DEFM14A 1 tv539133-defm14a.htm DEFM14A tv539133-defm14a - none - 85.660533s
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.      )
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Preliminary Proxy Statement

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Soliciting Material Pursuant to 240.14a-12
Diamond Eagle Acquisition Corp.
(Name of Registrant as Specified In Its Charter)
   
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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[MISSING IMAGE: lg_draftkings-4c.jpg]
PROXY STATEMENT OF
DIAMOND EAGLE ACQUISITION CORP.
PROSPECTUS FOR
50,000,000 SHARES OF CLASS A COMMON STOCK AND
19,666,667 SHARES OF CLASS A COMMON STOCK UNDERLYING WARRANTS OF DEAC NV
MERGER CORP. (WHICH WILL BE RENAMED DRAFTKINGS INC.)
The board of directors of Diamond Eagle Acquisition Corp., a Delaware corporation (“DEAC,” “we,” “us” or “our”), has unanimously approved the business combination agreement, dated as of December 22, 2019 (as amended on April 7, 2020, the “BCA” or the “Business Combination Agreement”), by and among DEAC, DraftKings Inc., a Delaware corporation (“DraftKings”), SBTech (Global) Limited, a company limited by shares, originally incorporated in Gibraltar and continued as a company under the Isle of Man Companies Act 2006, with registration number 014119V (“SBT” or “SBTech”), DEAC NV Merger Corp., a Nevada corporation and a wholly-owned subsidiary of DEAC (“DEAC Nevada”), DEAC Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of DEAC (“Merger Sub”), the shareholders of SBT who are party thereto (the “SBT Sellers”) and the SBT Sellers’ Representative, pursuant to which (i) DEAC will merge with and into DEAC Nevada, with DEAC Nevada surviving the merger (the “reincorporation”), (ii) following the reincorporation, Merger Sub will merge with and into DraftKings, with DraftKings surviving the merger (the “DK Merger”) and the stockholders of DraftKings will receive shares of Class A common stock and Class B common stock of New DraftKings (as defined below) and (iii) immediately following the DK Merger, DEAC Nevada will acquire all of the issued and outstanding share capital of SBT for a combination of cash and stock consideration. Upon consummation of the transactions contemplated by the BCA (the “Business Combination”), each of DraftKings and SBT will be wholly-owned subsidiaries of DEAC Nevada, which will be renamed “DraftKings Inc.” and is referred to herein as “New DraftKings” both as of the time of the reincorporation and following such change of name.
As described in this proxy statement/prospectus, DEAC’s stockholders are being asked to consider and vote upon (among other things) the Business Combination, the reincorporation and the other proposals set forth herein.
Under the BCA, DEAC has agreed to combine with DraftKings and SBT for approximately $2.7 billion (with the apportionment of shares as among DEAC, DraftKings and SBTech equity holders based on the liquidation value of DEAC Class A common stock), of which (A) approximately $2.055 billion will be paid to (i) the current equityholders of DraftKings, including Jason Robins, the Chief Executive Officer of DraftKings (and of New DraftKings following the completion of the Business Combination) (the “DK Equityholders”) in the form of shares of Class A common stock of New DraftKings, valued at the redemption price for DEAC’s public shares in the Business Combination, plus in the case of Mr. Robins, a number of shares of Class B common stock of New DraftKings as a result of which he will have approximately 90% of the voting power of the capital stock of New DraftKings on a fully-diluted basis and (ii) holders of vested options and warrants exercisable for DraftKings equity in the form of newly issued options and warrants of New DraftKings exercisable for New DraftKings Class A common stock and (B) approximately €590 million will be paid to the SBT Sellers and holders of vested in-the-money options exercisable for equity of SBT, consisting of  (i) €180 million in cash, subject to customary net debt and working capital adjustments as well as certain other specified items (the “Cash Consideration”) payable in respect of the SBT shares and 30% of the in-the-money vested SBT options (“Cashed-Out SBT Options”) and (ii) approximately €410 million in shares of New DraftKings Class A common stock, valued at the redemption price for DEAC’s public shares in the Business Combination, and in the form of newly issued in-the-money vested options of New DraftKings exercisable for New DraftKings Class A common stock. Outstanding options exercisable for DraftKings or SBT equity (other than Cashed-Out SBT Options, for which the holders will receive a portion of the Cash Consideration for such options) will be converted into options exercisable for shares of New DraftKings Class A common stock. After the execution of the BCA, DraftKings granted restricted stock units to certain of its employees, which will be converted into restricted stock units denominated in New DraftKings Class A common stock.The Cash Consideration will be funded from the following sources: (1) proceeds available from the trust account established in connection with DEAC’s initial public offering (the “trust account”), after giving effect to any and all

redemptions; and (2) proceeds from private placements of shares of DEAC’s Class A common stock to certain institutional investors to occur immediately prior to the closing of the Business Combination (the “Closing”), of which DEAC currently has commitments for $304.7 million of proceeds (the “Private Placement”).
On the effective date of the reincorporation, the currently issued and outstanding shares of DEAC Class B common stock will automatically convert, on a one-for-one basis, into shares of DEAC Class A common stock in accordance with the terms of the amended and restated certificate of incorporation of DEAC (the “Current Charter”). In connection with the Closing, the currently issued and outstanding shares of DEAC Class A common stock will be exchanged, on a one-for-one basis, for shares of New DraftKings Class A common stock. Similarly, all of DEAC’s outstanding warrants will become warrants to acquire shares of New DraftKings Class A common stock on the same terms as DEAC’s currently outstanding warrants. In addition, on the effective date, all of DEAC’s outstanding units (each of which consists of one share of DEAC Class A common stock and one-third of one warrant to purchase one share of DEAC Class A common stock) will be separated into its component share of Class A common stock and one-third of one warrant.
Subject to approval by DEAC Stockholders of the Business Combination Proposal, the Reincorporation Proposal and the Charter Proposal, New DraftKings will adopt a dual class stock structure comparable to the one that will be in effect at DraftKings immediately prior to the Closing, comprised of Class A common stock, which will carry one vote per share, and Class B common stock, which will carry 10 votes per share. Upon the Closing, all stockholders of New DraftKings will hold only shares of New DraftKings Class A common stock, except for Mr. Robins, who will hold shares of New DraftKings Class A common stock and shares of New DraftKings Class B common stock. Immediately following the Closing, and by virtue of his holdings of New DraftKings Class A common stock and New DraftKings Class B common stock, Mr. Robins is expected to hold approximately 90% of the voting power of the capital stock of New DraftKings on a fully-diluted basis. The New DraftKings Class B common stock will not be entitled to dividends and will have only a nominal participation in any liquidation of New DraftKings, which participation will rank junior to the New DraftKings Class A common stock. The New DraftKings Class B common stock is also subject to a “sunset” if Mr. Robins no longer (i) serves in a senior executive or board role, or (ii) holds more than a specified amount of New DraftKings shares. See “Description of New DraftKings Securities — New DraftKings Common Stock — Class B Common Stock — Mandatory Cancellation.
This proxy statement/prospectus covers the following securities of New DraftKings to be issued in the reincorporation: (i) 50,000,000 shares of New DraftKings Class A common stock, representing (A) currently issued and outstanding public shares, and (B) shares of DEAC Class A common stock that will be issued immediately prior to the reincorporation upon conversion of 10,000,000 shares of DEAC Class B common stock in accordance with the Current Charter and (ii) 19,666,667 shares of New DraftKings Class A common stock underlying the 19,666,667 warrants to purchase shares of DEAC Class A common stock that will be converted into warrants to purchase shares of New DraftKings Class A common stock in connection with the Business Combination.
DEAC’s units, shares of Class A common stock and public warrants are currently listed on The Nasdaq Capital Market under the symbols “DEACU,” “DEAC” and “DEACW,” respectively. DEAC intends to apply to continue the listing of the shares of New DraftKings Class A common stock and public warrants effective upon the consummation of the Business Combination on The Nasdaq Global Market (“Nasdaq”) under the proposed symbols “DKNG” and “DKNGW,” respectively.
This proxy statement/prospectus provides you with detailed information about the Business Combination and other matters to be considered at the Special Meeting. We urge you to carefully read this entire document and the documents incorporated herein by reference. You should also carefully consider the risk factors described in “Risk Factors” beginning on page 47 of this proxy statement/prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the transactions described in this proxy statement/prospectus, passed upon the fairness of the BCA or the transactions contemplated thereby, or passed upon the adequacy or accuracy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.
This proxy statement/prospectus is dated April 15, 2020, and is first being mailed to DEAC stockholders on or about April 15, 2020.

DIAMOND EAGLE ACQUISITION CORP.
2121 Avenue of the Stars, Suite 2300
Los Angeles, California 90067
NOTICE OF RECONVENED SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 23, 2020
TO THE STOCKHOLDERS OF DIAMOND EAGLE ACQUISITION CORP.:
NOTICE IS HEREBY GIVEN that a special meeting (the “Special Meeting”) of the stockholders of Diamond Eagle Acquisition Corp., a Delaware corporation (“DEAC,” “we,” “us” or “our”), initially convened on April 9, 2020, will be reconvened at 9:00 a.m., New York City time, on April 23, 2020, in virtual format. You are cordially invited to attend the Special Meeting, which will be held for the following purposes:
(a)
Proposal No. 1 — The Business Combination Proposal — to consider and vote upon a proposal to approve the business combination agreement, dated as of December 22, 2019 (as amended on April 7, 2020, the “BCA” or the “Business Combination Agreement”), by and among DEAC, DraftKings Inc., a Delaware corporation (“DraftKings”), SBTech (Global) Limited, a company limited by shares, originally incorporated in Gibraltar and continued as a company under the Isle of Man Companies Act 2006, with registration number 014119V (“SBTech”), DEAC NV Merger Corp., a Nevada corporation and a wholly-owned subsidiary of DEAC (“DEAC Nevada”), DEAC Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of DEAC (“Merger Sub”), the shareholders of SBT party thereto (the “SBT Sellers”) and the SBT Sellers’ Representative, pursuant to which (i) DEAC will merge with and into DEAC Nevada, with DEAC Nevada surviving the merger (the “reincorporation”), (ii) following the reincorporation, Merger Sub will merge with and into DraftKings, with DraftKings surviving the merger (the “DK Merger”), (iii) immediately following the DK Merger, DEAC Nevada will acquire all of the issued and outstanding share capital of SBTech and (iv) DEAC Nevada will be renamed DraftKings Inc. (the transactions contemplated by the BCA, the “Business Combination” and such proposal, the “Business Combination Proposal”);
(b)
Proposal No. 2 — The Reincorporation Proposal — to consider and vote upon a proposal to approve, assuming the Business Combination Proposal is approved and adopted, the change of DEAC’s jurisdiction of incorporation from the State of Delaware to the State of Nevada through the reincorporation. In connection with the reincorporation, DEAC will replace its current amended and restated certificate of incorporation (the “Current Charter”) with the proposed amended and restated articles of incorporation (the “Proposed Charter”) of DEAC Nevada, to be renamed DraftKings Inc. following the reincorporation (“New DraftKings”) (we refer to such proposal as the “Reincorporation Proposal”);
(c)
Proposal No. 3 — The Charter Proposal — to consider and vote upon a proposal to approve, assuming each of the Business Combination Proposal and the Reincorporation Proposal is approved and adopted, the Proposed Charter of New DraftKings in connection with the reincorporation (we refer to such proposal as the “Charter Proposal”);
(d)
Proposal No. 4 — The Advisory Charter Proposals — to approve and adopt, on a non-binding advisory basis, certain differences between the Current Charter and the Proposed Charter, which are being presented in accordance with the requirements of the U.S. Securities and Exchange Commission (the “SEC”) as nine separate sub-proposals (which we refer to, collectively, as the “Advisory Charter Proposals”):
(1)
Advisory Charter Proposal A — New DraftKings will have 2,100,000,000 shares of authorized capital stock, which will consist of  (i) 900,000,000 shares of Class A common stock of New DraftKings, par value $0.0001 per share (“New DraftKings Class A common stock”), (ii) 900,000,000 shares of Class B common stock of New DraftKings, par value $0.0001 per share (“New DraftKings Class B common stock”) and (iii) 300,000,000 shares of preferred stock, par value $0.0001 per share, as opposed to DEAC having 401,000,000 shares of capital stock authorized, consisting of  (i) 380,000,000 shares of Class A common stock of DEAC, par value

