, results of operations or cash flows. |
Business Combination
Business Combination | 3 Months Ended |
Mar. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Combination | Business Combination Acquisition of Golden Nugget Online Gaming, Inc. On May 5, 2022, DraftKings consummated the GNOG Transaction, and, under the terms of the GNOG Merger Agreement and subject to certain exclusions contained therein, GNOG stockholders received a fixed ratio of 0.365 shares of DraftKings Inc.’s Class A common stock for each share of GNOG that they held on the GNOG Closing Date. DraftKings Inc. issued approximately 29.3 million shares of its Class A common stock in connection with the consummation of the GNOG Transaction. Operating results for GNOG are included in the Company’s consolidated statements of operations for the three months ended March 31, 2023 . Purchase Price Accounting for the GNOG Transaction On the GNOG Closing Date, the Company acquired 100% of the equity interests of GNOG pursuant to the GNOG Merger Agreement. The following is a summary of the consideration issued on the GNOG Closing Date: Share consideration (1) $ 460,128 Other consideration (2) 143,337 Total consideration $ 603,465 (1) Includes the issuance of approximately 29.3 million shares of DraftKings Inc.’s Class A common stock issued at a price of $15.73. (2) Includes (i) $170.9 million of payments made by the Company on behalf of GNOG, including repayment of the outstanding portion of GNOG’s term loan (including the associated prepayment premium) and payment of certain of GNOG’s transaction expenses incurred in connection with the GNOG Transaction and (ii) warrants that were exercisable for shares of GNOG Class A common stock prior to the GNOG Closing Date, which were assumed by DraftKings in connection with the GNOG Transaction and became eligible to be converted into approximately 2.1 million shares of DraftKings Inc.’s Class A common stock in the aggregate. These payments were partially offset by commercial credits received by the Company from Fertitta Entertainment, Inc. (“FEI”), which can be applied by the Company from time to time to offset future amounts otherwise owed by it to FEI or its affiliates under commercial arrangements among such parties, subject to certain limited exceptions. The following table summarizes the consideration issued or paid in connection with the GNOG Transaction and the fair value of the assets acquired and liabilities assumed in connection with the consummation of the GNOG Transaction on the GNOG Closing Date: Cash and cash equivalents $ 66,709 Cash reserved for users 7,633 Receivables reserved for users 2,814 Accounts receivables 7,783 Prepaid expenses and other current assets 64 Property and equipment, net 1,433 Intangible assets, net 315,000 Operating lease right-of-use assets 1,185 Deposits and other non-current assets 47,395 Total identifiable assets acquired 450,016 Liabilities assumed: Accounts payable and accrued expenses 32,989 Liabilities to users 4,314 Operating lease liabilities 1,185 Other long-term liabilities 78,781 Total liabilities assumed 117,269 Net assets acquired (a) $ 332,747 Purchase consideration (b) $ 603,465 Goodwill (b) – (a) $ 270,718 Goodwill represents the excess of the gross consideration transferred over the difference between the fair value of the underlying net assets acquired and the underlying liabilities assumed. Qualitative factors that contribute to the recognition of goodwill include certain intangible assets that are not recognized as separate identifiable intangible assets apart from goodwill. Intangible assets not recognized apart from goodwill consist primarily of benefits from securing buyer-specific synergies that increase revenue and profits and are not otherwise available to a market participant, as well as acquiring a talented workforce and cost savings opportunities. Goodwill associated with the GNOG Transaction was assigned as of the GNOG Closing Date to the Company’s B2C reporting unit. Goodwill recognized is partially deductible for tax purposes, and the amount of deductible goodwill was determined to be $160.7 million. Intangible Assets Fair Value Weighted- Gaming licenses $ 145,000 12.2 years Customer relationships 170,000 5.9 years Total $ 315,000 Loan Receivable The Company acquired a long-term receivable in the amount of $30.1 million in connection with the GNOG Transaction, which originally resulted from a $30.0 million mezzanine loan (the “Danville GN Casino Loan”) by GNOG to certain parties before the GNOG Closing Date to develop and construct a “Golden Nugget”-branded casino in Danville, Illinois that, pending regulatory approvals, would enable GNOG to obtain market access to the State of Illinois. There has been no significant deterioration of credit quality since the origination date of the Danville GN Casino Loan. The receivable related to the Danville GN Casino Loan is classified within deposits and other non-current assets on the Company’s consolidated balance sheet. Unaudited Pro-Forma Information The financial information in the table below summarizes the combined results of operations of Old DraftKings and GNOG, on an actual and a pro forma basis, as applicable, as though the companies had been combined as of January 1, 2021. The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the GNOG Transaction had been consummated as of the beginning of the periods presented or of results that may occur in the future. Three months ended March 31, 2023 Actual 2022 Pro Forma Revenue $ 769,652 $ 449,109 Net loss $ (397,148) $ (475,774) The foregoing pro forma financial information is based on estimates and assumptions, which the Company believes are reasonable. The pro forma financial information includes adjustments primarily related to purchase accounting adjustments. Acquisition costs and other non-recurring charges incurred are included in the period of assumed acquisition. |
Intangible Assets
Intangible Assets | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets Intangible Assets The Company has the following intangible assets, net as of March 31, 2023: Weighted-Average Remaining Amortization Period Gross Carrying Amount Accumulated Amortization Net Amortized intangible assets: Developed technology 5.1 years $ 422,900 $ (153,462) $ 269,438 Internally developed software 2.4 years 187,017 (80,807) 106,210 Gaming licenses 10.9 years 208,017 (33,747) 174,270 Customer relationships 4.4 years 269,728 (89,127) 180,601 Trademarks, tradenames and other 3.7 years 36,882 (15,518) 21,364 Indefinite-lived intangible assets: Digital assets, net of impairment Indefinite-lived 2,626 — 2,626 Total $ 1,127,170 $ (372,661) $ 754,509 The Company had the following intangible assets, net as of December 31, 2022: Weighted-Average Remaining Amortization Period Gross Carrying Amount Accumulated Amortization Net Amortized intangible assets: Developed technology 5.4 years $ 422,900 $ (140,200) $ 282,700 Internally developed software 2.4 years 168,277 (70,575) 97,702 Gaming licenses 11.0 years 206,655 (29,487) 177,168 Customer relationships 4.6 years 269,728 (75,791) 193,937 Trademarks, tradenames and other 3.8 years 36,193 (13,463) 22,730 Indefinite-lived intangible assets: Digital assets, net of impairment Indefinite-lived 2,697 — 2,697 Intangible assets, net $ 1,106,450 $ (329,516) $ 776,934 Amortization expense was $43.1 million and $28.1 million for the three months ended March 31, 2023 and 2022, respectively. |
Current and Long-term Liabiliti
Current and Long-term Liabilities | 3 Months Ended |
Mar. 31, 2023 | |
Current and Long-term Liabilities | |
Current and Long-term Liabilities | Current and Long-term Liabilities Revolving Line of Credit On December 20, 2022, the Company entered into a loan and security agreement with Pacific Western Bank and Citizens Bank, as lenders (as amended, the “Credit Agreement”), which provides the Company with a revolving line of credit of up to $125.0 million (the “Revolving Line of Credit”). The Credit Agreement has a maturity date of December 20, 2024 and replaced the Company’s amended and restated loan and security agreement entered into with Pacific Western Bank in October 2016, which provided a revolving line of credit of up to $60.0 million and was terminated in connection with the Company’s entry into the Credit Agreement. Borrowings under the Credit Agreement bear interest at a variable annual rate equal to the greater of (i) 1.00% above the prime rate then in effect and (ii) 5.00%, and the Credit Agreement requires monthly, interest-only payments on any outstanding borrowings. In addition, the Company is required to pay quarterly in arrears a commitment fee equal to 0.25% per annum of the unused portion of the Revolving Line of Credit. As of March 31, 2023, the Credit Agreement provided a revolving line of credit of up to $125.0 million, and there was no principal outstanding under the Credit Agreement. Net borrowing capacity available from the Credit Agreement as of March 31, 2023 totaled $122.7 million. The Company is also subject to certain affirmative and negative covenants under the Credit Agreement, with which the Company was in compliance with as of March 31, 2023. Surety Bonds As of March 31, 2023, the Company has been issued $125.0 million in surety bonds at a combined annual premium cost of 0.5%, which are held for certain regulators’ use and benefit in order for the Company to satisfy state license requirements. There have been no claims against such bonds and the likelihood of future claims is remote. Convertible Notes and Capped Call Transactions In March 2021, Old DraftKings issued zero-coupon convertible senior notes in an aggregate principal amount of $1,265.0 million, which includes proceeds from the full exercise of the over-allotment option (collectively, the “Convertible Notes”). The Convertible Notes will mature on March 15, 2028 (the “Notes Maturity Date”), subject to earlier conversion, redemption or repurchase. In connection with the issuance of the Convertible Notes, Old DraftKings incurred $17.0 million of lender fees and $1.7 million of debt financing costs, which are being amortized through the Notes Maturity Date. The Convertible Notes represent senior unsecured obligations of Old DraftKings, which are being amortized through the Notes Maturity Date. On May 5, 2022, in connection with the consummation of the GNOG Transaction, (i) DraftKings Inc. agreed to fully and unconditionally guarantee all of Old DraftKings’ obligations under the Convertible Notes and the indenture governing the Convertible Notes and (ii) each Convertible Note which was outstanding as of the consummation of the GNOG Transaction and previously convertible into shares of Old DraftKings Class A common stock became convertible into shares of DraftKings Inc. Class A common stock. The Convertible Notes are convertible at an initial conversion rate of 10.543 shares of DraftKings Inc.'s Class A common stock per $1,000 principal amount of Convertible Notes, which is equivalent to an initial conversion price of approximately $94.85 per share of Class A common stock. The conversion rate is subject to adjustment upon the occurrence of certain specified events and includes a make-whole adjustment upon early conversion in connection with a make-whole fundamental change (as defined in the indenture governing the Convertible Notes). Prior to September 15, 2027, the Convertible Notes will be convertible only upon satisfaction of certain conditions and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day immediately preceding the Notes Maturity Date. Old DraftKings will satisfy any conversion election by paying or delivering, as the case may be, cash, shares of DraftKings Inc.’s Class A common stock or a combination of cash and shares of DraftKings Inc.’s Class A common stock. In connection with the pricing of the Convertible Notes and the exercise of the over-allotment option to purchase additional notes, Old DraftKings entered into a privately negotiated capped call transaction (the “Capped Call Transactions”). The Capped Call Transactions have a strike price of $94.85 per share, subject to certain adjustments, which corresponds to the initial conversion price of the Convertible Notes. The Capped Call Transactions have an initial cap price