$0.0001 per share (“DEAC Class A common stock”), (ii) 20,000,000 shares of Class B common stock of DEAC, par value $0.0001 per share (“DEAC Class B common stock”) and (iii) 1,000,000 shares of preferred stock, par value $0.0001 per share;
(2)
Advisory Charter Proposal B — Holders of shares of New DraftKings Class A common stock will be entitled to cast one vote per share of New DraftKings Class A common stock and holders of shares of New DraftKings Class B common stock will be entitled to cast 10 votes per share of New DraftKings Class B common stock on each matter properly submitted to New DraftKings’ stockholders entitled to vote, as opposed to each share of DEAC Class A common stock and DEAC Class B common stock being entitled to one vote per share on each matter properly submitted to DEAC’s stockholders entitled to vote;
(3)
Advisory Charter Proposal C — Each member of the board of directors of New DraftKings will be elected at each annual meeting of stockholders (or special meeting in lieu thereof), as opposed to DEAC having three classes of directors, with only one class of directors being elected in each year and each class serving a three-year term;
(4)
Advisory Charter Proposal D — Any action required or permitted to be taken by the stockholders of New DraftKings may be taken by written consent until the time that Mr. Robins no longer beneficially owns at least a majority of the voting power of the capital stock of New DraftKings, as opposed to only holders of shares of DEAC Class B common stock having the ability to take stockholder action by written consent;
(5)
Advisory Charter Proposal E — The Eighth Judicial District Court of Clark County, Nevada, or under certain circumstances another state or federal court located within the State of Nevada, will be the exclusive forum for certain actions and claims, as opposed to the Court of Chancery of the State of Delaware or under certain circumstances another state or federal court located within the State of Delaware;
(6)
Advisory Charter Proposal F — Amendments to certain provisions of the Proposed Charter will require either the affirmative vote of the holders of at least two-thirds of the voting power of the outstanding capital stock of New DraftKings or the affirmative vote of the holders of a majority of the voting power of the outstanding capital stock of New DraftKings, depending on the number of shares of New DraftKings capital stock beneficially owned by Mr. Robins at such time, as opposed to amendments to certain provisions of the Current Charter requiring an amendment to be conducted in accordance with Delaware law, subject to certain exceptions;
(7)
Advisory Charter Proposal G — The bylaws of New DraftKings may be amended, altered, rescinded or repealed or adopted either (x) by the New DraftKings board of directors or (y) (i) the affirmative vote of the holders of at least two-thirds of the voting power of the capital stock of New DraftKings or (ii) the affirmative vote of the holders of a majority of the voting power of the outstanding capital stock of New DraftKings, depending on the number of shares of New DraftKings capital stock beneficially owned by Mr. Robins at such time, as opposed to the bylaws of DEAC requiring the approval of a majority of the board of directors of DEAC or by the holders of a majority of DEAC’s outstanding shares;
(8)
Advisory Charter Proposal H — The number of directors will be fixed and may be modified either (i) by the New DraftKings board of directors or (ii) by the affirmative vote of the holders of at least two-thirds of the voting power of the outstanding capital stock of New DraftKings, depending on the number of shares of New DraftKings capital stock beneficially owned by Mr. Robins at such time, as opposed to the number of directors being determined by DEAC’s board of directors; and
(9)
Advisory Charter Proposal I — The Proposed Charter will provide New DraftKings with certain rights to require the sale and transfer of New DraftKings capital stock owned or controlled by any stockholders that fail to comply with applicable gaming laws or their affiliates, and otherwise prohibit the transfer of New DraftKings capital stock to such persons, as opposed to no such provisions in the Current Charter.

(e)
Proposal No. 5 — The Stock Issuance Proposal — to consider and vote upon a proposal to approve, assuming the Business Combination Proposal, the Reincorporation Proposal and the Charter Proposal are approved and adopted, for the purposes of complying with the applicable listing rules of The Nasdaq Stock Market, the issuance of  (x) shares of New DraftKings Class A common stock to the current DraftKings equity holders (the “DK Equityholders”) and the SBT Sellers pursuant to the terms of the BCA and (y) shares of DEAC Class A common stock to certain institutional investors (the “PIPE Investors”) in connection with the Private Placement, including shares to be issued upon conversion of the Convertible Notes, plus any additional shares pursuant to subscription agreements we may enter into prior to Closing (we refer to this proposal as the “Stock Issuance Proposal”);
(f)
Proposal No. 6 — The Incentive Award Plan Proposal — to consider and vote upon a proposal to approve, assuming the Business Combination Proposal, the Reincorporation Proposal, the Charter Proposal and the Stock Issuance Proposal are approved and adopted, the DraftKings Inc. 2020 Incentive Award Plan (we refer to this proposal as the “Incentive Award Plan Proposal” and, collectively with the Business Combination Proposal, the Reincorporation Proposal, the Charter Proposal and the Stock Issuance Proposal, the “condition precedent proposals”); and
(g)
Proposal No. 7 — The Employee Stock Purchase Plan Proposal — to consider and vote upon a proposal to approve, assuming the Business Combination Proposal, the Reincorporation Proposal, the Charter Proposal and the Stock Issuance Proposal are approved and adopted, the DraftKings Inc. Employee Stock Purchase Plan (we refer to this proposal as the “ESPP Proposal”).
(h)
Proposal No. 8 — The Adjournment Proposal — to consider and vote upon a proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Special Meeting, any of the condition precedent proposals would not be duly approved and adopted by our stockholders or we determine that one or more of the closing conditions under the BCA is not satisfied or waived (we refer to this proposal as the “Adjournment Proposal”).
The Special Meeting was originally called for April 9, 2020 and will be reconvened on April 23, 2020 at 9:00 a.m., New York City time, in virtual format. Stockholders may attend, vote and examine the list of DEAC stockholders entitled to vote at the Special Meeting by visiting https://www.cstproxy.com/​diamondeagleacquisitioncorp/sm2020 and entering the control number found on their proxy card, voting instruction form or notice included in their proxy materials. In light of public health concerns regarding the coronavirus (COVID-19), the Special Meeting will be held in a virtual meeting format only. You will not be able to attend the Special Meeting physically.
The record date for the Special Meeting has not changed and remains fixed at March 20, 2020. Only holders of record of shares of DEAC’s Class A common stock and Class B common stock (collectively, “DEAC common stock”) at the close of business on March 20, 2020 are entitled to notice of and to vote and have their votes counted at the reconvened Special Meeting and any further adjournments or postponements of the Special Meeting.
We will provide you with the proxy statement/prospectus and a proxy card in connection with the solicitation of proxies to be voted at the Special Meeting and at any adjournment of the Special Meeting. Whether or not you plan to attend the Special Meeting, we urge you to read the proxy statement/prospectus (and any documents incorporated into the proxy statement/prospectus by reference) carefully. Please pay particular attention to the section entitled “Risk Factors.”
After careful consideration, DEAC’s board of directors has determined that each of the Business Combination Proposal, the Reincorporation Proposal, the Charter Proposal, the Advisory Charter Proposals, the Stock Issuance Proposal, the Incentive Award Plan Proposal, the ESPP Proposal and the Adjournment Proposal are in the best interests of DEAC and its stockholders and unanimously recommends that you vote or give instruction to vote “FOR” each of those proposals.

The existence of financial and personal interests of DEAC’s directors and officers may result in a conflict of interest on the part of one or more of the directors between what he or they may believe is in the best interests of DEAC and its stockholders and what he or they may believe is best for himself or themselves in determining to recommend that stockholders vote for the proposals. See the section entitled “The Business Combination Proposal — Interests of DEAC’s Directors and Officers in the Business Combination” in the proxy statement/prospectus for a further discussion.
Under the BCA, the approval of each of the condition precedent proposals is a condition to the consummation of the Business Combination. The adoption of each condition precedent proposal is conditioned on the approval of all of the condition precedent proposals. If our stockholders do not approve each of the condition precedent proposals, the Business Combination may not be consummated. The Adjournment Proposal is not conditioned on the approval of any other proposal.
In connection with our initial public offering, our initial stockholders (consisting of Eagle Equity Partners, LLC, a Delaware limited liability company (our “Sponsor”), and Harry E. Sloan) and our directors at the time of our initial public offering entered into a letter agreement to vote their shares of DEAC Class B common stock purchased prior to our initial public offering (the “founder shares”), as well as any shares of DEAC Class A common stock sold as part of the units by us in our initial public offering (the “public shares”) purchased by them during or after our initial public offering, in favor of the Business Combination Proposal, and we also expect them to vote their shares in favor of all other proposals being presented at the Special Meeting. As of the date hereof, our initial stockholders own approximately 20% of our total outstanding common stock.
Pursuant to DEAC’s Current Charter, a holder of public shares (a “public stockholder”) may request that DEAC redeem all or a portion of its public shares (which would become shares of New DraftKings Class A common stock in the Business Combination) for cash if the Business Combination is consummated. As a public stockholder, you will be entitled to receive cash for any public shares to be redeemed only if you:
(i)
(a) hold public shares or (b) hold public shares through units and you elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares; and
(ii)
prior to 12:00 p.m., New York City time, on April 22, 2020, (a) submit a written request to Continental Stock Transfer & Trust Company, DEAC’s transfer agent (the “transfer agent”), that DEAC redeem your public shares for cash and (b) deliver your public shares to the transfer agent, physically or electronically through Depository Trust Company (“DTC”).
Holders of units must elect to separate the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and public warrants, or if a holder holds units registered in its own name, the holder must contact the transfer agent, directly and instruct it to do so. Public stockholders may elect to redeem all or a portion of their public shares even if they vote for the Business Combination Proposal. If the Business Combination is not consummated, the public shares will not be redeemed for cash. If the Business Combination is consummated and a public stockholder properly exercises its right to redeem its public shares and timely delivers its shares to the transfer agent, we will redeem each public share for a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account established in connection with our initial public offering (the “trust account”), calculated as of two business days prior to the consummation of the Business Combination, including interest earned on the funds held in the trust account and not previously released to us to fund our working capital requirements (subject to an annual limit of   $250,000) and/or to pay our taxes, divided by the number of then issued and outstanding public shares. For illustrative purposes, as of December 31, 2019, this would have amounted to approximately $10.10 per public share. If a public stockholder exercises its redemption rights, then it will be exchanging its redeemed public shares for cash and will no longer own such shares. Any request to redeem public shares, once made, may be withdrawn at any time until the deadline for submitting redemption requests and thereafter, with our consent, until the Closing (as defined below). If a holder of a public share delivers its shares in connection with an election to redeem and subsequently decides prior to the deadline for

submitting redemption requests not to elect to exercise such rights, it may simply request that DEAC instruct its transfer agent to return the shares (physically or electronically). The holder can make such request by contacting the transfer agent, at the address or email address listed in this proxy statement/​prospectus. See “The Special Meeting — Redemption Rights” in the proxy statement/prospectus for a detailed description of the procedures to be followed if you wish to redeem your public shares for cash.
Notwithstanding the foregoing, a holder of public shares, together with any affiliate of such public stockholder or any other person with whom such public stockholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its public shares with respect to more than an aggregate of 20% of the public shares. Accordingly, if a public stockholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the public shares, then any such shares in excess of that 20% limit would not be redeemed for cash.
Under the BCA, DEAC has agreed to combine with DraftKings and SBT for approximately $2.7 billion (with the apportionment of shares as among DEAC, DraftKings and SBTech equity holders based on the liquidation value of DEAC Class A common stock), of which (A) approximately $2.055 billion will be paid to (i) the current equityholders of DraftKings, including Jason Robins, the Chief Executive Officer of DraftKings (and of New DraftKings following the completion of the Business Combination) (the “DK Equityholders”) in the form of shares of Class A common stock of New DraftKings, valued at the redemption price for DEAC’s public shares in the Business Combination, plus in the case of Mr. Robins, a number of shares of Class B common stock of New DraftKings as a result of which he will have approximately 90% of the voting power of the capital stock of New DraftKings on a fully-diluted basis and (ii) holders of vested options and warrants exercisable for DraftKings equity in the form of newly issued options and warrants of New DraftKings exercisable for New DraftKings Class A common stock and (B) approximately €590 million will be paid to the SBT Sellers and holders of vested in-the-money options exercisable for equity of SBT, consisting of  (i) €180 million in cash, subject to customary net debt and working capital adjustments as well as certain other specified items (the “Cash Consideration”) payable in respect of the SBT shares and Cashed-Out SBT Options and (ii) approximately €410 million in shares of New DraftKings Class A common stock, valued at the redemption price for DEAC’s public shares in the Business Combination, and in the form of newly issued in-the-money vested options of New DraftKings exercisable for New DraftKings Class A common stock. Outstanding options exercisable for DraftKings or SBT equity (other than Cashed-Out SBT Options, for which the holders will receive a portion of the Cash Consideration for such options) will be converted into options exercisable for shares of New DraftKings Class A common stock. After the execution of the BCA, DraftKings granted restricted stock units to certain of its employees, which will be converted into restricted stock units denominated in New DraftKings Class A common stock. The Cash Consideration will be funded from the following sources: (1) proceeds available from the trust account established in connection with DEAC’s initial public offering, after giving effect to any and all redemptions; and (2) proceeds from the private placements of shares of DEAC’s Class A common stock and warrants of DEAC pursuant to the Subscription Agreements to certain institutional investors to occur immediately prior to the closing of the Business Combination (the “Closing”) at a purchase price of  $10.00 per share, of which DEAC currently has commitments for $304.7 million of proceeds (the “Private Placement”).
Under the terms of the BCA, the Closing is subject to certain conditions, including, among other things, (i) approval by DEAC Stockholders, DraftKings’ stockholders and SBT’s shareholders of the Business Combination Agreement, the Business Combination and certain other actions related thereto, (ii) the expiration or termination of the waiting period (or any extension thereof) applicable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, (iii) certain approvals or other determinations from certain gaming regulatory authorities, as applicable, and the absence of a material adverse regulatory event with respect to DraftKings and SBT, (iv) DEAC having at least $400 million of cash at the Closing (the “Minimum Proceeds Condition”), consisting of cash held in the trust account after giving effect to redemptions of public shares, if any, and proceeds from the Private Placement, (v) the effectiveness of the registration statement, of which this proxy statement/prospectus forms a part and (vi) the listing of the shares of New DraftKings to be issued in the Business Combination on Nasdaq. Unless waived, if any of these conditions are not satisfied, the Business Combination may not be consummated. Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than