of $135.50 per share, subject to certain adjustments. The Capped Call Transactions are expected generally to reduce potential dilution to the Company’s Class A common stock upon any conversion of Convertible Notes. As the Capped Call Transactions qualify for equity classification, the net cost of $124.0 million incurred in connection with the Capped Call Transactions was recorded as a reduction to additional paid-in capital on the Company’s consolidated balance sheet. As of March 31, 2023, the Company’s convertible debt balance was $1,251.8 million, net of unamortized debt issuance costs of $13.2 million. Amortization of debt issuance costs was $0.7 million for the three months ended March 31, 2023 and $0.7 million for the three months ended March 31, 2022, which are included in the interest expense line-item on the Company's consolidated statements of operations. Although recorded at amortized cost on the Company’s consolidated balance sheets, the estimated fair value of the Convertible Notes was $883.9 million and $786.5 million as of March 31, 2023 and December 31, 2022, respectively, which was calculated using the estimated or actual bids and offers of the Convertible Notes in an over-the-counter market on the last business day of the period, which is a Level 1 fair value measurement. Indirect Taxes Taxation of e-commerce is becoming more prevalent and could negatively affect the Company’s business as it pertains to DFS and its contestants. The ultimate impact of indirect taxes on the Company’s business is uncertain, as is the period required to resolve this uncertainty. The Company’s estimated contingent liability for indirect taxes represents the Company’s best estimate of tax liability in jurisdictions in which the Company believes taxation is probable. The Company frequently reevaluates its tax positions for appropriateness. Indirect tax statutes and regulations are complex and subject to differences in application and interpretation. Tax authorities may impose indirect taxes on Internet-delivered activities based on statutes and regulations which, in some cases, were established prior to the advent of the Internet and do not apply with certainty to the Company’s business. The Company’s estimated contingent liability for indirect taxes may be materially impacted by future audit results, litigation and settlements, should they occur. The Company’s activities by jurisdiction may vary from period to period, which could result in differences in the applicability of indirect taxes from period to period. As of March 31, 2023 and December 31, 2022, the Company’s estimated contingent liability for indirect taxes was $63.6 million and $60.3 million, respectively. The estimated contingent liability for indirect taxes is recorded within other long-term liabilities on the consolidated balance sheets and general and administrative expenses on the condensed consolidated statements of operations. Warrant Liabilities As part of the initial public offering of Diamond Eagle Acquisition Corp. ("DEAC") on May 14, 2019 (the “IPO”), DEAC issued 13.3 million warrants each of which entitles the holder to purchase one share of DraftKings Inc.’s Class A common stock at an exercise price of $11.50 per share (the “Public Warrants”). Simultaneously with the closing of the IPO, DEAC completed the private sale of 6.3 million warrants to DEAC’s sponsor (the “Private Warrants”), each of which entitles the holder to purchase one share of DraftKings Inc.’s Class A common stock at an exercise price of $11.50 per share. As of March 31, 2023 and 2022, there were no Public Warrants outstanding and 1.6 million Private Warrants outstanding. On May 5, 2022, in connection with the consummation of the GNOG Transaction, Old DraftKings entered into an assignment and assumption agreement (the “Old DraftKings Warrant Assignment Agreement”) with DraftKings Inc., Computershare Trust Company, N.A. and Computershare Inc. (together, “Computershare”), pursuant to which Old DraftKings assigned to DraftKings Inc. all of its rights, interests and obligations under the warrant agreement, dated as of May 10, 2019 (the “Old DraftKings Warrant Agreement”), by and between DEAC and Continental Stock Transfer & Trust Company, as warrant agent, as assumed by Old DraftKings and assigned to Computershare by that certain assignment and assumption agreement, dated as of April 23, 2020, governing Old DraftKings’ outstanding Private Warrants, on the terms and conditions set forth in the Old DraftKings Warrant Assignment Agreement. In connection with the consummation of the GNOG Transaction and pursuant to the Old DraftKings Warrant Assignment Agreement, each of the outstanding Private Warrants became exercisable for one share of DraftKings Inc. Class A common stock on the existing terms and conditions, except as otherwise described in the Old DraftKings Warrant Assignment Agreement. In addition, on May 5, 2022, in connection with the consummation of the GNOG Transaction, the Company assumed an additional 5.9 million warrants, each of which entitled the holder to purchase one share of GNOG’s Class A common stock at an exercise price of $11.50 per share (the “GNOG Private Warrants”). Effective as of the consummation of the GNOG Transaction, each of the outstanding GNOG Private Warrants became exercisable, at an exercise price of $31.50, for 0.365 of a share of DraftKings Inc.’s Class A common stock, or approximately 2.1 million shares of DraftKings Inc.’s Class A common stock in the aggregate, on the existing terms and conditions of such GNOG Private Warrants, except as otherwise described in the assignment and assumption agreement relating to the GNOG Private Warrants entered into on the GNOG Closing Date. As of March 31, 2023, there were 5.9 million GNOG Private Warrants outstanding. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Certain assets and liabilities are carried at fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value and nonrecurring fair value measurements are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: • Level 1 — Quoted prices in active markets for identical assets or liabilities. • Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. • Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. The following tables set forth the fair value of the Company’s financial assets and liabilities measured at fair value as of March 31, 2023 and December 31, 2022 based on the three-tier fair value hierarchy: March 31, 2023 Level 1 Level 2 Level 3 Total Assets Cash equivalents: Money market funds $ 206,939 (1) $ — $ — $ 206,939 Other current assets: Digital assets held for users — 48,733 (6) — 48,733 Other non-current assets: Derivative instruments — — 25,287 (4) 25,287 Equity securities 19,075 (2) 13,533 (3) — 32,608 Total $ 226,014 $ 62,266 $ 25,287 $ 313,567 Liabilities Digital assets held for users $ — $ 48,733 (6) $ — $ 48,733 Warrant liabilities — 27,715 (5) — 27,715 Total $ — $ 76,448 $ — $ 76,448 December 31, 2022 Level 1 Level 2 Level 3 Total Assets Cash equivalents: Money market funds $ 304,216 (1) $ — $ — $ 304,216 Other current assets: Digital assets held for users — 38,444 (6) — 38,444 Other non-current assets: Derivative instruments — — 26,248 (4) 26,248 Equity securities 18,250 (2) 13,533 (3) — 31,783 Total $ 322,466 $ 51,977 $ 26,248 $ 400,691 Liabilities Digital assets held for users — $ 38,444 (6) — $ 38,444 Warrant liabilities $ — $ 10,680 (5) $ — 10,680 Total $ — $ 49,124 $ — $ 49,124 (1) Represents the Company’s money market funds, which are classified as Level 1 because the Company measures the fair value of these assets using quoted market prices. (2) Represents the Company’s marketable equity securities, which are classified as Level 1 because the Company measures the fair value of these assets using quoted market prices. (3) Represents the Company’s non-marketable equity securities, which are classified as Level 2 because the Company measures the fair value of these assets using observable inputs for similar investments of the same issuer. The Company has elected the remeasurement alternative for these assets. (4) Represents the Company’s derivative instruments held in other public and privately held entities. The Company measures the fair value of these derivative instruments using option pricing models and, accordingly, classifies these assets as Level 3. During the three months ended March 31, 2023, there were no new derivative instruments purchased by or issued to the Company. The table below includes a range and an average weighted by relative fair value of the significant unobservable inputs used to measure the fair value of the Level 3 derivative instruments. A change in these significant unobservable inputs might result in a significantly higher or lower fair value measurement at the reporting date. March 31, 2023 December 31, 2022 Significant Unobservable Input Range (Weighted Average) Range (Weighted Average) Underlying stock price $7.63 - $19.80 ($16.95) $7.30 - $19.80 ($16.53) Volatility 56.0% - 80.0% (74.8%) 56.0% - 80.0% (74.1%) Risk-free rate 1.3% - 4.7% (4.2%) 1.3% - 4.3% (4.1%) (5) The Company measures the fair value of its warrant liabilities using a binomial lattice model or a Black-Scholes model, where appropriate, with the significant assumptions being observable inputs and, accordingly, classifies these liabilities as Level 2. (6) Represents the asset and liability balance for the digital assets held by the Company for its users, which are classified as Level 2 because the Company measures the fair value of these digital assets using observable inputs for similar transactions. For the three months ended March 31, 2023 and 2022, the Company recorded $0.1 million and $37.4 million of unrealized gains on its financial assets carried at fair value, respectively. Those unrealized gains are included within other income, net in the condensed consolidated statements of operations. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Deferred Revenue The Company includes deferred revenue within accounts payable and accrued expenses and liabilities to users in the condensed consolidated balance sheets. The deferred revenue balances were as follows: Three months ended March 31, 2023 2022 Deferred revenue, beginning of the period $ 133,851 $ 91,554 Deferred revenue, end of the period $ 132,213 $ 95,402 Revenue recognized in the period from amounts included in deferred revenue at the beginning of the period $ 112,426 $ 51,680 Deferred revenue primarily represents contract liabilities related to the Company’s obligation to transfer future value in relation to in period transactions in which the Company has received consideration. Such obligations are recognized as liabilities when awarded to users and are recognized as revenue when those liabilities are later resolved. Revenue Disaggregation Disaggregation of revenue for the three months ended March 31, 2023 and 2022 is as follows: Three months ended March 31, 2023 2022 Online gaming $ 735,189 $ 386,678 Gaming software 8,610 13,495 Other 25,853 17,032 Total Revenue $ 769,652 $ 417,205 Online gaming includes Sportsbook, iGaming and DFS, which have certain similar attributes and patterns of recognition. Sources of other revenue primarily include media, Marketplace and other online consumer products. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation The Company has historically issued three types of stock-based compensation: time-based awards, long-term incentive plan (“LTIP”) awards and performance-based stock compensation plan (“PSP”) awards. Time-based awards are equity awards that tie vesting to length of service with the Company and generally vest over a four-year period in annual and/or quarterly installments. LTIP awards are performance-based equity awards that are used to establish longer-term performance objectives and incentivize management to meet those objectives. PSP awards are performance-based equity awards which establish performance objectives related to one or two particular fiscal years. LTIP awards generally vest when revenue or Adjusted EBITDA targets are achieved amongst other conditions, while PSP awards generally vest upon achievement of revenue and Adjusted EBITDA targets and have a range of payouts amongst other conditions. All stock-based compensation awards expire seven The following table shows restricted stock unit (“RSU”) and stock option activity for the three months ended March 31, 2023: Time-Based PSP LTIP Total Weighted Average Exercise Price of Options Weighted Average FMV Options RSUs Options RSUs Options RSUs Outstanding at December 31, 2022 12,259 15,273 2,273 13,119 11,152 13,864 67,940 $ 6.17 $ 29.64 Granted 600 9,560 — 1,990 — 113 12,263 25.81 17.24 Exercised options / vested RSUs (530) (1,700) (171) (1,715) — (8,342) (12,458) 3.13 48.49 Change in awards due to performance-based multiplier — — — 1,142 — — 1,142 — 60.25 Forfeited — (369) — (55) — (41) (465) 4.53 25.67 Outstanding at March 31, 2023 12,329 22,764 2,102 14,481 11,152 5,594 68,422 $ 6.71 $ 21.99 As of March 31, 2023, total unrecognized stock-based compensation expense of $689.8 million related to granted and unvested stock-based compensation arrangements is expected to be recognized over a weighted-average period of 3.1 years. The following table shows stock compensation expense for the three months ended March 31, 2023 and 2022: Three months ended March 31, 2023 Three months ended March 31, 2022 Options RSUs Total Options RSUs Total Time-based (1) $ 3,844 $ 44,807 $ 48,651 $ 3,864 $ 21,786 $ 25,650 PSP (2) — 24,015 24,015 — 43,367 43,367 LTIP (2) — 44,734 44,734 — 118,060 118,060 Total $ 3,844 $ 113,556 $ 117,400 $ 3,864 $ 183,213 $ 187,077 (1) Time-based awards vest and are expensed over a defined service period. (2) PSP and LTIP awards vest based on defined performance criteria and are expensed based on the probability of achieving such criteria. During the three months ended March 31, 2022, the Company recorded a cumulative catch-up adjustment of $20.7 million in additional stock-based compensation expense related to its updated expectation on achieving higher revenue targets than originally estimated for certain PSP awards which have a range of payouts. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s provision for income taxes for the three months ended March 31, 2023 and 2022 is as follows: Three months ended March 31, 2023 2022 Income tax provision $ 1,368 $ 469 The effective tax rates for the three months ended March 31, 2023 and 2022 were (0.3)% and (0.1)%, respectively. The difference between the Company’s effective tax rates for the three month periods ended March 31, 2023 and 2022 and the U.S. statutory tax rate of 21% was primarily due to a valuation allowance related to the Company’s deferred tax assets, offset partially by current state tax and current foreign tax. The Company regularly evaluates the realizability of its deferred tax assets and establishes a valuation allowance if it is more likely than not that some or all such deferred tax assets will not be realized. |
Loss Per Share
Loss Per Share | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Loss Per Share | Loss Per Share The computation of loss per share and weighted-average shares of the Company's Class A common stock outstanding for the periods presented are as follows: Three months ended March 31, 2023 2022 Net loss attributable to common stockholders $ (397,148) $ (467,693) Basic and diluted weighted-average common shares outstanding 455,081 411,066 Loss per share attributable to common stockholders: Basic and diluted $ (0.87) $ (1.14) There were no preferred or other dividends declared for the three months ended March 31, 2023. For the periods presented, the following securities were not required to be included in the computation of diluted shares outstanding: Three months ended March 31, 2023 2022 Class A common stock resulting from exercise of all warrants 3,761 1,613 Stock options and RSUs 68,422 53,512 Convertible notes 13,337 13,337 Total 85,520 68,462 |
Related-Party Transactions
Related-Party Transactions | 3 Months Ended |
Mar. 31, 2023 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | Related-Party Transactions Receivables from Equity Method Investment The Company provides office space and general operational support to DKFS, LLC, an equity-method affiliate. The operational support is primarily in the form of general and administrative services. As of March 31, 2023 and December 31, 2022, the Company had $0.1 million and $0.2 million, respectively, of receivables from DKFS, LLC related to those services and expenses to be reimbursed to the Company, which are included within non-current assets in the consolidated balance sheets. The Company has committed to invest up to $17.5 million into DBDK Venture Fund I, LP, a Delaware limited partnership and a subsidiary of DKFS, LLC. As of March 31, 2023, the Company had invested a total of $6.7 million of the total commitment. Transactions with a Shareholder and their Immediate Family Members For the three months ended March 31, 2023 and March 31, 2022, the Company had $0.7 million and $0.6 million in sales, respectively, to entities owned by an immediate family member of a current director of the Company. The Company had an associated accounts receivable balance of $0.3 million and $0.2 million a s of March 31, 2023 and December 31, 2022, respectively, included in accounts receivable in its condensed consolidated balance sheets. Aircraft In 2022, from time to time, the Company chartered, without mark-up, a private plane owned by an entity controlled by Jason Robins, the Company’s Chief Executive Officer, utilizing aircraft services from Jet Aviation Flight Services, Inc. for the business and personal travel of Mr. Robins and his family. The Company had no direct or indirect interest in such private plane. During the three months ended March 31, 2022, the Company incurred $0.7 million of expense for use of the aircraft under these chartering services. During the three months ended March 31, 2023, the Company incurred no expense for use of the aircraft under these chartering services. On March 30, 2022, the Company entered into a one-year lease of an aircraft from an entity controlled by Mr. Robins, pursuant to which Mr. Robins’ entity leased the aircraft to the Company for $0.6 million for a one-year period (the “Original Aircraft Lease”). The Company covered all operating, maintenance and other expenses associated with the aircraft. The Original Aircraft Lease expired in accordance with its terms on March 30, 2023, and DraftKings entered into a new one-year lease of such aircraft from an entity controlled by Mr. Robins for $0.6 million and otherwise on terms and conditions substantially the same as the Original Aircraft Lease, effective upon the expiration thereof (collectively with the Original Aircraft Lease, the “Aircraft Leases”). The audit and compensation committees of the Company’s board of directors approved this arrangement, as well as the Aircraft Leases, based, among other things, on the requirements of the overall security program that Mr. Robins and his family fly private and the committees' assessment that such an arrangement is more efficient and flexible and better ensures safety, confidentiality and privacy. During the three months ended March 31, 2023, the Company incurred $0.1 million of expense under the Original Aircraft Lease. |
Leases, Commitments and Conting
Leases, Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Leases, Commitments and Contingencies | Leases, Commitments and Contingencies Leases The Company primarily leases corporate office facilities, data centers and motor vehicles under operating lease agreements. Some of the Company’s leases include one or more options to renew. For a majority of our leases, we do not assume renewals in our determination of the lease term as the renewals are not deemed to be reasonably assured. Our lease agreements generally do not contain any material residual value guarantees or material restrictive covenants. As of March 31, 2023, the Company’s lease agreements typically have terms not exceeding ten years. Payments under the Company’s lease arrangements may be fixed or variable, and variable lease payments primarily represent costs related to common area maintenance and utilities. The components of lease cost are as follows: Three months ended March 31, 2023 2022 Operating lease cost $ 5,028 $ 4,230 Short term lease cost 1,331 1,755 Variable lease cost 1,119 806 Sublease income (236) (230) Total lease cost $ 7,242 $ 6,561 Supplemental cash flow and other information for the three months ended March 31, 2023 and 2022 related to operating leases was as follows: Three months ended March 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used by operating leases $ 3,165 $ 4,283 Right-of-use assets obtained in exchange for new operating lease liabilities $ 366 $ 619 The weighted-average remaining lease term for the Company's operating leases was 8.3 years, and the weighted-average discount rate for the Company's operating leases was 6.5%, in each case as of March 31, 2023. The Company calculated the weighted-average discount rate using incremental borrowing rates, which equal the rates of interest that it would pay to borrow funds on a fully collateralized basis over a similar term. Maturity of lease liabilities are as follows: Years Ending December 31, From April 1, 2023 to December 31, 2023 $ 5,240 2024 12,252 2025 11,920 2026 11,660 2027 11,518 Thereafter 40,445 Total undiscounted future cash flows 93,035 Less: Imputed interest (22,594) Present value of undiscounted future cash flows $ 70,441 Other Contractual Obligations and Contingencies The Company is a party to several non-cancelable contracts with vendors where the Company is obligated to make future minimum payments under the terms of these contracts as follows: Years Ending December 31, From April 1, 2023 to December 31, 2023 $ 326,823 2024 418,437 2025 327,388 2026 188,672 2027 107,988 Thereafter 247,196 Total $ 1,616,504 Contingencies From time to time, and in the ordinary course of business, the Company may be subject to certain claims, charges and litigation concerning matters arising in connection with the conduct of the Company’s business activities. Interactive Games LLC On June 14, 2019, Interactive Games LLC filed suit against the Company in the U.S. District Court for the District of Delaware, alleging that our Daily Fantasy Sports product offering infringes two patents and the Company’s Sportsbook product offering infringes two different patents. The Company intends to vigorously defend this case. In the event that a court ultimately determines that the Company is infringing the asserted patents, it may be subject to substantial damages, which may include treble damages and/or an injunction that could require the Company to modify certain features that we currently offer. The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in these matters could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows. Despite the potential for significant damages, the Company does not believe, based on currently available information, that the outcome of this proceeding will have a material adverse effect on the Company's financial condition, although the outcome could be material to the Company's operating results for any particular period, depending, in part, upon the operating results for such period. Winview Inc. On July 7, 2021, Winview Inc., a Delaware corporation, filed suit against the Company in the U.S. District Court for the District of New Jersey, which was subsequently amended on July 28, 2021, alleging that our Sportsbook product offering infringes two patents, our Daily Fantasy Sports product offering infringes one patent, and that our Sportsbook product offering and Daily Fantasy Sports product offering infringe another patent. On November 15, 2021, Winview Inc. filed a second amended complaint (the “SAC”), adding as defendants DK Crown Holdings Inc. and Crown Gaming Inc., a Delaware corporation, which are wholly-owned subsidiaries of the Company. The SAC largely repeats the allegations of the first amended complaint. The Company intends to vigorously defend this case. In the event that a court ultimately determines that the Company is infringing the asserted patents, it may be subject to substantial damages, which may include treble damages and/or an injunction that could require the Company to modify certain features that we currently offer. The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in