$5,000,001. The required approvals of DraftKings’ stockholders and SBT’s shareholders were obtained prior to the date of this proxy statement/prospectus.
In connection with satisfying the Minimum Proceeds Condition, DEAC entered into subscription agreements (the “Subscription Agreements”) with the PIPE Investors, pursuant to which the PIPE Investors have agreed to purchase immediately prior to the Closing an aggregate of 30,471,352 shares of DEAC Class A common stock at a purchase price of  $10.00 per share, and DEAC has agreed to issue to the PIPE Investors an aggregate of 3.0 million warrants to purchase shares of DEAC Class A common stock that are identical to DEAC’s public warrants. In connection with the Closing, all of the issued and outstanding shares of DEAC Class A common stock, including the shares of DEAC Class A common stock issued to the PIPE Investors, will be exchanged, on a one-for-one basis, for shares of New DraftKings Class A common stock. In addition, all of DEAC’s outstanding warrants will become warrants to acquire shares of New DraftKings Class A common stock on the same terms as DEAC’s currently outstanding warrants.
In connection with the Closing, our Sponsor and Mr. Sloan (together, the “DEAC Founders”) will deposit 5,280,000 of their founder shares into escrow and forfeit 720,000 of their founder shares to New DraftKings, and New DraftKings will issue 720,000 new shares of Class A common stock into escrow for the SBT Earnout Group (as defined below) pursuant to the BCA (collectively, the “Earnout Shares”). Pursuant to the BCA, the Earnout Shares will be released from escrow to the DEAC Founders (the “DEAC Earnout Group”), the SBT Sellers (the “SBT Earnout Group”) and the DK Equityholders and holders of former DraftKings options that were converted into options to purchase a number of shares of New DraftKings Class A Common Stock and holders of former DraftKings restricted stock units that were converted into New DraftKings restricted stock units (together, the “DK Earnout Group”) upon the achievement of certain earnout targets based upon the volume weighted average share price of New DraftKings Class A common stock ranging from $12.50 to $16.00. The members of the DEAC Earnout Group will each be entitled to receive their respective pro rata shares (as among the DEAC Earnout Group) of 3,000,000 Earnout Shares. The members of the DK Earnout Group will each be entitled to receive their respective pro rata shares (as among the DK Earnout Group) of 2,280,000 Earnout Shares. The members of the SBT Earnout Group will each be entitled to receive their respective pro rata shares (as among the SBT Earnout Group) of 720,000 Earnout Shares. Any Earnout Shares not eligible to be released by the four-year anniversary of the Closing Date will be forfeited to New DraftKings and canceled, and no earnout recipient will have any rights with respect thereto.
In addition, at the Closing, New DraftKings will enter into a Stockholders Agreement (the “Stockholders Agreement”) with the DEAC Founder Group (defined below) and the independent directors of DEAC (the “DEAC Stockholder Group”), certain DK Equityholders consisting of the executive officers and directors of DraftKings and 1% and greater stockholders of DraftKings and excluding any shares acquired via the Private Placement (the “DK Stockholder Group”) and the SBT Sellers (the “SBT Stockholder Group” and, together with the DEAC Stockholder Group and the DK Stockholder Group, the “Stockholder Parties”), pursuant to which, among other things, (i) the DK Stockholder Group, the SBT Sellers’ Representative as of the date of the BCA and the DEAC Stockholder Group will have the right to nominate ten, two and one director(s), respectively, to the initial board of directors of New DraftKings, subject to certain independence requirements, (ii) the shares of New DraftKings common stock held by the Stockholder Parties will be subject to certain transfer restrictions and (iii) New DraftKings will provide certain registration rights for the shares of New DraftKings common stock held by the members of the Stockholder Parties.
Subject to approval by DEAC Stockholders of the Business Combination Proposal, the Reincorporation Proposal and the Charter Proposal, New DraftKings will adopt a dual class stock structure comparable to the one that will be in effect at DraftKings immediately prior to the Closing, comprised of Class A common stock, which will carry one vote per share, and Class B common stock, which will carry 10 votes per share. Upon the Closing, all stockholders of New DraftKings will hold only shares of New DraftKings Class A common stock, except for Mr. Robins, who will hold shares of New DraftKings Class A common stock and shares of New DraftKings Class B common stock. Immediately following the Closing, and by virtue of his holdings of New DraftKings Class A common stock and New DraftKings Class B common stock, Mr. Robins is expected to hold approximately 90% of the voting power

of the capital stock of New DraftKings on a fully-diluted basis. The New DraftKings Class B common stock will not be entitled to dividends and will have only a nominal participation in any liquidation of New DraftKings, which participation will rank junior to the New DraftKings Class A common stock. The New DraftKings Class B common stock is also subject to a “sunset” if Mr. Robins no longer (i) serves in a senior executive or board role, or (ii) holds more than a specified amount of New DraftKings shares. See “Description of New DraftKings Securities — New DraftKings Common Stock — Class B Common Stock — Mandatory Cancellation.”
All DEAC stockholders are cordially invited to attend the Special Meeting which will be held in virtual format. You will not be able to physically attend the Special Meeting. To ensure your representation at the Special Meeting, however, you are urged to complete, sign, date and return the proxy card accompanying the proxy statement/prospectus as soon as possible. If you are a stockholder of record holding shares of DEAC common stock, you may also cast your vote at the Special Meeting electronically by visiting https://www.cstproxy.com/diamondeagleacquisitioncorp/sm2020. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the Special Meeting and vote electronically, obtain a proxy from your broker or bank. If you do not vote or do not instruct your broker or bank how to vote, it will have no effect on certain proposals because such action would not count as a vote cast at the Special Meeting.
Your vote is important regardless of the number of shares you own. Whether you plan to attend the Special Meeting or not, please sign, date and return the proxy card accompanying the proxy statement/​prospectus as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.
If you have any questions or need assistance voting your common stock, please contact Morrow Sodali LLC, our proxy solicitor, by calling (800) 662-5200, or banks and brokers can call collect at (203) 658-9400, or by emailing DEAC.info@investor.morrowsodali.com. This notice of special meeting is and the proxy statement/prospectus relating to the Business Combination will be available at https://www.cstproxy.com/diamondeagleacquisitioncorp/sm2020.
Thank you for your participation. We look forward to your continued support.
April 15, 2020 By Order of the Board of Directors,
/s/ Jeff Sagansky
Jeff Sagansky
Chief Executive Officer and Chairman
The Special Meeting was initially called for April 9, 2020 and notice was mailed by DEAC on March 20, 2020.
IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS. TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST (I) IF YOU HOLD SHARES OF DEAC CLASS A COMMON STOCK THROUGH UNITS, ELECT TO SEPARATE YOUR UNITS INTO THE UNDERLYING SHARES OF DEAC CLASS A COMMON STOCK AND PUBLIC WARRANTS PRIOR TO EXERCISING YOUR REDEMPTION RIGHTS WITH RESPECT TO THE PUBLIC SHARES, (II) SUBMIT A WRITTEN REQUEST TO THE TRANSFER AGENT THAT YOUR PUBLIC SHARES BE REDEEMED FOR CASH AND (III) DELIVER YOUR SHARES OF DEAC CLASS A COMMON STOCK TO THE TRANSFER AGENT, PHYSICALLY OR ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM, IN EACH CASE, IN ACCORDANCE WITH THE PROCEDURES AND DEADLINES DESCRIBED IN THE PROXY STATEMENT/PROSPECTUS. IF THE BUSINESS COMBINATION IS NOT CONSUMMATED, THEN THE PUBLIC SHARES WILL NOT BE

REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. SEE “THE SPECIAL MEETING — REDEMPTION RIGHTS” IN THE PROXY STATEMENT/​PROSPECTUS FOR MORE SPECIFIC INSTRUCTIONS.

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viii

ADDITIONAL INFORMATION
If you have questions about the Business Combination or the Special Meeting, or if you need to obtain copies of the enclosed proxy statement/prospectus, proxy card or other documents incorporated by reference in the proxy statement/prospectus, you may contact DEAC’s proxy solicitor listed below. You will not be charged for any of the documents you request.
Morrow Sodali LLC
470 West Avenue, Suite 3000
Stamford, CT 06902
Tel: (800) 662-5200
Banks and brokers call collect: (203) 658-9400
E-mail: DEAC.info@investor.morrowsodali.com
In order for you to receive timely delivery of the documents in advance of the reconvened Special Meeting to be held on April 23, 2020, you must request the information no later than four business days prior to the date of the Special Meeting, by April 17, 2020.
For a more detailed description of the information incorporated by reference in the enclosed proxy statement/prospectus and how you may obtain it, see the section captioned “Where You Can Find More Information” beginning on page 324 of the enclosed proxy statement/prospectus.
TRADEMARKS
This document contains references to trademarks and service marks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this proxy statement/prospectus may appear without the​ ® or ™ symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
1

SELECTED DEFINITIONS

“BCA” or “Business Combination Agreement” refers to the Business Combination Agreement, dated as of December 22, 2019, as amended on April 7, 2020, by and among DEAC, DraftKings, SBT, the SBT Sellers party thereto, the SBT Sellers’ Representative, DEAC Nevada and Merger Sub.

“Board” refers to DEAC’s board of directors, DraftKings’ board of directors or New DraftKings’ board of directors, as the context suggests.

“Business Combination” refers to the transactions contemplated by the BCA.

“Closing” refers to the closing of the Business Combination.

“Closing Date” refers to the date on which the Closing actually occurs.

“condition precedent proposals” means the Business Combination Proposal, the Reincorporation Proposal, the Charter Proposal, the Stock Issuance Proposal and the Incentive Award Plan Proposal.

“Continental” refers to Continental Stock Transfer & Trust Company, the transfer agent, warrant agent and escrow agent of DEAC.

“DEAC” refers to Diamond Eagle Acquisition Corp., a Delaware corporation.

“DEAC Class A common stock” refers to the shares of Class A common stock, par value $0.0001 per share, of DEAC.

“DEAC Class B common stock” refers to the shares of Class B common stock, par value $0.0001 per share, of DEAC.

“DEAC Founder Group” refers to Eagle Equity Partners, LLC, Harry E. Sloan, Jeff Sagansky and Eli Baker.

“DEAC Liquidation Value” refers to the quotient obtained by dividing (I) the aggregate amount on deposit in DEAC’s trust account as of two business days prior to the Closing (including interest) not previously released to DEAC to fund DEAC’s working capital requirements (subject to an annual limit of   $250,000) and/or to pay DEAC’s taxes, by (II) the total number of shares of Class A common stock of DEAC that were sold in DEAC’s initial public offering and outstanding as of two business days prior to the Closing.