these matters could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows. Despite the potential for significant damages, the Company does not believe, based on currently available information, that the outcome of this proceeding will have a material adverse effect on the Company's financial condition, although the outcome could be material to the Company's operating results for any particular period, depending, in part, upon the operating results for such period. Securities Matters Related to Allegations in the Hindenburg Report On July 2, 2021, the first of two substantially similar federal securities law putative class actions was filed in the U.S. District Court for the Southern District of New York against the Company and certain of its officers. The actions alleged violations of Sections 10(b) and 20(a) of the Exchange Act on a behalf of a putative class of persons who purchased or otherwise acquired the Company's stock between December 23, 2019 and June 15, 2021. The allegations related to, among other things, allegedly false and misleading statements and/or failures to disclose information about the Company’s business and prospects, based primarily upon the allegations concerning SBTech that were contained in a report published about the Company on June 15, 2021 by Hindenburg Research (the “Hindenburg Report”). On November 12, 2021, the court consolidated the two actions under the caption In re DraftKings Securities Litigation and appointed a lead plaintiff. The lead plaintiff filed a consolidated amended complaint on January 11, 2022. On January 10, 2023, the court granted the Company's motion to dismiss and final judgment was entered dismissing the action with prejudice. Beginning on July 9, 2021, the Company received subpoenas from the SEC seeking documents concerning, among other things, certain of the allegations raised in the Hindenburg Report, as well as the Company’s disclosures regarding its compliance policies and procedures, and related matters. The Company intends to comply with the related requests and is cooperating with the SEC’s ongoing inquiry. The Company cannot predict with any degree of certainty the outcome of the SEC matter or determine the extent of any potential liabilities. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in the SEC matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows. Despite the potential for significant damages, the Company does not believe, based on currently available information, that the outcome of the SEC matter will have a material adverse effect on the Company's financial condition, although the outcome could be material to the Company's operating results for any particular period, depending, in part, upon the operating results for such period. Shareholder Derivative Litigation Related to Allegations in the Hindenburg Report On October 21, 2021, the first of five substantially similar putative shareholder derivative actions was filed in Nevada by alleged shareholders of the Company. The actions purported to assert claims on behalf of the Company against certain current and former officers and/or members of the board of directors of the Company and DEAC. The two actions filed in the U.S. District Court for the District of Nevada were subsequently consolidated, and two of the actions filed in Nevada state District Court in Clark County likewise were consolidated. A substantially identical fifth action was filed in Nevada state District Court in Clark County and was subsequently dismissed voluntarily by the plaintiff. The same plaintiff filed a substantially identical action in Massachusetts Superior Court, which was also dismissed voluntarily by the plaintiff. The Nevada actions purported to assert claims on behalf of the Company for, among other things, breach of fiduciary duty and corporate waste based primarily upon the allegations concerning SBTech that were contained in the Hindenburg Report. The federal court action in Nevada also contended that certain individuals are liable to the Company for any adverse judgment in the federal securities class actions described above under Sections 10(b) and 21D of the Exchange Act. The Nevada actions sought unspecified compensatory damages, changes to corporate governance and internal procedures, equitable and injunctive relief, restitution, costs and attorney’s fees. The Nevada actions were voluntarily dismissed without prejudice by the plaintiffs in state court on February 27, 2023 and in federal court on March 3, 2023. Matters Related to the GNOG Transaction On August 12, 2022, a putative class action was filed in Nevada state District Court in Clark County against Golden Nugget Online Gaming, Inc. (“GNOG Inc.”), the Company and one of its officers, as well as former officers or directors and the former controlling stockholder of GNOG Inc. and Jefferies LLC. The lawsuit asserts claims on behalf of a putative class of former minority stockholders of GNOG Inc. alleging that certain former officers and directors of GNOG Inc. and its former controlling stockholder (Tilman Fertitta and/or Fertitta Entertainment, Inc.) breached their fiduciary duties to minority stockholders of GNOG Inc. in connection with the GNOG Transaction, and the other defendants aided and abetted the alleged breaches of fiduciary duty. On September 9, 2022, two similar putative class actions were filed in the Delaware Court of Chancery against former directors of GNOG Inc. and its former controlling stockholder, one of which also names the Company and Jefferies Financial Group, Inc. as defendants. These pending actions in Delaware assert substantially similar claims on behalf of a putative class of former minority stockholders of GNOG Inc. alleging that certain former officers and directors of GNOG Inc. and its former controlling stockholder (Tilman Fertitta) breached their fiduciary duties to minority stockholders of GNOG Inc. in connection with the GNOG Transaction, and one of the actions also alleges that the Company aided and abetted the alleged breaches of fiduciary duty. On October 12, 2022, the Delaware Court of Chancery consolidated these two actions under the caption In re Golden Nugget Online Gaming, Inc. Stockholders Litigation. The Company intends to vigorously defend against these claims. The Company cannot predict with any degree of certainty the outcome of these matters or determine the extent of any potential liabilities. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in these matters could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows. Despite the potential for significant damages, the Company does not believe, based on currently available information, that the outcome of these proceedings will have a material adverse effect on the Company's financial condition, although the outcome could be material to the Company's operating results for any particular period, depending, in part, upon the operating results for such period. AG 18, LLC d/b/a/ Arrow Gaming On August 19, 2021, AG 18, LLC d/b/a/ Arrow Gaming (“Arrow Gaming”) filed a complaint against the Company in the United States District Court for the District of New Jersey alleging that the Company's DFS and Casino product offerings infringe four patents. On October 12, 2021, Arrow Gaming filed an amended complaint to add one additional patent. On December 20, 2021, Arrow Gaming filed a second amended complaint adding new allegations with respect to alleged willful infringement. The Company intends to vigorously defend this case. In the event that a court ultimately determines that the Company is infringing the asserted patents, it may be subject to substantial damages, which may include treble damages and/or an injunction that could require the Company to modify certain features that we currently offer. The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in these matters could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows. Despite the potential for significant damages, the Company does not believe, based on currently available information, that the outcome of this proceeding will have a material adverse effect on the Company's financial condition, although the outcome could be material to the Company's operating results for any particular period, depending, in part, upon the operating results for such period. Beteiro, LLC On November 22, 2021, Beteiro, LLC filed a complaint against the Company in the United States District Court for the District of New Jersey alleging that the Company’s Sportsbook and Casino product offerings infringe four patents. The Company intends to vigorously defend this case. In the event that a court ultimately determines that the Company is infringing the asserted patents, it may be subject to substantial damages, which may include treble damages and/or an injunction that could require the Company to modify certain features that we currently offer. The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in these matters could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows. Despite the potential for significant damages, the Company does not believe, based on currently available information, that the outcome of this proceeding will have a material adverse effect on the Company's financial condition, although the outcome could be material to the Company's operating results for any particular period, depending, in part, upon the operating results for such period. Diogenes Ltd. & Colossus (IOM) Ltd. On December 1, 2021, Diogenes Ltd. & Colossus (IOM) Ltd. (“Colossus”), filed a complaint against the Company in the United States District Court for the District of Delaware alleging that the Company’s Sportsbook product offering infringes seven patents. Colossus amended its complaint on February 7, 2022 to, among other things, add one additional patent. The Company intends to vigorously defend this case. In the event that a court ultimately determines that the Company is infringing the asserted patents, it may be subject to substantial damages, which may include treble damages and/or an injunction that could require the Company to modify certain features that we currently offer. The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in these matters could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows. Despite the potential for significant damages, the Company does not believe, based on currently available information, that the outcome of this proceeding will have a material adverse effect on the Company's financial condition, although the outcome could be material to the Company's operating results for any particular period, depending, in part, upon the operating results for such period. Steiner Nelson Steiner filed suit against the Company and FanDuel Inc. in Florida state court on November 9, 2015. The action was subsequently transferred to In Re: Daily Fantasy Sports Litigation (Multi-District Litigation) (the “MDL”), and Mr. Steiner’s action was consolidated into the MDL’s amended complaint, which, in February 2016, consolidated numerous actions (primarily purported class actions) filed against the Company, FanDuel, and other related parties in courts across the United States. By June 23, 2022, the MDL was resolved, except for Mr. Steiner’s action, and the court officially closed the MDL docket on July 8, 2022. Mr. Steiner brings this action as a concerned citizen of the state of Florida alleging that, among other things, defendants’ daily fantasy sports contests are illegal gambling under the state laws of Florida and seeks disgorgement of “gambling losses” purportedly suffered by Florida citizens on behalf of the state. On June 23, 2022, the MDL court remanded Mr. Steiner’s action to the Circuit Court for Pinellas County, Florida. Plaintiff has not yet filed an amended pleading. The Company intends to vigorously defend this suit. Any adverse outcome in this matter could subject the Company to substantial damages and it could be restricted from offering DFS contests in Florida. The Company cannot provide any assurance as to the outcome of this matter. The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in these matters could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows. Despite the potential for significant damages, the Company does not believe, based on