“DEAC Nevada” refers to DEAC NV Merger Corp., a Nevada corporation.

“DEAC Shares” refers to shares of DEAC Class A common stock and shares of DEAC Class B common stock.

“DEAC Stockholders” refers to, collectively, holders of shares of DEAC Class A common stock and holders of shares of DEAC Class B common stock, but does not include the PIPE Investors.

“dollars” or “$” refers to U.S. dollars.

“DraftKings” refers to DraftKings Inc., a Delaware corporation.

“founder shares” refers to shares of DEAC Class B common stock initially purchased by our Sponsor in a private placement prior to our initial public offering and the shares of DEAC Class A common stock that will be issued upon the automatic conversion of the shares of DEAC Class B common stock in connection with the Closing.

“Merger Sub” refers to DEAC Merger Sub Inc., a Delaware corporation.

“New DraftKings” refers to DraftKings Inc., a Nevada corporation and the combined company following the consummation of the Business Combination.

“New DraftKings Class A common stock” refers to the shares of Class A common stock, par value $0.0001 per share, of New DraftKings.

“New DraftKings Class B common stock” refers to the shares of Class B common stock, par value $0.0001 per share, of New DraftKings.

“Nasdaq” refers to The Nasdaq Global Market.

“our,” “we” or “us” refers to DEAC or to New DraftKings, as the context suggests.
2


“PIPE Investors” refers to certain institutional investors who are party to the Subscription Agreements, pursuant to which DEAC has agreed to issue an aggregate of 30,471,352 shares of DEAC Class A common stock and 3.0 million warrants to the PIPE Investors immediately before the Closing, at a purchase price of  $10.00 per share, which will be exchanged for shares of New DraftKings Class A common stock upon consummation of the Business Combination.

“Private Placement” refers to the issuance of an aggregate of 30,471,352 shares of DEAC Class A common stock and 3.0 million warrants pursuant to the Subscription Agreements to the PIPE Investors immediately before the Closing, at a purchase price of  $10.00 per share.

“private placement warrants” refers to the 6,333,334 warrants initially issued to our Sponsor and Harry Sloan in a private placement simultaneously with the closing of DEAC’s initial public offering, each of which is exercisable for one share of DEAC Class A common stock at an exercise price of $11.50 per share, in accordance with its terms.

“public shares” refers to shares of DEAC Class A common stock sold as part of the units in DEAC’s initial public offering (whether they were purchased in that offering or thereafter in the open market).

“public stockholders” refers to the holders of our public shares, including our initial stockholders and management team to the extent our initial stockholders and/or members of our management team purchase public shares, provided that each initial stockholder’s and member of our management team’s status as a “public stockholder” will only exist with respect to such public shares.

“public warrants” refers to the warrants to purchase shares of DEAC Class A common stock sold as part of the units in DEAC’s initial public offering, each of which is exercisable for one share of DEAC Class A common stock at an exercise price of  $11.50 per share, in accordance with its terms (whether they were purchased in that offering or thereafter in the open market).

“record date” refers to March 20, 2020, the date for determining the DEAC Stockholders entitled to receive notice of and to vote at the Special Meeting.

“Reincorporation Merger Agreement” refers to the Agreement and Plan of Merger, dated as of March 12, 2020, by and between DEAC and DEAC Nevada.

“SBT” or “SBTech” refers to SBTech (Global) Limited, a company limited by shares, originally incorporated in Gibraltar and continued as a company under the Isle of Man Companies Act 2006, with registration number 014119V.

“SBT Sellers” refers to each of the holders of capital stock of SBT party to the BCA.

“SBT Sellers’ Representative” refers to Shalom Meckenzie in his capacity as representative of the SBT Sellers under the BCA.

“SBT shares” refers to the ordinary shares, par value $0.10 per share, of SBT.

“SEC” refers to the U.S. Securities and Exchange Commission.

Special Meetingrefers to the special meeting of DEAC Stockholders to vote on matters relating to the Business Combination, initially convened on April 9, 2020 at 10:00 a.m., New York City time, at the offices of Winston & Strawn LLP, located at 200 Park Avenue, New York, New York 10166 and reconvened on April 23, 2020 at 9:00 a.m., New York City time, in virtual format via https://​www.cstproxy.com/diamond eagleacquisitioncorp/sm2020.

“Stockholders Agreement” refers to the Stockholders Agreement, in the substantial form attached hereto as Annex B and to be entered at or prior to Closing, among New DraftKings and the DEAC Founder Group and the independent directors of DEAC (the “DEAC Stockholder Group”), certain equityholders of DraftKings consisting of the executive officers and directors of DraftKings and 1% and greater stockholders of DraftKings and excluding any shares acquired via the Private Placement (the “DK Stockholder Group”) and the SBT Sellers (the “SBT Stockholder Group” and, together with the DEAC Stockholder Group and the DK Stockholder Group, the “Stockholder Parties”).

“Subscription Agreements” refers to the subscription agreements, dated December 22, 2019, between DEAC and the PIPE Investors, pursuant to which DEAC has agreed to issue an aggregate of 30,471,352 shares of DEAC Class A common stock plus 3.0 million warrants to the PIPE Investors immediately before the Closing at a purchase price of  $10.00 per share. The warrants to be issued to the PIPE Investors will be identical to DEAC’s public warrants.
3

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The statements contained in this proxy statement/prospectus and in any document incorporated by reference herein that are not purely historical are forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. The information included in this proxy statement/prospectus in relation to DraftKings has been provided by DraftKings and its management team, and the information included in this proxy statement/prospectus in relation to SBT has been provided by SBT and its management. Forward-looking statements include statements relating to each of DraftKings’ and SBT’s management teams’ expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this proxy statement/prospectus and in any document incorporated by reference herein may include, for example, statements about:

our ability to complete the Business Combination, or, if we do not consummate the Business Combination, any other initial business combination;

satisfaction of conditions to the Business Combination, including the availability of at least $400 million of cash in DEAC’s trust account (and/or from other specified sources, if necessary), after giving effect to redemptions of public shares, if any;

the occurrence of any event, change or other circumstances that could give rise to the termination of the BCA;

the ability to obtain and/or maintain the listing of our common stock on Nasdaq following the Business Combination;

New DraftKings’ ability to raise financing in the future;

New DraftKings’ success in retaining or recruiting, or changes required in, our officers, key employees or directors following the Business Combination;

our directors and officers potentially having conflicts of interest with our business or in approving the Business Combination, as a result of which they would then receive expense reimbursements;

factors relating to the business, operations and financial performance of DraftKings and SBT, including:

New DraftKings’ ability to effectively compete in the global entertainment and gaming industries;

New DraftKings’ ability to successfully acquire and integrate new operations;

New DraftKings’ ability to obtain and maintain licenses with gaming authorities;

New DraftKings’ inability to recognize deferred tax assets and tax loss carryforwards;

market conditions and global and economic factors beyond DraftKings’ and SBT’s control, including the potential adverse effects of the ongoing global coronavirus (COVID-19) pandemic;

intense competition and competitive pressures from other companies worldwide in the industries in which the combined company will operate;

litigation and the ability to adequately protect New DraftKings’ intellectual property rights; and

other factors detailed under the section entitled “Risk Factors.
4

The forward-looking statements contained in this proxy statement/prospectus and in any document incorporated by reference herein are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” in this proxy statement/prospectus and in our registration statement on Form S-1 filed in connection with our initial public offering. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
Before you grant your proxy or instruct how your vote should be cast or vote on the proposals to be put to the Special Meeting, you should be aware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this proxy statement/prospectus may adversely affect DEAC, DraftKings, SBT, or, following the consummation of the Business Combination, New DraftKings.
5

QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION AND THE SPECIAL MEETING
The following are answers to certain questions that you may have regarding the Special Meeting. DEAC urges you to read carefully the remainder of this document because the information in this section may not provide all the information that might be important to you in determining how to vote. Additional important information is also contained in the appendices to, and the documents incorporated by reference in, this proxy statement/prospectus.
Q:
Why am I receiving this proxy statement/prospectus?
A:
DEAC is proposing to consummate the Business Combination with DraftKings and SBT. DEAC, DEAC Nevada, Merger Sub, DraftKings, SBT, the SBT Sellers and the SBT Sellers’ Representative have entered into the BCA, the terms of which are described in this proxy statement/prospectus. Copies of the BCA and Amendment No. 1 thereto are attached hereto as Annex A and Annex J, respectively. DEAC urges its stockholders to read the BCA in its entirety. The BCA provides, among other things, for (i) the reincorporation of DEAC as a Nevada corporation, (ii) following the reincorporation, the merger of Merger Sub with and into DraftKings, with DraftKings surviving the merger and (iii) the acquisition of all of the issued and outstanding equity interests of SBT from its shareholders by New DraftKings.
The BCA must be adopted by the DEAC Stockholders in accordance with the General Corporation Law of the State of Delaware (the “DGCL”) and DEAC’s Current Charter. DEAC is holding a Special Meeting to obtain that approval. DEAC Stockholders will also be asked to vote on certain other matters described in this proxy statement/prospectus at the Special Meeting and to approve the adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies in the event there are not sufficient votes at the time of the Special Meeting to adopt the BCA and thereby approve the Business Combination.
THE VOTE OF DEAC STOCKHOLDERS IS IMPORTANT. DEAC STOCKHOLDERS ARE URGED TO SUBMIT THEIR PROXIES AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS PROXY STATEMENT/PROSPECTUS AND CAREFULLY CONSIDERING EACH OF THE PROPOSALS BEING PRESENTED AT THE MEETING.
Q:
Why is DEAC proposing the business combination?
A:
DEAC was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more operating businesses.
Based on its due diligence investigations of DraftKings and SBT and the industries in which they operate, including the financial and other information provided by DraftKings and SBT in the course of DEAC’s due diligence investigations, the DEAC board of directors believes that the Business Combination with DraftKings and SBT is in the best interests of DEAC and its shareholders and presents an opportunity to increase stockholder value. However, there can be no assurances of this.
Although DEAC’s board of directors believes that the Business Combination with DraftKings and SBT presents a unique business combination opportunity and is in the best interests of DEAC and its stockholders, the board of directors did consider certain potentially material negative factors in arriving at that conclusion. See “The Business Combination Proposal — DEAC’s Board of Directors’ Reasons for Approval of the Business Combination” for a discussion of the factors considered by DEAC’s board of directors in making its decision.
Q:
When and where will the Special Meeting take place?
A:
The Special Meeting was originally called for April 9, 2020 at 10:00 a.m., New York City time, at the offices of Winston & Strawn LLP, located at 200 Park Avenue, New York, New York, 10166 and was adjourned. The Special Meeting will be reconvened on April 23, 2020 at 9:00 a.m., New York City time, in virtual format. Stockholders may attend, vote and examine the list of DEAC stockholders entitled to vote at the Special Meeting by visiting https://www.cstproxy.com/diamondeagle acquisitioncorp/sm2020 and entering the control number found on their proxy card, voting instruction form or notice they previously received.
6

Q:
Has the record date for the Special Meeting changed?
A:
The record date for the Special Meeting has not changed and remains fixed at March 20, 2020. Only holders of record of DEAC common stock at the close of business on March 20, 2020 are entitled to notice of the Special Meeting and to vote at the reconvened Special Meeting and any further adjournments or postponements of the Special Meeting.
Q:
What matters will be considered at the Special Meeting?
A:
The DEAC Stockholders will be asked to consider and vote on the following proposals:

a proposal to adopt the BCA and approve the Business Combination (the “Business Combination Proposal”);

a proposal to approve, assuming the Business Combination Proposal is approved and adopted, the change of DEAC’s jurisdiction of incorporation from the State of Delaware to the State of Nevada (the “reincorporation” and such proposal, the “Reincorporation Proposal”) through the merger of DEAC with and into DEAC Nevada, with DEAC Nevada surviving the merger and being renamed DraftKings Inc.;

a proposal to approve, assuming the Business Combination Proposal and the Reincorporation Proposal are approved and adopted, the proposed amended and restated articles of incorporation (the “Proposed Charter”) of New DraftKings (the “Charter Proposal”);

a proposal to approve, on a non-advisory basis and as required by applicable SEC guidance, certain material differences between the Current Charter and the Proposed Charter (the “Advisory Charter Proposals”);

to consider and vote upon a proposal to approve, assuming the Business Combination Proposal, the Reincorporation Proposal and the Charter Proposal are approved and adopted, the issuance of (i) shares of New DraftKings Class A common stock to the DK Equityholders and the SBT Sellers pursuant to the terms of the BCA and (ii) shares of DEAC Class A common stock to the PIPE Investors and the holders of Convertible Notes, including any additional shares of DEAC Class A common stock pursuant to subscription agreements we may enter into prior to Closing (the “Stock Issuance Proposal”);

to consider and vote upon a proposal to approve, assuming the Business Combination Proposal, the Reincorporation Proposal, the Charter Proposal and the Stock Issuance Proposal are approved and adopted, the DraftKings Inc. 2020 Incentive Award Plan (the “Incentive Award Plan Proposal”);

to consider and vote upon a proposal to approve, assuming the Business Combination Proposal, the Reincorporation Proposal, the Charter Proposal and the Stock Issuance Proposal are approved and adopted, the DraftKings Inc. Employee Stock Purchase Plan (the “ESPP Proposal”); and

to consider and vote upon a proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Special Meeting, any of the condition precedent proposals would not be duly approved and adopted by our stockholders or we determine that one or more of the closing conditions under the BCA is not satisfied or waived (the “Adjournment Proposal”).
Q:
Is my vote important?
A:
Yes. The Business Combination cannot be completed unless the BCA is adopted by the DEAC Stockholders holding a majority of the votes cast on such proposal and the other condition precedent proposals achieve the necessary vote outlined below. Only DEAC Stockholders as of the close of business on March 20, 2020, the record date for the Special Meeting, are entitled to vote at the Special Meeting. The DEAC Board unanimously recommends that such DEAC Stockholders vote “FOR” the approval of the Business Combination Proposal, “FOR” the approval of the Reincorporation
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Proposal, “FOR” the approval of the Charter Proposal, “FOR” the approval, on an advisory basis, of the Advisory Charter Proposals, “FOR” the approval of the Stock Issuance Proposal, “FOR” the approval of the Incentive Award Plan Proposal, “FOR” the approval of the ESPP Proposal and “FOR” the approval of the Adjournment Proposal.
Q:
If my shares are held in “street name” by my bank, brokerage firm or other nominee, will my bank, brokerage firm or other nominee automatically vote those shares for me?
A:
No. A “broker non-vote” occurs when a broker submits a proxy that states that the broker does not vote for some or all of the proposals because the broker has not received instructions from the beneficial owners on how to vote on the proposals and does not have discretionary authority to vote in the absence of instructions. Under the relevant rules, brokers are not permitted to vote on any of the matters to be considered at the Special Meeting. As a result, your public shares will not be voted on any matter unless you affirmatively instruct your broker, bank or nominee how to vote your shares in one of the ways indicated by your broker, bank or other nominee. You should instruct your broker to vote your shares in accordance with directions you provide.
Q:
What DEAC Stockholder vote is required for the approval of each proposal brought before the Special Meeting? What will happen if I fail to vote or abstain from voting on each proposal?
A:
The Business Combination Proposal.   Approval of the Business Combination Proposal requires the affirmative vote of a majority of the votes cast by DEAC Stockholders present in person (which would include presence at a virtual meeting) or represented by proxy at the Special Meeting and entitled to vote thereon. The failure to vote, abstentions and broker non-votes will have no effect on the outcome of the proposal.
Our initial stockholders have agreed to vote their shares in favor of the Business Combination. The initial stockholders own approximately 20% of our outstanding shares prior to the Business Combination. Accordingly, if all of our outstanding shares were to be voted, we would need the affirmative vote of approximately 38% of the remaining shares to approve the Business Combination.
The Reincorporation Proposal.   Approval of the Reincorporation Proposal requires the affirmative vote of a majority of the outstanding DEAC Shares entitled to vote thereon. The failure to vote, abstentions and broker non-votes have the same effect as a vote “AGAINST” the proposal.
The Charter Proposal.   Approval of the Charter Proposal requires the affirmative vote of the holders of at least a majority of the outstanding DEAC Shares entitled to vote thereon, voting as a single class. The failure to vote, abstentions and broker non-votes have the same effect as a vote “AGAINST” the proposal.
The Advisory Charter Proposals.   Approval of each of the Advisory Charter Proposals, each of which is a non-binding vote, requires the affirmative vote of a majority of the votes cast by DEAC Stockholders present in person (which would include presence at a virtual meeting) or represented by proxy at the Special Meeting and entitled to vote thereon. The failure to vote, abstentions and broker non-votes have no effect on the outcome of the proposal.
The Stock Issuance Proposal.   Approval of the Stock Issuance Proposal requires the affirmative vote of a majority of the votes cast by DEAC Stockholders present in person (which would include presence at a virtual meeting) or represented by proxy at the Special Meeting and entitled to vote thereon. The failure to vote, abstentions and broker non-votes have no effect on the outcome of the proposal.
The Incentive Award Plan Proposal.   Approval of the Incentive Award Plan Proposal requires the affirmative vote of a majority of the votes cast by DEAC Stockholders present in person (which would include presence at a virtual meeting) or represented by proxy at the Special Meeting and entitled to vote thereon. The failure to vote, abstentions and broker non-votes have no effect on the outcome of the proposal.
The ESPP Proposal.   Approval of the ESPP Proposal requires the affirmative vote of a majority of the votes cast by DEAC Stockholders present in person (which would include presence at a virtual meeting) or represented by a proxy at the Special Meeting and entitled to vote thereon. The failure to vote, abstentions and broker non-votes have no effect on the outcome of the proposal.
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The Adjournment Proposal.   Approval of the Adjournment Proposal requires the affirmative vote of a majority of the votes cast by DEAC Stockholders present in person (which would include presence at a virtual meeting) or represented by proxy at the Special Meeting and entitled to vote thereon. The failure to vote, abstentions and broker non-votes have no effect on the outcome of the proposal.
Q:
What will DraftKings’ equity holders receive in connection with the DK Merger?
A:
The aggregate value of the consideration paid in respect of DraftKings is approximately $2.055 billion, which will be paid to (i) the DK Equityholders in the form of shares of New DraftKings Class A common stock valued at the redemption price for DEAC’s public shares in the Business Combination, plus in the case of Jason Robins, a number of shares of New DraftKings Class B common stock as a result of which he will have approximately 90% of the voting power of the capital stock of New DraftKings on a fully-diluted basis and (ii) holders of vested DraftKings options and warrants exercisable for DraftKings equity in the form of newly issued options and warrants of New DraftKings exercisable for New DraftKings Class A common stock. In addition, outstanding unvested options exercisable for DraftKings equity will be converted into unvested options exercisable for shares of New DraftKings Class A common stock and outstanding restricted stock units will be converted into restricted stock units denominated in shares of New DraftKings Class A common stock.
Q:
What will SBT’s equity holders receive in return for the acquisition of SBT by New DraftKings?
A:
The aggregate consideration payable to the SBT Sellers and holders of vested in-the-money options exercisable for equity of SBT is approximately €590 million, consisting of  (i) €180 million in cash, subject to customary net debt and working capital adjustments as well as certain other specified items, payable in respect of the SBT shares and 30% of the in-the-money vested SBT options and (ii) approximately €410 million in shares of New DraftKings Class A common stock, valued at the redemption price for DEAC’s public shares in the Business Combination, and in the form of newly issued vested in-the-money options exercisable for New DraftKings Class A common stock.
Q:
What equity stake will current DEAC Stockholders, DK Equityholders and the SBT Equityholders hold in New DraftKings immediately after the consummation of the Business Combination?
A:
It is anticipated that, upon completion of the Business Combination, the ownership interests in New DraftKings will be as set forth in the table below, applying a DK Share Exchange Ratio of 0.3546 and an SBT Share Exchange ratio of 1,001.5 (and a $1.090 to €1.00 exchange rate)(1):
Assuming No
Redemptions of
Public Shares
Assuming
Maximum
Redemptions of
Public Shares(2)
DK Equityholders
59.7% 66.1%
SBT Equityholders
13.0% 14.5%
DEAC Public Stockholders
12.8% 3.3%
Initial Stockholders
1.2% 1.3%
PIPE Investors(3)
13.3% 14.8%
(1)
Calculation excludes shares held by DraftKings’ non-accredited investors that will be cashed out at Closing.
(2)
Assumes that holders of 30,564,789 public shares exercise their redemption rights in connection with the Business Combination (maximum redemption scenario based on $403,961,209 held in trust as of December 31, 2019 and a redemption price of  $10.10 per share).
(3)
Includes the holders of the Convertible Notes.
The ownership percentages set forth above do not take into account (a) public warrants and private placement warrants that will remain outstanding immediately following the Business Combination and may be exercised thereafter (commencing 30 days after the closing of the Business Combination), (b) the Earnout Shares to be held in escrow and subject to release to the DEAC Earnout Group, the
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DK Earnout Group and the SBT Earnout Group in accordance with the terms of the BCA or (c) the issuance of any shares upon completion of the Business Combination under the DraftKings Inc. 2020 Incentive Award Plan, a copy of which is attached to this proxy statement/prospectus as Annex G, but does include 3,658,858 of founder shares, which, on the effective date of the Business Combination, will be exchanged, on a one-for-one basis, for shares of New DraftKings Class A common stock. If the actual facts are different than the assumptions set forth above, the percentage ownership numbers set forth above will be different.
For more information, please see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”
In addition, there are currently outstanding an aggregate of 19,666,667 warrants to acquire shares of DEAC Class A common stock, which comprise 6,333,334 private placement warrants held by our initial stockholders and 13,333,333 public warrants. Each of our outstanding whole warrants is exercisable commencing 30 days following the Closing for one share of Class A common stock and, following the consummation of the Business Combination, will entitle the holder thereof to purchase one share of New DraftKings Class A common stock in accordance with its terms. Therefore, as of the date of this proxy statement/prospectus, if we assume that each outstanding whole warrant is exercised and one share of DEAC Class A common stock is issued as a result of such exercise, with payment to DEAC of the exercise price of  $11.50 per whole warrant for one whole share, our fully-diluted share capital would increase by a total of 19,666,667 shares, with approximately $226,166,670 paid to DEAC to exercise the warrants.
Furthermore, subject to approval by DEAC Stockholders of the Business Combination Proposal, the Reincorporation Proposal and the Charter Proposal, in connection with the Closing, New DraftKings will adopt a dual class stock structure and Mr. Robins will receive, in addition to shares of Class A common stock of New DraftKings, a number of shares of Class B common stock of New DraftKings which will have 10 to 1 voting rights as compared to the shares of New DraftKings Class A common stock, such that as of immediately following the completion of the Business Combination, Mr. Robins will have approximately 90% of the voting power of the capital stock of New DraftKings on a fully-diluted basis.
Q:
Why is DEAC proposing the reincorporation?
A:
Our Board believes that there are significant advantages to New DraftKings that will arise as a result of being domiciled in Nevada. Further, our Board believes that the direct benefits that Nevada corporation law provides to a corporation will also indirectly benefits DEAC Stockholders, who will become the owners of New DraftKings. The Board believes that there are several reasons why a reincorporation in Nevada is in the best interests of New DraftKings and the DEAC Stockholders, including (i) the elimination of our obligation to pay the annual Delaware franchise tax and the expected savings as a result of not having a franchise tax, (ii) the potential for greater protection for directors of New DraftKings and (iii) the benefit of attracting and retaining qualified management by reducing the risk of lawsuits being filed against New DraftKings and its directors and officers. See “The Reincorporation Proposal” for a further discussion of these factors.
Q:
What happens to the funds deposited in the trust account after consummation of the Business Combination?
A:
A total of  $400,000,000, comprised of approximately $392,000,000 of the proceeds from our initial public offering, including approximately $14,000,000 of underwriters’ deferred discount, and $8,000,000 of the proceeds of the sale of the private placement warrants were placed in a trust account maintained by Continental, acting as trustee. As of December 31, 2019, there were investments and cash held in the trust account of approximately $404.0 million. These funds will not be released until the earlier of Closing or the redemption of our public shares if we are unable to complete an initial business combination by May 14, 2021, although we may withdraw the interest earned on the funds held in the trust account to pay franchise and income taxes and for working capital purposes (subject to an annual limitation of  $250,000).
10