currently available information, that the outcome of this matter will have a material adverse effect on Company’s financial condition, although the outcome could be material to the Company’s operating results for any particular period, depending, in part, upon the operating results for such period. Turley On January 9, 2023, Simpson G. Turley, individually and on behalf of all others similarly situated, filed a purported class action against the Company in the United States District Court for the District of Massachusetts. Plaintiff alleges, among other things, that he was a contestant in the Company’s daily fantasy showdown contest for the January 2, 2023, NFL game between the Cincinnati Bengals and the Buffalo Bills (the “Bengals-Bills Game”). The Bengals-Bills Game was postponed and eventually cancelled due to Damar Hamlin collapsing during the game. Plaintiff alleges that he was winning prizes in multiple showdown contests at the point in time that the Bengals-Bills Game was cancelled (with 5:58 remaining in the first quarter). Plaintiff alleges that, instead of paying out the prize money, the Company refunded entry fees to contestants that entered showdown or flash draft fantasy contests. Plaintiff asserts claims for breach of contract, unfair and deceptive acts and practices, false advertising, and unjust enrichment. Among other things, Plaintiffs seeks statutory damages, monetary damages, punitive damages, attorney fees and interest. The Company intends to vigorously defend this case. Any adverse outcome in this matter could subject the Company to substantial damages and/or require alterations to the Company’s business. The Company cannot provide any assurance as to the outcome of this matter. The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows. Despite the potential for significant damages, the Company does not believe, based on currently available information, that the outcome of this matter will have a material adverse effect on Company’s financial condition, although the outcome could be material to the Company’s operating results for any particular period, depending, in part, upon the operating results for such period. Matter Related to DraftKings Marketplace On March 9, 2023, a putative class action was filed in Massachusetts federal court by alleged purchasers of non-fungible tokens (“NFTs”) on the DraftKings Marketplace (“DK Marketplace”). The complaint asserts claims for violations of federal and state securities laws against the Company and three of its officers on the grounds that, among other things, the NFTs that are sold and traded on the DK Marketplace allegedly constitute securities that were not registered with the SEC in accordance with federal and Massachusetts law, and that the DK Marketplace is a securities exchange that is not registered in accordance with federal and Massachusetts law. Based on these allegations, plaintiff brings claims seeking rescissory damages and other relief on behalf of himself and a putative class of persons who purchased NFTs on the DK Marketplace between August 11, 2021 and the present. The Company intends to vigorously defend this matter. Any adverse outcome in this matter could subject the Company to substantial damages and/or require alterations to the Company’s business. The Company cannot provide any assurance as to the outcome of this matter. The Company cannot predict with any degree of certainty the outcome of this matter or determine the extent of any potential liability or damages. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows. Despite the potential for significant damages, the Company does not believe, based on currently available information, that the outcome of this matter will have a material adverse effect on Company’s financial condition, although the outcome could be material to the Company’s operating results for any particular period, depending, in part, upon the operating results for such period. Internal Revenue Service The Company is currently under Internal Revenue Service audit for prior tax years, with the primary unresolved issues relating to excise taxation of fantasy sports contests and informational reporting and withholding. The final resolution of that audit, and other audits or litigation, may differ from the amounts recorded in these consolidated financial statements and may materially affect the Company’s consolidated financial statements in the period or periods in which that determination is made. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies and Practices (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation These unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim reporting. As such, certain notes or other information that are normally required by U.S. GAAP have been omitted if they substantially duplicate the disclosures contained in the Company’s annual audited consolidated financial statements. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and related notes as of and for the fiscal year ended December 31, 2022, which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC on February 17, 2023 (the “2022 Annual Report”). These condensed consolidated financial statements are unaudited; however, in the opinion of management, they include all normal and recurring adjustments necessary for a fair presentation of the Company’s condensed consolidated financial statements for the periods presented. Results of operations reported for interim periods are not necessarily indicative of results for the entire year, due to seasonal fluctuations in the Company’s revenue as a result of timing of various sports seasons, sporting events and other factors. The Company consummated the GNOG Transaction on the GNOG Closing Date. In the GNOG Transaction, the Company was determined to be the accounting acquirer and, as such, the acquisition is considered a business combination under Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”), and was accounted for using the acquisition method of accounting. These unaudited condensed consolidated financial statements include the accounts and operations of the Company, except that, due to the timing of the consummation of the GNOG Transaction, these unaudited condensed consolidated financial statements exclude the operations of GNOG prior to the GNOG Closing Date. |
Segments | Segments The Company regularly reviews its operating segments and the approach used by the chief operating decision maker (“CODM”) to evaluate performance and allocate resources. As a result of the Company’s acquisition of DK Crown Holdings Inc. (formerly DraftKings Inc.), a Delaware corporation (“DK DE”), and SBTech (Global) Limited (“SBTech”) and the consummation of the transactions contemplated by the business combination agreement, dated December 22, 2019 (as amended), in April 2020, the Company began to identify two distinct operating segments: a business-to-consumer (“B2C”) segment, which included its Sportsbook, iGaming and DFS product offerings, as well as media and other consumer product offerings, and a business-to-business (“B2B”) segment, which had principal activities involving the design and development of gaming software. However, beginning in the fourth quarter of 2022, as a result of the Company’s integration of the technology and expertise of SBTech, the Company began to view the B2B segment primarily as a cost center of the B2C segment and, therefore, began to operate its business and report its results as a single operating segment. The Company’s determination that it operates as a single segment is consistent with the financial information regularly reviewed by the CODM for purposes of evaluating performance, allocating resources and planning and forecasting for future periods. The Company’s CODM allocates resources and assesses financial performance on a consolidated basis. Prior periods have been reclassified to conform with the new segment presentation. |
Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Issued Accounting Pronouncements Not Yet Adopted In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”), which clarifies the guidance in Accounting Standards Codification Topic 820, Fair Value Measurement (“Topic 820”), when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security and introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. ASU 2022-03 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and early adoption is permitted. While the Company is continuing to assess the timing of adoption and the potential impacts of ASU 2022-03, it does not expect ASU 2022-03 to have a material effect on the Company’s consolidated financial condition, results of operations or cash flows. |
Business Combinations (Tables)
Business Combinations (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Summary of Consideration Transferred at Closing | The following is a summary of the consideration issued on the GNOG Closing Date: Share consideration (1) $ 460,128 Other consideration (2) 143,337 Total consideration $ 603,465 (1) Includes the issuance of approximately 29.3 million shares of DraftKings Inc.’s Class A common stock issued at a price of $15.73. (2) Includes (i) $170.9 million of payments made by the Company on behalf of GNOG, including repayment of the outstanding portion of GNOG’s term loan (including the associated prepayment premium) and payment of certain of GNOG’s transaction expenses incurred in connection with the GNOG Transaction and (ii) warrants that were exercisable for shares of GNOG Class A common stock prior to the GNOG Closing Date, which were assumed by DraftKings in connection with the GNOG Transaction and became eligible to be converted into approximately 2.1 million shares of DraftKings Inc.’s Class A common stock in the aggregate. These payments were partially offset by commercial credits received by the Company from Fertitta Entertainment, Inc. (“FEI”), which can be applied by the Company from time to time to offset future amounts otherwise owed by it to FEI or its affiliates under commercial arrangements among such parties, subject to certain limited exceptions. |
Summary of Acquisition Purchase Price | The following table summarizes the consideration issued or paid in connection with the GNOG Transaction and the fair value of the assets acquired and liabilities assumed in connection with the consummation of the GNOG Transaction on the GNOG Closing Date: Cash and cash equivalents $ 66,709 Cash reserved for users 7,633 Receivables reserved for users 2,814 Accounts receivables 7,783 Prepaid expenses and other current assets 64 Property and equipment, net 1,433 Intangible assets, net 315,000 Operating lease right-of-use assets 1,185 Deposits and other non-current assets 47,395 Total identifiable assets acquired 450,016 Liabilities assumed: Accounts payable and accrued expenses 32,989 Liabilities to users 4,314 Operating lease liabilities 1,185 Other long-term liabilities 78,781 Total liabilities assumed 117,269 Net assets acquired (a) $ 332,747 Purchase consideration (b) $ 603,465 Goodwill (b) – (a) $ 270,718 |
Summary of Intangible Assets Acquired | Fair Value Weighted- Gaming licenses $ 145,000 12.2 years Customer relationships 170,000 5.9 years Total $ 315,000 |
Summary of Pro Forma Information | The financial information in the table below summarizes the combined results of operations of Old DraftKings and GNOG, on an actual and a pro forma basis, as applicable, as though the companies had been combined as of January 1, 2021. The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the GNOG Transaction had been consummated as of the beginning of the periods presented or of results that may occur in the future. Three months ended March 31, 2023 Actual 2022 Pro Forma Revenue $ 769,652 $ 449,109 Net loss $ (397,148) $ (475,774) |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets, Finite-Lived | The Company has the following intangible assets, net as of March 31, 2023: Weighted-Average Remaining Amortization Period Gross Carrying Amount Accumulated Amortization Net Amortized intangible assets: Developed technology 5.1 years $ 422,900 $ (153,462) $ 269,438 Internally developed software 2.4 years 187,017 (80,807) 106,210 Gaming licenses 10.9 years 208,017 (33,747) 174,270 Customer relationships 4.4 years 269,728 (89,127) 180,601 Trademarks, tradenames and other 3.7 years 36,882 (15,518) 21,364 Indefinite-lived intangible assets: Digital assets, net of impairment Indefinite-lived 2,626 — 2,626 Total $ 1,127,170 $ (372,661) $ 754,509 The Company had the following intangible assets, net as of December 31, 2022: Weighted-Average Remaining Amortization Period Gross Carrying Amount Accumulated Amortization Net Amortized intangible assets: Developed technology 5.4 years $ 422,900 $ (140,200) $ 282,700 Internally developed software 2.4 years 168,277 (70,575) 97,702 Gaming licenses 11.0 years 206,655 (29,487) 177,168 Customer relationships 4.6 years 269,728 (75,791) 193,937 Trademarks, tradenames and other 3.8 years 36,193 (13,463) 22,730 Indefinite-lived intangible assets: Digital assets, net of impairment Indefinite-lived 2,697 — 2,697 Intangible assets, net $ 1,106,450 $ (329,516) $ 776,934 |