Q:
What happens if a substantial number of the public stockholders vote in favor of the Business Combination Proposal and exercise their redemption rights?
A:
DEAC Stockholders who vote in favor of the Business Combination may also nevertheless exercise their redemption rights. Accordingly, the Business Combination may be consummated even though the funds available from the trust account and the number of public stockholders are reduced as a result of redemptions by public stockholders. However, the consummation of the Business Combination is conditioned upon, among other things, the Minimum Proceeds Condition described below. In addition, with fewer public shares and public stockholders, the trading market for New DraftKings Class A common stock may be less liquid than the market for DEAC’s Class A common stock was prior to consummation of the Business Combination and New DraftKings may not be able to meet the listing standards for The Nasdaq Stock Market or another national securities exchange. In addition, with less funds available from the trust account, the working capital infusion from the trust account into New DraftKings’ business will be reduced. As a result, the proceeds will be greater in the event that no public stockholders exercise redemption rights with respect to their public shares for a pro rata portion of the trust account as opposed to the scenario in which DEAC’s public stockholders exercise the maximum allowed redemption rights.
Q:
What amendments will be made to the Current Charter of DEAC?
A:
We are asking DEAC Stockholders to approve the Proposed Charter that will be effective upon the consummation of the Business Combination. The Proposed Charter provides for various changes that the DEAC board of directors believes are necessary to address the needs of the post-Business Combination company, including, among other things: (i) the change of DEAC’s name to “DraftKings Inc.”; (ii) the increase of the total number of authorized shares of all classes of capital stock, par value of  $0.0001 per share, from 401,000,000 shares to 2,100,000,000 shares, consisting of 1,800,000,000 shares of common stock, including 900,000,000 shares of Class A common stock, par value $0.0001 per share, and 900,000,000 shares of Class B common stock, par value $0.0001 per share, and 300,000,000 shares of preferred stock, par value $0.0001 per share; (iii) the establishment of 10:1 voting rights with respect to shares of New DraftKings Class B common stock, as described herein and in the Proposed Charter; (iv) the declassification of the board of directors of the post-Business Combination company such that all directors will be elected annually; (v) limitations on the ability of the stockholders to act by written consent in lieu of a meeting until the time that Mr. Robins beneficially owns less than a majority of the voting power of the capital stock of New DraftKings; (vi) the selection of the Eighth Judicial District Court of Clark County, Nevada as the exclusive forum for any derivative action or proceeding brought on behalf of New DraftKings, subject to certain limitations; (vii) changes to the required vote to amend the charter, bylaws and the number of directors; (viii) the establishment of redemption rights and transfer restrictions with respect to capital stock held by any stockholders who are unsuitable persons or their affiliates; and (ix) the elimination of certain provisions specific to DEAC’s status as a blank check company.
Pursuant to Delaware law and the Current Charter, DEAC is required to submit the Charter Proposal to DEAC’s stockholders for approval. For additional information, see the section entitled “The Charter Proposal.
Q:
What material negative factors did DEAC’s board of directors consider in connection with the business combination?
A:
Although DEAC’s board of directors believes that the business combination with DraftKings and SBT will provide DEAC’s stockholders with an opportunity to participate in a combined company with significant growth potential, market share and well-known brands, the board of directors did consider certain potentially material negative factors in arriving at that conclusion, such as the risk that DEAC Stockholders would not approve the Business Combination and the risk that significant numbers of DEAC Stockholders would exercise their redemption rights. These factors are discussed in greater detail in the section entitled “The Business Combination Proposal — DEAC’s Board of Directors’ Reasons for Approval of the Business Combination,” as well as in the section entitled “Risk Factors — Risk Factors Relating to the Business Combination and Integration of DraftKings’ and SBTech’s Business.”
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Q:
How will the reincorporation affect my public shares, public warrants and units?
A:
On the effective date of the reincorporation, the currently issued and outstanding shares of DEAC Class B common stock will automatically convert on a one-for-one basis into shares of DEAC Class A common stock in accordance with the terms of the Current Charter. In connection with the Closing, the currently issued and outstanding shares of DEAC Class A common stock will be exchanged, on a one-for-one basis, for shares of New DraftKings Class A common stock in connection with the Business Combination. Similarly, all of DEAC’s outstanding warrants will become warrants to acquire shares of New DraftKings Class A common stock on the same terms as DEAC’s currently outstanding warrants. In addition, at the Closing, all of DEAC’s outstanding units (each of which consists of one share of DEAC Class A common stock and one-third of one warrant to purchase one share of DEAC Class A common stock) will be separated into its component share of common stock and one-third of one warrant.
Q:
Do I have redemption rights?
A:
If you are a public stockholder, you have the right to request that DEAC redeem all or a portion of your public shares for cash, provided that you follow the procedures and deadlines described elsewhere in this proxy statement/prospectus under the heading “The Special Meeting — Redemption Rights.” Public stockholders may elect to redeem all or a portion of their public shares even if they vote for the Business Combination Proposal. We sometimes refer to these rights to elect to redeem all or a portion of the public shares into a pro rata portion of the cash held in the trust account as “redemption rights.” If you wish to exercise your redemption rights, please see the answer to the next question: “How do I exercise my redemption rights?
Notwithstanding the foregoing, a public stockholder, together with any affiliate of such public stockholder or any other person with whom such public stockholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its public shares with respect to more than an aggregate of 20% of the public shares. Accordingly, if a public stockholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the public shares, then any such shares in excess of that 20% limit would not be redeemed for cash.
Our initial stockholders and our directors at the time of our initial public offering entered into the insider letter agreement, pursuant to which they agreed to waive their redemption rights with respect to their shares in connection with the completion of a business combination.
The Closing is subject to certain conditions, including, among other things, (i) approval by DEAC’s stockholders, DraftKings’ stockholders and SBT’s shareholders of the Business Combination Agreement, the Business Combination and certain other actions related thereto, (ii) the expiration or termination of the waiting period (or any extension thereof) applicable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”), (iii) certain approvals or other determinations from certain gaming regulatory authorities, as applicable, and the absence of a material adverse regulatory event with respect to DraftKings and SBT, (iv) DEAC having at least $400 million of cash at the Closing, consisting of cash held in the trust account after giving effect to redemptions of public shares, if any, and proceeds from the Private Placement, (v) the effectiveness of the registration statement, of which this proxy statement/prospectus forms a part and (vi) the listing of the shares of New DraftKings Class A common stock to be issued in the Business Combination on Nasdaq. Unless waived, if any of these conditions are not satisfied, the Business Combination may not be consummated. Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001. See the section entitled “The Business Combination Proposal.” The required approvals of DraftKings’ stockholders and SBT’s shareholders were obtained prior to the date of this proxy statement/prospectus.
Q:
How do I exercise my redemption rights?
A:
If you are a public stockholder and wish to exercise your right to redeem your public shares, you must:
(i)
(a) hold public shares or (b) hold public shares through units and elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares; and
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(ii)
prior to 12:00 p.m., New York City time, on April 22, 2020, (a) submit a written request to Continental that DEAC redeem your public shares for cash and (b) deliver your public shares to Continental, physically or electronically through The Depository Trust Company (“DTC”).
The address of Continental is listed under the question “Whom do I call if I have questions about the Special Meeting or the Business Combination?” below.
Holders of units must elect to separate the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and public warrants, or if a holder holds units registered in its own name, the holder must contact Continental directly and instruct them to do so.
Any public stockholder will be entitled to request that their public shares (which would become shares of New DraftKings common stock in the reincorporation) be redeemed for a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, calculated as of two business days prior to the consummation of the Business Combination, including interest earned on the funds held in the trust account and not previously released to us to fund our working capital requirements (subject to an annual limit of  $250,000) and/or to pay our taxes, divided by the number of then issued and outstanding public shares. For illustrative purposes, as of December 31, 2019, this would have amounted to approximately $10.10 per public share. However, the proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public stockholders, regardless of whether such public stockholders vote for or against the Business Combination Proposal. Therefore, the per-share distribution from the trust account in such a situation may be less than originally anticipated due to such claims. Your vote on any proposal other than the Business Combination Proposal will have no impact on the amount you will receive upon exercise of your redemption rights. It is anticipated that the funds to be distributed to public stockholders electing to redeem their public shares will be distributed promptly after the consummation of the Business Combination.
If you are a holder of public shares, you may exercise your redemption rights by submitting your request in writing to Continental at the address listed under the question “Whom do I call if I have questions about the Special Meeting or the Business Combination?” below.
Any request for redemption, once made by a holder of public shares, may be withdrawn at any time up to the deadline for submitting redemption requests, which is 12:00 p.m., New York City time, on April 22, 2020, and thereafter, with our consent, until the Closing. If you deliver your shares for redemption to Continental and later decide prior to the deadline for submitting redemption requests not to elect redemption, you may request that DEAC instruct Continental to return the shares to you (physically or electronically). You may make such request by contacting Continental at the phone number or address listed at the end of this section.
Any corrected or changed written exercise of redemption rights must be received by DEAC’s secretary prior to the deadline for submitting redemption requests. No request for redemption will be honored unless the holder’s stock has been delivered (either physically or electronically) to Continental by 12:00 p.m., New York City time, on April 22, 2020.
If you are a holder of public shares and you exercise your redemption rights, it will not result in the loss of any DEAC warrants that you may hold.
Q:
If I am a holder of units, can I exercise redemption rights with respect to my units?
A:
No. Holders of outstanding units must elect to separate the units into the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If you hold your units in an account at a brokerage firm or bank, you must notify your broker or bank that you elect to separate the units into the underlying public shares and public warrants, or if you hold units registered in your own name, you must contact Continental, DEAC’s transfer agent, directly and instruct them to do so. If you fail to cause your units to be separated and delivered to Continental, DEAC’s transfer agent, by 12:00 p.m., New York City time, on April 22, 2020, you will not be able to exercise your redemption rights with respect to your public shares.
13

Q:
What are the U.S. federal income tax consequences of exercising my redemption rights?
A:
We expect that a U.S. holder (as defined below) that exercises its redemption rights to receive cash from the trust account in exchange for its public shares will generally be treated as selling such public shares resulting in the recognition of capital gain or capital loss. There may be certain circumstances in which the redemption may be treated as a distribution for U.S. federal income tax purposes depending on the amount of public shares that a U.S. holder owns or is deemed to own (including through the ownership of New DraftKings warrants). For a more complete discussion of the U.S. federal income tax considerations of an exercise of redemption rights, see “Material U.S. Federal Income Tax Considerations.”
TAX MATTERS ARE COMPLICATED, AND THE TAX CONSEQUENCES OF EXERCISING YOUR REDEMPTION RIGHTS WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF THE EXERCISE OF REDEMPTION RIGHTS TO YOU IN YOUR PARTICULAR CIRCUMSTANCES.
Q:
What are the U.S. federal income tax consequences of the reincorporation?
A:
In the opinion of Winston & Strawn LLP, tax counsel to DEAC, the reincorporation will be a tax-free reorganization under the Internal Revenue Code of 1986, as amended (the “Code”). Accordingly, the holders of DEAC Shares will not recognize any gain or loss under the U.S. federal income tax laws as a result of the consummation of the reincorporation, and neither will DEAC nor New DraftKings. Each DEAC Stockholder will have the same basis in New DraftKings Class A common stock received as a result of the reincorporation as that holder has in DEAC Shares held at the time the reincorporation is consummated. Each holder’s holding period in New DraftKings Class A common stock received as a result of the reincorporation will include the period during which such holder held DEAC Shares at the time the reincorporation is consummated, provided the latter was held by such holder as a capital asset at the time of consummation of the reincorporation. For a more complete discussion of the U.S. federal income tax considerations relating to the reincorporation, see “Material U.S. Federal Income Tax Considerations.”
Q:
How does the DEAC Board recommend that I vote?
A:
The DEAC Board recommends that the DEAC Stockholders vote “FOR” the approval of the Business Combination Proposal, “FOR” the approval of the Reincorporation Proposal, “FOR” the approval of the Charter Proposal, “FOR” the approval, on an advisory basis, of the Advisory Charter Proposals, “FOR” the approval of the Stock Issuance Proposal, “FOR” the approval of the Incentive Award Plan Proposal, “FOR” the approval of the ESPP Proposal and “FOR” the approval of the Adjournment Proposal. For more information regarding how the board of directors of DEAC recommends that DEAC Stockholders vote, see the section entitled “The Business Combination Proposal — DEAC’s Board of Directors’ Reasons for Approval of the Business Combination” beginning on page 102.
Q:
How do our Sponsor and the other initial stockholders intend to vote their shares?
A:
In connection with our initial public offering, our initial stockholders (consisting of our Sponsor and Mr. Sloan) and our directors at the time of our initial public offering entered into a letter agreement to vote their shares in favor of the Business Combination Proposal, and we also expect them to vote their shares in favor of all other proposals being presented at the Special Meeting. As of the date hereof, our initial stockholders own approximately 20% of our total outstanding common stock.
Q:
May our Sponsor and the other initial stockholders purchase public shares or warrants prior to the Special Meeting?
A:
At any time prior to the Special Meeting, during a period when they are not then aware of any material nonpublic information regarding DEAC or its securities, the initial stockholders, DraftKings and/or its affiliates and SBT and/or its affiliates may purchase shares and/or warrants from investors, or they may enter into transactions with such investors and others to provide them with incentives to acquire public shares or vote their public shares in favor of the Business Combination Proposal. The purpose of such
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share purchases and other transactions would be to increase the likelihood that (i) the proposals presented for approval at the Special Meeting are approved and/or (ii) DEAC satisfies the Minimum Proceeds Condition. Any such stock purchases and other transactions may thereby increase the likelihood of obtaining stockholder approval of the Business Combination. This may result in the completion of our Business Combination in a way that may not otherwise have been possible. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and the transfer to such investors or holders of shares or rights owned by the initial stockholders for nominal value.
Entering into any such arrangements may have a depressive effect on public shares. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares it owns, either prior to or immediately after the Special Meeting.
If such transactions are effected, the consequence could be to cause the Business Combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of public shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the Special Meeting and would likely increase the chances that such proposals would be approved. As of the date of this proxy statement/prospectus, there have been no such discussions and no agreements to such effect have been entered into with any such investor or holder.
Q:
Who is entitled to vote at the Special Meeting?
A:
The DEAC Board has fixed March 20, 2020 as the record date for the Special Meeting. All holders of record of DEAC Shares as of the close of business on the record date are entitled to receive notice of, and to vote at, the Special Meeting, provided that those shares remain outstanding on the date of the Special Meeting. Attendance at the Special Meeting is not required to vote. See the section entitled “Questions and Answers About the Business Combination and the Special Meeting — How can I vote my shares without attending the Special Meeting?” beginning on page 16 for instructions on how to vote your DEAC Shares without attending the Special Meeting.
Q:
How many votes do I have?
A:
Each DEAC Stockholder of record is entitled to one vote for each DEAC Share held by such holder as of the close of business on the record date. As of the close of business on the record date, there were 50,000,000 outstanding DEAC Shares.
Q:
What constitutes a quorum for the Special Meeting?
A:
A quorum is the minimum number of stockholders necessary to hold a valid meeting.
A quorum will exist at the Special Meeting with respect to each matter to be considered at the Special Meeting if the holders of outstanding DEAC Shares representing a majority of the voting power of all outstanding DEAC Shares entitled to vote at the Special Meeting on the record date are present in person (which would include presence at a virtual meeting) or represented by proxy at the Special Meeting.
Q:
What will happen to DEAC as a result of the Business Combination?
A:
Immediately prior to Closing, DEAC will change its jurisdiction of incorporation from the State of Delaware to the State of Nevada by merging with and into DEAC Nevada, with DEAC Nevada surviving the merger. DEAC Nevada will also change its name to DraftKings Inc.
Q:
What is DraftKings?
A:
DraftKings is a digital sports entertainment and gaming company that was incorporated in Delaware in 2011. DraftKings provides users with daily fantasy sports, sports betting and iGaming opportunities.
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Q:
What will happen to my DEAC Shares as a result of the Business Combination?
A:
If the Business Combination is completed, each DEAC Share will be canceled and converted into the right to receive one share of New DraftKings Class A common stock. See the section entitled “The Business Combination Proposal — Consideration” beginning on page 95.
Q:
Where will the New DraftKings Class A common stock that DEAC Stockholders receive in the Business Combination be publicly traded?
A:
Assuming the Business Combination is completed, the shares of New DraftKings Class A common stock issued in connection with the Business Combination will be listed and traded on Nasdaq under the ticker symbol “DKNG.”
Q:
What happens if the Business Combination is not completed?
A:
If the BCA is not adopted by DEAC Stockholders or if the Business Combination is not completed for any other reason by June 30, 2020, then we will seek to consummate an alternative initial business combination prior to May 14, 2021. If we do not consummate an initial business combination by May 14, 2021, we will cease all operations except for the purpose of winding up and redeem our public shares and liquidate the trust account, in which case our public stockholders may only receive approximately $10.00 per share and our warrants will expire worthless.
Q:
How can I vote my shares at the Special Meeting?
A:
DEAC Shares held directly in your name as the stockholder of record of such DEAC Shares as of the close of business on March 20, 2020, the record date, may be voted electronically at the Special Meeting. If you choose to attend the Special Meeting, you will need to visit https://www.cstproxy.com/​diamondeagleacquisitioncorp/sm2020, and enter the control number found on your proxy card, voting instruction form or notice you previously received. You may vote during the Special Meeting by following the instructions available on the meeting website during the meeting. If you are a beneficial owner of DEAC Shares but not the stockholder of record of such DEAC Shares, you will also need to obtain a legal proxy for the meeting provided by your bank, broker, or nominee. Please note that if your shares are held in “street name” by a broker, bank or other nominee and you wish to vote at the Special Meeting, you will not be permitted to vote electronically at the Special Meeting unless you first obtain a legal proxy issued in your name from the record owner. To request a legal proxy, please contact your broker, bank or other nominee holder of record. It is suggested you do so in a timely manner to ensure receipt of your legal proxy prior to the Special Meeting.
Q:
How can I vote my shares without attending the Special Meeting?
A:
If you are a stockholder of record of DEAC Shares as of the close of business on March 20, 2020, the record date, you can vote by proxy via the Internet, by telephone or by mail by following the instructions provided in the enclosed proxy card. Please note that if you hold your shares in “street name,” which means your shares are held of record by a broker, bank or nominee, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares, or otherwise follow the instructions provided by your bank, brokerage firm or other nominee.
Q:
What is a proxy?
A:
A proxy is a legal designation of another person to vote the stock you own. If you are a stockholder of record of DEAC Shares as of the close of business on the record date, and you vote by phone, by Internet or by signing, dating and returning your proxy card in the enclosed postage-paid envelope, you designate two of DEAC’s officers as your proxies at the Special Meeting, each with full power to act without the other and with full power of substitution. These two officers are Jeff Sagansky and Eli Baker.
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Q:
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
A:
If your DEAC Shares are registered directly in your name with Continental you are considered the stockholder of record with respect to those shares, and access to proxy materials is being provided directly to you. If your shares are held in a stock brokerage account or by a bank or other nominee, then you are considered the beneficial owner of those shares, which are considered to be held in street name. Access to proxy materials is being provided to you by your broker, bank or other nominee who is considered the stockholder of record with respect to those shares.
Direct holders (stockholders of record).   For DEAC Shares held directly by you, please complete, sign, date and return each proxy card (or cast your vote by telephone or Internet as provided on each proxy card) or otherwise follow the voting instructions provided in this proxy statement/prospectus in order to ensure that all of your DEAC Shares are voted.
Shares in “street name.”   For DEAC Shares held in “street name” through a bank, brokerage firm or other nominee, you should follow the procedures provided by your bank, brokerage firm or other nominee to vote your shares.
Q:
If a DEAC Stockholder gives a proxy, how will the DEAC Shares covered by the proxy be voted?
A:
If you provide a proxy, regardless of whether you provide that proxy by phone, via the Internet or by completing and returning the applicable enclosed proxy card, the individuals named on the enclosed proxy card will vote your DEAC Shares in the way that you indicate when providing your proxy in respect of the DEAC Shares you hold. When completing the Internet or telephone processes or the proxy card, you may specify whether your DEAC Shares should be voted for or against, or should be abstained from voting on, all, some or none of the specific items of business to come before the Special Meeting.
Q:
How will my DEAC Shares be voted if I return a blank proxy?
A:
If you sign, date and return your proxy and do not indicate how you want your DEAC Shares to be voted, then your DEAC Shares will be voted “FOR” the approval of the Business Combination Proposal, “FOR” the approval of the Reincorporation Proposal, “FOR” the approval of the Charter Proposal, “FOR” the approval, on an advisory basis, of the Advisory Charter Proposals, “FOR” the approval of the Stock Issuance Proposal, “FOR” the approval of the Incentive Award Plan Proposal, “FOR” the approval of the ESPP Proposal and “FOR” the approval of the Adjournment Proposal.
Q:
Can I change my vote after I have submitted my proxy?
A:
Yes. If you are a stockholder of record of DEAC Shares as of the close of business on the record date, whether you vote by telephone, Internet or mail, you can change or revoke your proxy before it is voted at the meeting in one of the following ways:

submit a new proxy card bearing a later date;

vote again by telephone or the Internet at a later time;

give written notice of your revocation to DEAC’s Corporate Secretary, which notice must be received by DEAC’s Corporate Secretary prior to the vote at the Special Meeting; or