Schedule of Intangible Assets, Indefinite-Lived | The Company has the following intangible assets, net as of March 31, 2023: Weighted-Average Remaining Amortization Period Gross Carrying Amount Accumulated Amortization Net Amortized intangible assets: Developed technology 5.1 years $ 422,900 $ (153,462) $ 269,438 Internally developed software 2.4 years 187,017 (80,807) 106,210 Gaming licenses 10.9 years 208,017 (33,747) 174,270 Customer relationships 4.4 years 269,728 (89,127) 180,601 Trademarks, tradenames and other 3.7 years 36,882 (15,518) 21,364 Indefinite-lived intangible assets: Digital assets, net of impairment Indefinite-lived 2,626 — 2,626 Total $ 1,127,170 $ (372,661) $ 754,509 The Company had the following intangible assets, net as of December 31, 2022: Weighted-Average Remaining Amortization Period Gross Carrying Amount Accumulated Amortization Net Amortized intangible assets: Developed technology 5.4 years $ 422,900 $ (140,200) $ 282,700 Internally developed software 2.4 years 168,277 (70,575) 97,702 Gaming licenses 11.0 years 206,655 (29,487) 177,168 Customer relationships 4.6 years 269,728 (75,791) 193,937 Trademarks, tradenames and other 3.8 years 36,193 (13,463) 22,730 Indefinite-lived intangible assets: Digital assets, net of impairment Indefinite-lived 2,697 — 2,697 Intangible assets, net $ 1,106,450 $ (329,516) $ 776,934 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Summary of Assets and Liabilities Measured at Fair Value | The following tables set forth the fair value of the Company’s financial assets and liabilities measured at fair value as of March 31, 2023 and December 31, 2022 based on the three-tier fair value hierarchy: March 31, 2023 Level 1 Level 2 Level 3 Total Assets Cash equivalents: Money market funds $ 206,939 (1) $ — $ — $ 206,939 Other current assets: Digital assets held for users — 48,733 (6) — 48,733 Other non-current assets: Derivative instruments — — 25,287 (4) 25,287 Equity securities 19,075 (2) 13,533 (3) — 32,608 Total $ 226,014 $ 62,266 $ 25,287 $ 313,567 Liabilities Digital assets held for users $ — $ 48,733 (6) $ — $ 48,733 Warrant liabilities — 27,715 (5) — 27,715 Total $ — $ 76,448 $ — $ 76,448 December 31, 2022 Level 1 Level 2 Level 3 Total Assets Cash equivalents: Money market funds $ 304,216 (1) $ — $ — $ 304,216 Other current assets: Digital assets held for users — 38,444 (6) — 38,444 Other non-current assets: Derivative instruments — — 26,248 (4) 26,248 Equity securities 18,250 (2) 13,533 (3) — 31,783 Total $ 322,466 $ 51,977 $ 26,248 $ 400,691 Liabilities Digital assets held for users — $ 38,444 (6) — $ 38,444 Warrant liabilities $ — $ 10,680 (5) $ — 10,680 Total $ — $ 49,124 $ — $ 49,124 (1) Represents the Company’s money market funds, which are classified as Level 1 because the Company measures the fair value of these assets using quoted market prices. (2) Represents the Company’s marketable equity securities, which are classified as Level 1 because the Company measures the fair value of these assets using quoted market prices. (3) Represents the Company’s non-marketable equity securities, which are classified as Level 2 because the Company measures the fair value of these assets using observable inputs for similar investments of the same issuer. The Company has elected the remeasurement alternative for these assets. (4) Represents the Company’s derivative instruments held in other public and privately held entities. The Company measures the fair value of these derivative instruments using option pricing models and, accordingly, classifies these assets as Level 3. During the three months ended March 31, 2023, there were no new derivative instruments purchased by or issued to the Company. The table below includes a range and an average weighted by relative fair value of the significant unobservable inputs used to measure the fair value of the Level 3 derivative instruments. A change in these significant unobservable inputs might result in a significantly higher or lower fair value measurement at the reporting date. March 31, 2023 December 31, 2022 Significant Unobservable Input Range (Weighted Average) Range (Weighted Average) Underlying stock price $7.63 - $19.80 ($16.95) $7.30 - $19.80 ($16.53) Volatility 56.0% - 80.0% (74.8%) 56.0% - 80.0% (74.1%) Risk-free rate 1.3% - 4.7% (4.2%) 1.3% - 4.3% (4.1%) (5) The Company measures the fair value of its warrant liabilities using a binomial lattice model or a Black-Scholes model, where appropriate, with the significant assumptions being observable inputs and, accordingly, classifies these liabilities as Level 2. (6) Represents the asset and liability balance for the digital assets held by the Company for its users, which are classified as Level 2 because the Company measures the fair value of these digital assets using observable inputs for similar transactions. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Summary of Deferred Revenue Balances | The deferred revenue balances were as follows: Three months ended March 31, 2023 2022 Deferred revenue, beginning of the period $ 133,851 $ 91,554 Deferred revenue, end of the period $ 132,213 $ 95,402 Revenue recognized in the period from amounts included in deferred revenue at the beginning of the period $ 112,426 $ 51,680 |
Summary of Disaggregation of Revenue | Disaggregation of revenue for the three months ended March 31, 2023 and 2022 is as follows: Three months ended March 31, 2023 2022 Online gaming $ 735,189 $ 386,678 Gaming software 8,610 13,495 Other 25,853 17,032 Total Revenue $ 769,652 $ 417,205 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of Stock Option Activity | The following table shows restricted stock unit (“RSU”) and stock option activity for the three months ended March 31, 2023: Time-Based PSP LTIP Total Weighted Average Exercise Price of Options Weighted Average FMV Options RSUs Options RSUs Options RSUs Outstanding at December 31, 2022 12,259 15,273 2,273 13,119 11,152 13,864 67,940 $ 6.17 $ 29.64 Granted 600 9,560 — 1,990 — 113 12,263 25.81 17.24 Exercised options / vested RSUs (530) (1,700) (171) (1,715) — (8,342) (12,458) 3.13 48.49 Change in awards due to performance-based multiplier — — — 1,142 — — 1,142 — 60.25 Forfeited — (369) — (55) — (41) (465) 4.53 25.67 Outstanding at March 31, 2023 12,329 22,764 2,102 14,481 11,152 5,594 68,422 $ 6.71 $ 21.99 |
Summary of Stock Compensation Expense | The following table shows stock compensation expense for the three months ended March 31, 2023 and 2022: Three months ended March 31, 2023 Three months ended March 31, 2022 Options RSUs Total Options RSUs Total Time-based (1) $ 3,844 $ 44,807 $ 48,651 $ 3,864 $ 21,786 $ 25,650 PSP (2) — 24,015 24,015 — 43,367 43,367 LTIP (2) — 44,734 44,734 — 118,060 118,060 Total $ 3,844 $ 113,556 $ 117,400 $ 3,864 $ 183,213 $ 187,077 (1) Time-based awards vest and are expensed over a defined service period. (2) PSP and LTIP awards vest based on defined performance criteria and are expensed based on the probability of achieving such criteria. During the three months ended March 31, 2022, the Company recorded a cumulative catch-up adjustment of $20.7 million in additional stock-based compensation expense related to its updated expectation on achieving higher revenue targets than originally estimated for certain PSP awards which have a range of payouts. |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Schedule of Company's (Benefit) provision for income taxes | The Company’s provision for income taxes for the three months ended March 31, 2023 and 2022 is as follows: Three months ended March 31, 2023 2022 Income tax provision $ 1,368 $ 469 |
Loss Per Share (Tables)
Loss Per Share (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Loss Per Share and Weighted-Average Shares | The computation of loss per share and weighted-average shares of the Company's Class A common stock outstanding for the periods presented are as follows: Three months ended March 31, 2023 2022 Net loss attributable to common stockholders $ (397,148) $ (467,693) Basic and diluted weighted-average common shares outstanding 455,081 411,066 Loss per share attributable to common stockholders: Basic and diluted $ (0.87) $ (1.14) |
Schedule of Computation of Diluted Shares Outstanding | For the periods presented, the following securities were not required to be included in the computation of diluted shares outstanding: Three months ended March 31, 2023 2022 Class A common stock resulting from exercise of all warrants 3,761 1,613 Stock options and RSUs 68,422 53,512 Convertible notes 13,337 13,337 Total 85,520 68,462 |
Leases, Commitments and Conti_2
Leases, Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Components of Lease Cost and Other Information | The components of lease cost are as follows: Three months ended March 31, 2023 2022 Operating lease cost $ 5,028 $ 4,230 Short term lease cost 1,331 1,755 Variable lease cost 1,119 806 Sublease income (236) (230) Total lease cost $ 7,242 $ 6,561 Supplemental cash flow and other information for the three months ended March 31, 2023 and 2022 related to operating leases was as follows: Three months ended March 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used by operating leases $ 3,165 $ 4,283 Right-of-use assets obtained in exchange for new operating lease liabilities $ 366 $ 619 |
Schedule of Maturity of Lease Liabilities | Maturity of lease liabilities are as follows: Years Ending December 31, From April 1, 2023 to December 31, 2023 $ 5,240 2024 12,252 2025 11,920 2026 11,660 2027 11,518 Thereafter 40,445 Total undiscounted future cash flows 93,035 Less: Imputed interest (22,594) Present value of undiscounted future cash flows $ 70,441 |
Summary of Other Contractual Obligations and Contingencies | The Company is a party to several non-cancelable contracts with vendors where the Company is obligated to make future minimum payments under the terms of these contracts as follows: Years Ending December 31, From April 1, 2023 to December 31, 2023 $ 326,823 2024 418,437 2025 327,388 2026 188,672 2027 107,988 Thereafter 247,196 Total $ 1,616,504 |
Description of Business (Detail
Description of Business (Details) | Mar. 31, 2023 jurisdiction |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of jurisdictions with legalized sports betting in which company operates | 21 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies and Practices (Details) - segment | 1 Months Ended | 3 Months Ended |
Apr. 30, 2020 | Dec. 31, 2022 | |
Accounting Policies [Abstract] | ||
Number of operating segments | 2 | 1 |
Business Combination - Narrativ
Business Combination - Narrative (Details) - GNOG $ in Millions | May 05, 2022 USD ($) shares |
Business Acquisition [Line Items] | |
Issuance of New DraftKings' Class A Common Stock for each Common Share of Golden Nugget Online Gaming | shares | 0.365 |
Shares issued for acquisition (in shares) | shares | 29,300,000 |
Equity interest acquired | 100% |
Long term receivable | $ 30.1 |
B2C reporting unit | |
Business Acquisition [Line Items] | |
Expected tax deductible amount | 160.7 |
Danville GN Casino Loan | |
Business Acquisition [Line Items] | |
Long term receivable | $ 30 |
Business Combination - Summary
Business Combination - Summary of Consideration Transferred at Closing (Details) - GNOG $ / shares in Units, $ in Thousands, shares in Millions | May 05, 2022 USD ($) $ / shares shares |
Business Acquisition [Line Items] | |
Share consideration | $ 460,128 |
Other consideration | 143,337 |
Total consideration | $ 603,465 |
Shares issued for acquisition (in shares) | shares | 29.3 |
Weighted average fair value (in dollars per share) | $ / shares | $ 15.73 |
Payments made by the Company | $ 170,900 |
Issuance of New DraftKings' class A common stock for each common share of Golden Nugget Online Gaming (in shares) | shares | 2.1 |
Business Combinations - Purchas
Business Combinations - Purchase Price Allocation (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | May 05, 2022 |
Business Acquisition [Line Items] | |||
Goodwill | $ 886,373 | $ 886,373 | |
GNOG | |||
Business Acquisition [Line Items] | |||
Cash and cash equivalents | $ 66,709 | ||
Cash reserved for users | 7,633 | ||
Receivables reserved for users | 2,814 | ||
Accounts receivables | 7,783 | ||
Prepaid expenses and other current assets | 64 | ||
Property and equipment, net | 1,433 | ||
Intangible assets, net | 315,000 | ||
Operating lease right-of-use assets | 1,185 | ||
Deposits and other non-current assets | 47,395 | ||
Total identifiable assets acquired | 450,016 | ||
Accounts payable and accrued expenses | 32,989 | ||
Liabilities to users | 4,314 | ||
Operating lease liabilities | 1,185 | ||
Other long-term liabilities | 78,781 | ||
Total liabilities assumed | 117,269 | ||
Net assets acquired | 332,747 | ||
Purchase consideration | 603,465 | ||
Goodwill | $ 270,718 |
Business Combination - Summar_2
Business Combination - Summary of Intangible Assets Acquired (Details) - GNOG $ in Thousands | May 05, 2022 USD ($) |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair Value | $ 315,000 |
Gaming licenses | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair Value | $ 145,000 |
Weighted- Average Useful Life | 12 years 2 months 12 days |
Customer relationships | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair Value | $ 170,000 |
Weighted- Average Useful Life | 5 years 10 months 24 days |
Business Combination - Summar_3
Business Combination - Summary of Pro Forma Information (Details) - GNOG - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||
Net loss, Pro Forma | $ (397,148) | $ (475,774) |
Revenue, Pro Forma | $ 769,652 | $ 449,109 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Finite-Lived Intangible Assets [Line Items] | ||
Accumulated Amortization | $ (372,661) | $ (329,516) |
Indefinite-lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 1,127,170 | 1,106,450 |
Intangible assets, net | 754,509 | 776,934 |
Digital assets, net of impairment | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | $ 2,626 | $ 2,697 |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Remaining Amortization Period | 5 years 1 month 6 days | 5 years 4 months 24 days |
Gross Carrying Amount | $ 422,900 | $ 422,900 |
Accumulated Amortization | (153,462) | (140,200) |
Net | $ 269,438 | $ 282,700 |
Internally developed software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Remaining Amortization Period | 2 years 4 months 24 days | 2 years 4 months 24 days |
Gross Carrying Amount | $ 187,017 | $ 168,277 |
Accumulated Amortization | (80,807) | (70,575) |
Net | $ 106,210 | $ 97,702 |
Gaming licenses | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Remaining Amortization Period | 10 years 10 months 24 days | 11 years |
Gross Carrying Amount | $ 208,017 | $ 206,655 |
Accumulated Amortization | (33,747) | (29,487) |
Net | $ 174,270 | $ 177,168 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Remaining Amortization Period | 4 years 4 months 24 days | 4 years 7 months 6 days |
Gross Carrying Amount | $ 269,728 | $ 269,728 |
Accumulated Amortization | (89,127) | (75,791) |
Net | $ 180,601 | $ 193,937 |
Trademarks, tradenames and other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Remaining Amortization Period | 3 years 8 months 12 days | 3 years 9 months 18 days |
Gross Carrying Amount | $ 36,882 | $ 36,193 |
Accumulated Amortization | (15,518) | (13,463) |
Net | $ 21,364 | $ 22,730 |
Intangible Assets - Additional
Intangible Assets - Additional information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Finite-Lived Intangible Assets, Net [Abstract] | ||
Amortization expense | $ 43.1 | $ 28.1 |
Current and Long-term Liabili_2
Current and Long-term Liabilities - Revolving Line of Credit (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2023 | Dec. 20, 2022 | Oct. 31, 2016 | |
Revolving Line of Credit | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing capacity | $ 125 | ||
Principal outstanding | 0 | ||
Net facility available | $ 122.7 | ||
Revolving Line of Credit | Prime Rate | |||
Line of Credit Facility [Line Items] | |||
Variable interest rate spread | 1% | ||
Variable annual interest rate floor | 5% | ||
Quarterly in arrears fee per annum | 0.25% | ||
Revolving Line of Credit | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing capacity | $ 125 | $ 60 |
Current and Long-term Liabili_3
Current and Long-term Liabilities - Surety Bonds (Details) - Surety Bond $ in Millions | Mar. 31, 2023 USD ($) |
Line of Credit Facility [Line Items] | |
Maximum borrowing capacity | $ 125 |
Combined annual premium cost | 0.50% |
Current and Long-term Liabili_4
Current and Long-term Liabilities - Convertible Notes and Indirect Taxes (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Mar. 31, 2021 USD ($) $ / shares | Mar. 31, 2023 USD ($) | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Line of Credit Facility [Line Items] | ||||
Convertible notes, net of issuance costs | $ 1,251,758 | $ 1,251,103 | ||
Estimated liability for indirect taxes | 63,600 | 60,300 | ||
Convertible Noteholders | ||||
Line of Credit Facility [Line Items] | ||||
Aggregate principle amount | $ 1,265,000 | |||
Lender fees | 17,000 | |||
Debt financing costs | $ 1,700 | |||
Conversion price (in dollars per share) | $ / shares | $ 94.85 | |||
Strike price (in dollars per share) | $ / shares | 94.85 | |||
Cap price (in dollars per share) | $ / shares | $ 135.50 | |||
Net cost incurred | $ 124,000 | |||
Debt issuance costs | 13,200 | |||
Amortization of debt issuance costs | 700 | $ 700 | ||
Fair value of convertible notes | $ 883,900 | $ 786,500 | ||
Conversion ratio | 0.010543 |
Current and Long-term Liabili_5
Current and Long-term Liabilities - Warrant Liabilities (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||||
May 05, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | May 14, 2019 | |
Liabilities, Other than Long-term Debt, Noncurrent [Abstract] | |||||
Loss (gain) on remeasurement of warrant liabilities | $ 17,035 | $ (12,681) | |||
Fair Value, Recurring | |||||
Liabilities, Other than Long-term Debt, Noncurrent [Abstract] | |||||
Warrant liabilities | 27,715 | $ 10,680 | |||
Level 2 | Fair Value, Recurring | |||||
Liabilities, Other than Long-term Debt, Noncurrent [Abstract] | |||||
Warrant liabilities | $ 27,715 | $ 10,680 | |||
GNOG | |||||
Liabilities, Other than Long-term Debt, Noncurrent [Abstract] | |||||
Issuance of New DraftKings' Class A Common Stock for each Common Share of Golden Nugget Online Gaming | 0.365 | ||||
Issuance of New DraftKings' class A common stock for each common share of Golden Nugget Online Gaming (in shares) | 2,100,000 | ||||
Public Warrants | |||||
Liabilities, Other than Long-term Debt, Noncurrent [Abstract] | |||||
Number of warrants issued (in shares) | 13,300,000 | ||||
Number of shares issuable per warrant (in shares) | 1 | ||||
Price per warrant (in dollars per share) | $ 11.50 | ||||
Number of warrants outstanding (in shares) | 0 | 0 | |||
Private Placement Warrants | |||||
Liabilities, Other than Long-term Debt, Noncurrent [Abstract] | |||||
Number of warrants issued (in shares) | 6,300,000 | ||||
Number of shares issuable per warrant (in shares) | 1 | ||||
Price per warrant (in dollars per share) | $ 11.50 | ||||
Number of warrants outstanding (in shares) | 1,600,000 | 1,600,000 | |||
Private Placement Warrants | GNOG | |||||
Liabilities, Other than Long-term Debt, Noncurrent [Abstract] | |||||
Number of warrants issued (in shares) | 5,900,000 | 5,900,000 | |||
Number of shares issuable per warrant (in shares) | 1 | ||||
Price per warrant (in dollars per share) | $ 11.50 | ||||
Outstanding exercisable warrants (in dollars per share) | $ 31.50 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 |
Liabilities | |||
Derivative Asset, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Deposits and other non-current assets | Deposits and other non-current assets | |
Fair Value, Recurring | |||
Assets | |||
Digital assets held for users | $ 48,733 | $ 38,444 | |
Derivative instruments | 25,287 | 26,248 | |
Equity securities | 32,608 | 31,783 | |
Assets | 313,567 | 400,691 | |
Liabilities | |||
Digital assets held for users | 48,733 | 38,444 | |
Warrant liabilities | 27,715 | 10,680 | |
Liabilities | 76,448 | 49,124 | |
Fair Value, Recurring | Level 1 | |||
Assets | |||
Digital assets held for users | 0 | 0 | |
Derivative instruments | 0 | 0 | |
Equity securities | 19,075 | 18,250 | |
Assets | 226,014 | 322,466 | |
Liabilities | |||
Digital assets held for users | 0 | 0 | |
Warrant liabilities | 0 | 0 | |
Liabilities | 0 | 0 | |
Fair Value, Recurring | Level 2 | |||
Assets | |||
Digital assets held for users | 48,733 | 38,444 | |
Derivative instruments | 0 | 0 | |
Equity securities | 13,533 | 13,533 | |
Assets | 62,266 | 51,977 | |
Liabilities | |||
Digital assets held for users | 48,733 | 38,444 | |
Warrant liabilities | 27,715 | 10,680 | |
Liabilities | 76,448 | 49,124 | |
Fair Value, Recurring | Level 3 | |||
Assets | |||
Digital assets held for users | 0 | 0 | |
Derivative instruments | 25,287 | 26,248 | |
Equity securities | 0 | 0 | |
Assets | 25,287 | 26,248 | |
Liabilities | |||
Digital assets held for users | 0 | 0 | |
Warrant liabilities | 0 | 0 | |
Liabilities | 0 | 0 | |
Money market funds | Fair Value, Recurring | |||
Assets | |||
Cash equivalents | 206,939 | 304,216 | |
Money market funds | Fair Value, Recurring | Level 1 | |||
Assets | |||
Cash equivalents | 206,939 | 304,216 | |
Money market funds | Fair Value, Recurring | Level 2 | |||
Assets | |||
Cash equivalents | 0 | 0 | |
Money market funds | Fair Value, Recurring | Level 3 | |||
Assets | |||
Cash equivalents | $ 0 | $ 0 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value Assumptions (Details) - Level 3 | Mar. 31, 2023 $ / shares | Dec. 31, 2022 $ / shares |
Underlying stock price | Minimum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Measurement input | 7.63 | 7.30 |
Underlying stock price | Maximum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Measurement input | 19.80 | 19.80 |
Underlying stock price | Weighted Average | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Measurement input | 16.95 | 16.53 |
Volatility | Minimum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Measurement input | 0.560 | 0.560 |
Volatility | Maximum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Measurement input | 0.800 | 0.800 |
Volatility | Weighted Average | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Measurement input | 0.748 | 0.741 |
Risk-free rate | Minimum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Measurement input | 0.013 | 0.013 |
Risk-free rate | Maximum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Measurement input | 0.047 | 0.043 |
Risk-free rate | Weighted Average | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Measurement input | 0.042 | 0.041 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Fair Value Disclosures [Abstract] | ||
Unrealized gains | $ 0.1 | $ 37.4 |
Revenue Recognition - Deferred
Revenue Recognition - Deferred Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | ||
Deferred revenue, beginning of the period | $ 133,851 | $ 91,554 |
Deferred revenue, end of the period | 132,213 | 95,402 |
Revenue recognized in the period from amounts included in deferred revenue at the beginning of the period | $ 112,426 | $ 51,680 |
Revenue Recognition - Revenue D
Revenue Recognition - Revenue Disaggregation (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 769,652 | $ 417,205 |
Online gaming | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 735,189 | 386,678 |
Gaming software | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 8,610 | 13,495 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 25,853 | $ 17,032 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2023 USD ($) segment | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Total unrecognized stock-based compensation expense | $ | $ 689.8 |
Total unrecognized stock-based compensation expense expected to be recognized over a weighted-average period | 3 years 1 month 6 days |
Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Stock based compensation expiration period | 7 years |
Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Stock based compensation expiration period | 10 years |
Stock options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of types of stock-based compensation | segment | 3 |
Stock options | Stock Option And Restricted Stock Incentive Plan2012 And Equity Incentive2017 And Equity Incentive2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period | 4 years |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock option activity (Details) shares in Thousands | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Options Activity | |
Number of shares outstanding, beginning of period (in shares) | 67,940 |
Number of shares granted (in shares) | 12,263 |
Number of shares exercised (in shares) | (12,458) |
Number of shares changed in awards due to performance-based multiplier (in shares) | 1,142 |
Number of shares forfeited (in shares) | (465) |
Number of shares outstanding, end of period (in shares) | 68,422 |
Stock options | |
Weighted-Average Exercise Price | |
Weighted average exercise price outstanding, beginning of period (in dollars per share) | $ / shares | $ 6.17 |
Weighted average exercise price granted (in dollars per share) | $ / shares | 25.81 |
Weighted average exercise price exercised (in dollars per share) | $ / shares | 3.13 |
Weighted average exercise price change in awards due to performance-based multiplier (in dollars per share) | $ / shares | 0 |
Weighted average exercise price forfeited (in dollars per share) | $ / shares | 4.53 |
Weighted average exercise price outstanding, end of period (in dollars per share) | $ / shares | $ 6.71 |
Time Based Options | |
Options Activity | |
Number of shares outstanding, beginning of period (in shares) | 12,259 |
Number of shares granted (in shares) | 600 |
Number of shares exercised (in shares) | (530) |
Number of shares changed in awards due to performance-based multiplier (in shares) | 0 |
Number of shares forfeited (in shares) | 0 |
Number of shares outstanding, end of period (in shares) | 12,329 |
Time Based RSUs | |
Options Activity | |
Number of shares outstanding, beginning of period (in shares) | 15,273 |
Number of shares granted (in shares) | 9,560 |
Number of shares exercised (in shares) | (1,700) |
Number of shares changed in awards due to performance-based multiplier (in shares) | 0 |
Number of shares forfeited (in shares) | (369) |
Number of shares outstanding, end of period (in shares) | 22,764 |
PSP Options | |
Options Activity | |
Number of shares outstanding, beginning of period (in shares) | 2,273 |
Number of shares granted (in shares) | 0 |
Number of shares exercised (in shares) | (171) |
Number of shares changed in awards due to performance-based multiplier (in shares) | 0 |
Number of shares forfeited (in shares) | 0 |
Number of shares outstanding, end of period (in shares) | 2,102 |
PSP RSUs | |
Options Activity | |
Number of shares outstanding, beginning of period (in shares) | 13,119 |
Number of shares granted (in shares) | 1,990 |
Number of shares exercised (in shares) | (1,715) |
Number of shares changed in awards due to performance-based multiplier (in shares) | 1,142 |
Number of shares forfeited (in shares) | (55) |
Number of shares outstanding, end of period (in shares) | 14,481 |
LTIP Options | |
Options Activity | |
Number of shares outstanding, beginning of period (in shares) | 11,152 |
Number of shares granted (in shares) | 0 |
Number of shares exercised (in shares) | 0 |
Number of shares changed in awards due to performance-based multiplier (in shares) | 0 |
Number of shares forfeited (in shares) | 0 |
Number of shares outstanding, end of period (in shares) | 11,152 |
LTIP RSUs | |
Options Activity | |
Number of shares outstanding, beginning of period (in shares) | 13,864 |
Number of shares granted (in shares) | 113 |
Number of shares exercised (in shares) | (8,342) |
Number of shares changed in awards due to performance-based multiplier (in shares) | 0 |
Number of shares forfeited (in shares) | (41) |
Number of shares outstanding, end of period (in shares) | 5,594 |
RSUs | |
Weighted-Average Exercise Price | |
Weighted average exercise price outstanding, beginning of period (in dollars per share) | $ / shares | $ 29.64 |
Weighted average exercise price granted (in dollars per share) | $ / shares | 17.24 |
Weighted average exercise price exercised (in dollars per share) | $ / shares | 48.49 |
Weighted average exercise price change in awards due to performance-based multiplier (in dollars per share) | $ / shares | 60.25 |
Weighted average exercise price forfeited (in dollars per share) | $ / shares | 25.67 |
Weighted average exercise price outstanding, end of period (in dollars per share) | $ / shares | $ 21.99 |
Stock-Based Compensation - St_2
Stock-Based Compensation - Stock compensation expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock compensation expense, Options | $ 3,844 | $ 3,864 |
Stock compensation expense, RSU | 113,556 | 183,213 |
Stock compensation expense | 117,400 | 187,077 |
Time Based | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock compensation expense, Options | 3,844 | 3,864 |
Stock compensation expense, RSU | 44,807 | 21,786 |
Stock compensation expense | 48,651 | 25,650 |
PSP | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock compensation expense, Options | 0 | 0 |
Stock compensation expense, RSU | 24,015 | 43,367 |
Stock compensation expense | 24,015 | 43,367 |
Cumulative catch up expense | 20,700 | |
LTIP | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock compensation expense, Options | 0 | 0 |
Stock compensation expense, RSU | 44,734 | 118,060 |
Stock compensation expense | $ 44,734 | $ 118,060 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of the federal income tax rate (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Reconciliation of the federal income tax rate to the Company's effective tax rate | ||
Income tax provision | $ 1,368 | $ 469 |
Effective tax rate | (0.30%) | (0.10%) |
Loss Per Share (Details)
Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Earnings Per Share [Abstract] | ||
Net loss | $ (397,148) | $ (467,693) |
Weighted-average common shares outstanding, Basic (in shares) | 455,081 | 411,066 |
Weighted-average common shares outstanding, Diluted (in shares) | 455,081 | 411,066 |
Loss per share attributable to common stockholders: | ||
Basic (in dollars per share) | $ (0.87) | $ (1.14) |
Diluted (in dollars per share) | $ (0.87) | $ (1.14) |
Loss Per Share - Diluted shares
Loss Per Share - Diluted shares outstanding (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 85,520 | 68,462 |
Class A common stock resulting from exercise of all warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 3,761 | 1,613 |
Stock options and RSUs | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 68,422 | 53,512 |
Convertible notes | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 13,337 | 13,337 |
Related-Party Transactions (Det
Related-Party Transactions (Details) - USD ($) $ in Millions | 3 Months Ended | ||||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 30, 2023 | Dec. 31, 2022 | Mar. 30, 2022 | |
Related Party Transaction [Line Items] | |||||
Revenue from related parties | $ 0.6 | ||||
Shareholders and Directors | |||||
Related Party Transaction [Line Items] | |||||
Revenue from related parties | $ 0.7 | ||||
SB Tech | |||||
Related Party Transaction [Line Items] | |||||
Accounts receivable | 0.3 | $ 0.2 | |||
Entity controlled by CEO | |||||
Related Party Transaction [Line Items] | |||||
Aircraft lease cost incurred | 0.1 | ||||
Equity Method Investee | |||||
Related Party Transaction [Line Items] | |||||
Total administrative services expenses | 0.1 | $ 0.2 | |||
Equity Method Investee | DBDK Venture Fund | |||||
Related Party Transaction [Line Items] | |||||
Investment commitment | 17.5 | ||||
Investment amount | $ 6.7 | ||||
Aircraft Lease | Chief Executive Officer | |||||
Related Party Transaction [Line Items] | |||||
Total administrative services expenses | $ 0.7 | ||||
Aircraft Lease | Entity controlled by CEO | |||||
Related Party Transaction [Line Items] | |||||
Term of aircraft lease | 1 year | 1 year | |||
Related party aircraft lease amount | $ 0.6 | $ 0.6 |
Leases, Commitments and Conti_3
Leases, Commitments and Contingencies - Narrative (Details) | Sep. 09, 2022 claim | Feb. 07, 2022 patent | Dec. 01, 2021 patent | Nov. 22, 2021 patent | Oct. 21, 2021 claim | Oct. 12, 2021 patent | Aug. 19, 2021 patent | Jul. 28, 2021 patent | Jul. 02, 2021 claim | Jun. 14, 2019 patent | Mar. 31, 2023 |
Property, Plant and Equipment [Line Items] | |||||||||||
Weighted-average remaining lease term, operating leases | 8 years 3 months 18 days | ||||||||||
Weighted-average discount rate, operating leases | 6.50% | ||||||||||
Interactive Games LLC | Daily Fantasy Sports | |||||||||||
Property, Plant and Equipment [Line Items] | |||||||||||
Number of patents | 2 | ||||||||||
Interactive Games LLC | Sportsbook product | |||||||||||
Property, Plant and Equipment [Line Items] | |||||||||||
Number of patents | 2 | ||||||||||
Winview Inc. | Daily Fantasy Sports | |||||||||||
Property, Plant and Equipment [Line Items] | |||||||||||
Number of patents | 1 | ||||||||||
Winview Inc. | Sportsbook product | |||||||||||
Property, Plant and Equipment [Line Items] | |||||||||||
Number of patents | 2 | ||||||||||
Securities Matters | |||||||||||
Property, Plant and Equipment [Line Items] | |||||||||||
Number of cases | claim | 2 | ||||||||||
Shareholder Derivative Litigation | |||||||||||
Property, Plant and Equipment [Line Items] | |||||||||||
Number of cases | claim | 5 | ||||||||||
Shareholder Derivative Litigation, US District Court of Nevada | |||||||||||
Property, Plant and Equipment [Line Items] | |||||||||||
Number of cases | claim | 2 | ||||||||||
GNOG | |||||||||||
Property, Plant and Equipment [Line Items] | |||||||||||
Number of cases | claim | 2 | ||||||||||
Arrow Gaming Matter | |||||||||||
Property, Plant and Equipment [Line Items] | |||||||||||
Number of patents | 1 | 4 | |||||||||
Beteiro, LLC Matter | |||||||||||
Property, Plant and Equipment [Line Items] | |||||||||||
Number of patents | 4 | ||||||||||
Diogenes Ltd. & Colossus (IOM) Ltd. Matter | |||||||||||
Property, Plant and Equipment [Line Items] | |||||||||||
Number of patents | 1 | 7 | |||||||||
Maximum | |||||||||||
Property, Plant and Equipment [Line Items] | |||||||||||
Lease agreement term | 10 years |
Leases, Commitments and Conti_4
Leases, Commitments and Contingencies - Components of Lease Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease cost | $ 5,028 | $ 4,230 |
Short term lease cost | 1,331 | 1,755 |
Variable lease cost | 1,119 | 806 |
Sublease income | (236) | (230) |
Total lease cost | $ 7,242 | $ 6,561 |
Leases, Commitments and Conti_5
Leases, Commitments and Contingencies - Other Information Related to Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows used by operating leases | $ 3,165 | $ 4,283 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 366 | $ 619 |
Leases, Commitments and Conti_6
Leases, Commitments and Contingencies - Maturity of Lease Liabilities (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |
From April 1, 2023 to December 31, 2023 | $ 5,240 |
2024 | 12,252 |
2025 | 11,920 |
2026 | 11,660 |
2027 | 11,518 |
Thereafter | 40,445 |
Total undiscounted future cash flows | 93,035 |
Less: Imputed interest | (22,594) |
Present value of undiscounted future cash flows | $ 70,441 |
Leases, Commitments and Conti_7
Leases, Commitments and Contingencies - Other Contractual Obligations and Contingencies (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
From April 1, 2023 to December 31, 2023 | $ 326,823 |
2024 | 418,437 |
2025 | 327,388 |
2026 | 188,672 |
2027 | 107,988 |
Thereafter | 247,196 |
Total | $ 1,616,504 |