vote electronically at the Special Meeting by visiting https://www.cstproxy.com/​diamondeagleacquisitioncorp/sm2020 and entering the control number found on your proxy card, voting instruction form or notice you previously received. Please note that your attendance at the Special Meeting will not alone serve to revoke your proxy.
If your shares are held in “street name” by your broker, bank or another nominee as of the close of business on the record date, you must follow the instructions of your broker, bank or other nominee to revoke or change your voting instructions.
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Q:
Where can I find the voting results of the Special Meeting?
A:
The preliminary voting results are expected to be announced at the Special Meeting. In addition, within four business days following certification of the final voting results, DEAC will file the final voting results of its Special Meeting with the SEC in a Current Report on Form 8-K.
Q:
Are DEAC Stockholders able to exercise dissenters’ rights or appraisal rights with respect to the matters being voted upon at the Special Meeting?
A:
No. DEAC Stockholders are not entitled to exercise dissenters’ rights or appraisal rights under Delaware law in connection with the Business Combination, because they are not required to receive any consideration other than the shares of New DraftKings Class A common stock, which will be listed on Nasdaq. DEAC Stockholders may vote against the Business Combination Proposal if they are not in favor of the adoption of the BCA.
Q:
Are there any risks that I should consider as a DEAC Stockholder in deciding how to vote or whether to exercise my redemption rights?
A:
Yes. You should read and carefully consider the risk factors set forth in the section entitled “Risk Factors” beginning on page 47. You also should read and carefully consider the risk factors of DEAC, DraftKings and SBT contained in the documents that are incorporated by reference herein.
Q:
What happens if I sell my DEAC Shares before the Special Meeting?
A:
The record date for DEAC Stockholders entitled to vote at the Special Meeting is earlier than the date of the Special Meeting. If you transfer your DEAC Shares before the record date, you will not be entitled to vote at the Special Meeting. If you transfer your DEAC Shares after the record date but before the Special Meeting, you will, unless special arrangements are made, retain your right to vote at the Special Meeting.
Q:
What are the material U.S. federal income tax consequences of the Business Combination to me?
A:
The U.S. federal income tax consequences of the Business Combination are discussed in more detail in the section entitled “Material U.S. Federal Income Tax Consequences.” The discussion of the material U.S. federal income tax consequences contained in this proxy statement/prospectus is intended to provide only a general discussion and is not a complete analysis or description of all potential U.S. federal income tax consequences of the business combination’s foreign, state or local tax laws.
TAX MATTERS ARE COMPLICATED, AND THE TAX CONSEQUENCES OF THE BUSINESS COMBINATION WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF THE BUSINESS COMBINATION TO YOU IN YOUR PARTICULAR CIRCUMSTANCES.
Q:
When is the Business Combination expected to be completed?
A:
Subject to the satisfaction or waiver of the closing conditions described in the section entitled “The Business Combination Agreement — Conditions to Closing” beginning on page 123, including the adoption of the BCA by the DEAC Stockholders at the Special Meeting, the Business Combination is expected to close in the second quarter of 2020. However, it is possible that factors outside the control of both companies could result in the Business Combination being completed at a later time, or not being completed at all.
Q:
Who will solicit and pay the cost of soliciting proxies?
A:
DEAC has engaged a professional proxy solicitation firm, Morrow Sodali LLC (“Morrow”), to assist in soliciting proxies for the Special Meeting. DEAC has agreed to pay Morrow a fee of  $35,000, plus disbursements. DEAC will reimburse Morrow for reasonable out-of-pocket expenses and will indemnify Morrow and its affiliates against certain claims, liabilities, losses, damages and expenses. DEAC will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of our common stock for their expenses in forwarding soliciting materials to
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beneficial owners of our common stock and in obtaining voting instructions from those owners. DEAC’s management team may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.
Q:
What are the conditions to completion of the Business Combination?
A:
The Closing is subject to certain conditions, including, among other things, (i) approval by DEAC’s stockholders, DraftKings’ stockholders and SBT’s shareholders of the Business Combination Agreement, the Business Combination and certain other actions related thereto, (ii) the expiration or termination of the waiting period (or any extension thereof) applicable under the HSR Act, (iii) certain approvals or other determinations from certain gaming regulatory authorities, as applicable, and the absence of a material adverse regulatory event with respect to DraftKings and SBT, (iv) DEAC having at least $400 million of cash at the Closing, consisting of cash held in the trust account after giving effect to redemptions of public shares, if any, and proceeds from the Private Placement, (v) the effectiveness of the registration statement, of which this proxy statement/prospectus forms a part and (vi) the listing of the shares of New DraftKings Class A common stock to be issued in the Business Combination on Nasdaq. Unless waived, if any of these conditions are not satisfied, the Business Combination may not be consummated. Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001. The required approvals of DraftKings’ stockholders and SBT’s shareholders were obtained prior to the date of this proxy statement/prospectus.
Q:
What should I do now?
A:
You should read this proxy statement/prospectus carefully in its entirety, including the annexes, and return your completed, signed and dated proxy card(s) by mail in the enclosed postage-paid envelope or submit your voting instructions by telephone or via the Internet as soon as possible so that your DEAC Shares will be voted in accordance with your instructions.
Q:
What should I do if I receive more than one set of voting materials?
A:
Stockholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your DEAC Shares.
Q:
Whom do I call if I have questions about the Special Meeting or the Business Combination?
A:
If you have questions about the Special Meeting or the Business Combination, or desire additional copies of this proxy statement/prospectus or additional proxies, you may contact:
Morrow Sodali LLC
470 West Avenue, Suite 3000
Stamford, CT 06902
Tel: (800) 662-5200
Banks and brokers call collect: (203) 658-9400
E-mail: DEAC.info@investor.morrowsodali.com
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You also may obtain additional information about DEAC from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.” If you are a holder of public shares and you intend to seek redemption of your shares, you will need to deliver your public shares (either physically or electronically) to Continental Stock Transfer & Trust Company, DEAC’s transfer agent, at the address below prior to 12:00 p.m., New York City time, on April 22, 2020. If you have questions regarding the certification of your position or delivery of your stock, please contact:
Mark Zimkind
Continental Stock Transfer & Trust Company
One State Street Plaza, 30th Floor
New York, New York 10004
E-mail: mzimkind@continentalstock.com
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SUMMARY
This summary highlights selected information included in this document and does not contain all of the information that may be important to you. You should read this entire document and its appendices and the other documents to which DEAC, DraftKings and SBTech refer before you decide how to vote with respect to the proposals to be considered and voted on at the Special Meeting. Each item in this summary includes a page reference directing you to a more complete description of that item.
Information About the Parties to the Business Combination (page 87)
Diamond Eagle Acquisition Corp.
2121 Avenue of the Stars, Suite 3200
Los Angeles, CA 90067
(310) 209-7280
Diamond Eagle Acquisition Corp. is a blank check company whose business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.
DraftKings Inc.
222 Berkeley Street, 5th Floor
Boston, MA 02116
DraftKings Inc., a Delaware corporation, is a digital sports entertainment and gaming company. DraftKings provides users with daily fantasy sports, sports betting and iGaming opportunities.
SBTech (Global) Limited
33-37 Athol Street,
Douglas, Isle of Man IM1 1LB
SBTech is headquartered in the Isle of Man. Its principal business activities involve the design and development of sports betting and casino gaming platform software for online and retail sportsbook and casino gaming products.
DEAC Nevada
DEAC Nevada is a wholly-owned subsidiary of DEAC formed for the purpose of effecting the Business Combination and the reincorporation. DEAC Nevada was incorporated under the Nevada Revised Statutes (“NRS”) on December 13, 2019. DEAC Nevada owns no material assets and does not operate any business.
Pursuant to the terms and subject to the conditions of the Business Combination Agreement, among other things, DEAC will merge with and into DEAC Nevada with DEAC Nevada surviving the merger.
DEAC Merger Sub Inc.
DEAC Merger Sub Inc. is a wholly-owned subsidiary of DEAC formed solely for the purpose of effecting the Business Combination. Merger Sub was incorporated under the DGCL on December 9, 2019. Merger Sub owns no material assets and does not operate any business.
Pursuant to the terms and subject to the conditions of the Business Combination Agreement, among other things, Merger Sub will merge with and into DraftKings, with DraftKings surviving the merger.
Recent Developments
On Friday, March 27, 2020, SBTech detected what appeared to be an active ransomware attack on its network (the “cybersecurity incident”). SBTech immediately shut down its data centers. This interrupted the operation of the sports betting and iGaming services of SBTech's customers. As of the date of this proxy
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statement/prospectus, substantially all of SBTech's customers are again operating without interruption. SBTech has notified customers and relevant regulatory and law enforcement authorities of the incident. In addition, SBTech has engaged third-party cybersecurity experts to conduct an independent forensic investigation, which is ongoing, and to recommend an implementation of any required enhanced security measures.
SBTech has advised that it has initiated enhanced security measures to improve the security of its network and that to the best of its knowledge it recovered all of its data. SBTech has further advised that at this initial stage of the forensic investigation there is no indication that any of its data, including its customer data, has been extracted or accessed. SBTech has further advised that it carries insurance, including cyber insurance, that may cover related expenses and losses, but the full scope of such expenses and losses and the impacts of the cybersecurity incident, including the amount of insurance available to offset some or all of such expenses and losses, have not been determined. SBTech is reviewing its cybersecurity procedures, which may result in an increase in cybersecurity protection costs, the amount of which has not been determined.
On April 7, 2020, DraftKings, SBTech and DEAC amended the BCA to update certain indemnification provisions to account for the cybersecurity incident, as further described in “The Business Combination Agreement — Indemnification” beginning on page 108.
The Business Combination Agreement (page 112)
The terms and conditions of the Business Combination are contained in the BCA, which is attached to this document as Annex A (along with Amendment No. 1 thereto, which is attached as Annex J), and is incorporated by reference herein in its entirety. DEAC encourages you to read the BCA carefully, as it is the legal document that governs the Business Combination. For more information on the BCA, see the section entitled “The Business Combination Agreement.”
Structure of the Business Combination (page 95)
Pursuant to the BCA, (i) DEAC will change its jurisdiction of incorporation to Nevada by merging with and into DEAC Nevada, with DEAC Nevada surviving the merger and changing its name to “DraftKings Inc.” (referred to in this proxy statement/prospectus as “New DraftKings”), (ii) following the reincorporation, Merger Sub will merge with and into DraftKings, with DraftKings surviving the merger (the “DK Merger”) and (iii) immediately following the DK Merger, New DraftKings will acquire all of the issued and outstanding share capital of SBT. Upon consummation of the foregoing transactions, DraftKings and SBT will be wholly-owned subsidiaries of New DraftKings. In addition, in connection with the reincorporation, New DraftKings will amend and restate its charter to be the Proposed Charter and adopt the dual class structure and the unsuitability provisions, each as described in the section of this proxy statement/prospectus titled “Description of New DraftKings Securities.
The following diagrams illustrate in simplified terms the current structure of DEAC and DraftKings and the expected structure of New DraftKings and its operating subsidiaries upon the Closing.
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Simplified Pre-Combination Structure
[MISSING IMAGE: tv535007-fc_simpprebw.jpg]
Simplified Post-Combination New DraftKings Structure
[MISSING IMAGE: tv535007-fc_simppostbw.jpg]
The Private Placement (page 97)
In order to satisfy the Minimum Proceeds Condition, DEAC entered into the Subscription Agreements with the PIPE Investors, pursuant to which, among other things, DEAC agreed to issue and sell in private placements an aggregate of 30,471,352 shares of DEAC Class A common stock to the PIPE Investors for $10.00 per share, plus the issuance by DEAC to the PIPE Investors of an aggregate of 3.0 million warrants to purchase shares of DEAC common stock, which warrants are identical to our public warrants. The Private Placement is expected to close immediately prior to the Closing. In connection with the Closing, pursuant to the Reincorporation Merger Agreement, all of the issued and outstanding shares of DEAC Class A common stock, including the shares of DEAC Class A common stock issued to the PIPE Investors, will be exchanged, on a one-for-one basis, for shares of New DraftKings Class A common stock. In
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addition, all of DEAC’s outstanding warrants will become warrants to acquire shares of New DraftKings Class A common stock on the same terms as DEAC’s currently outstanding warrants. For more information regarding the Private Placement, see the section entitled “The Business Combination Proposal — The Private Placement.”
The Convertible Notes (page 251)
On and after December 16, 2019, DraftKings issued subordinated convertible promissory notes to certain investors in an aggregate principal amount of approximately $109.2 million (the “Convertible Notes”). Pursuant to the terms of the Convertible Notes, the outstanding principal and accrued interest on the Convertible Notes will convert immediately prior to the reincorporation into shares of DEAC Class A common stock, at a price per share equal to the price per share paid by the PIPE Investors in the Private Placement. The shares of DEAC Class A common stock issued upon conversion of the Convertible Notes will be converted into shares of New DraftKings Class A common stock upon consummation of the reincorporation and the Business Combination.
Treatment of DraftKings Equity (page 113)
Each share of DraftKings Class A common stock (including shares of DraftKings preferred stock converted to DraftKings Class A common stock in connection with the conversion of such preferred shares) issued and outstanding immediately prior to the effective time of the DK Merger (other than certain excluded shares) will be converted into the right to receive shares of New DraftKings Class A common stock based on the DK Share Exchange Ratio as described further herein. Assuming the capitalization of DraftKings, SBT and DEAC as set forth in the BCA for illustrative purposes and assuming the Closing occurred on the date of the BCA, the DK Share Exchange Ratio would be 0.3574. Any DraftKings stockholder who is not an “accredited investor” will not receive shares of New DraftKings Class A common stock and will instead receive cash in an amount equal to the value of the shares of New DraftKings Class A common stock that such DraftKings stockholder would have otherwise received in respect of such stockholder’s shares based on the DK Share Exchange Ratio. We anticipate that the aggregate amount of cash that will be paid out to non-accredited investors in DraftKings will be less than $15 million.
Prior to the effective time of the DK Merger, DraftKings will issue shares of Class B common stock to Jason Robins. Each share of DraftKings Class B common stock issued and outstanding immediately prior to the effective time of the DK Merger will be converted into the right to receive shares of New DraftKings Class B common stock.
Each option to purchase shares of DraftKings common stock that is outstanding immediately prior to the effective time of the DK Merger, whether vested or unvested, will automatically be converted into an option to purchase a number of shares of New DraftKings Class A common stock based on the DK Share Exchange Ratio as described further herein. Each DraftKings restricted stock unit that is outstanding immediately prior to the effective time of the DK Merger will automatically be converted into a restricted stock unit denominated in New DraftKings Class A common stock based on the DK Share Exchange Ratio as described further herein.
Treatment of SBT Equity (page 114)
Each of the SBT Sellers and the holders of in-the-money vested options to purchase shares of SBT capital stock will receive, in respect of their shares of SBT capital stock and in respect of the Cashed-Out SBT Options, their respective pro rata portions of the aggregate cash consideration, as determined in accordance with the terms of the BCA, based on a cash amount of €180,000,000, as adjusted for net debt and working capital, as well as certain other specified items.
In addition, each SBT Seller will receive such number of shares of New DraftKings Class A common stock equal to the result of multiplying such SBT Seller’s aggregate number of shares of SBT capital stock held by such SBT Seller immediately prior to the Closing by the SBT Share Exchange Ratio (as defined in
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the BCA). Assuming the capitalization of DraftKings, SBT and DEAC as of the date of the BCA and assuming the Closing occurred on the date of the BCA, the SBT Share Exchange Ratio would be 998.5 shares of New DraftKings Class A common stock per SBT Share.
Each outstanding option to purchase shares of SBT capital stock other than the Cashed-Out SBT Options, which we collectively refer to as the SBT rolled-over options, will automatically and without any action on the part of the holder thereof, be converted into an option to purchase a number of shares of New DraftKings Class A common stock equal to the number of shares of SBT capital stock subject to such option award immediately prior to the Closing multiplied by the SBT Share Exchange Ratio, with an exercise price per share of New DraftKings Class A common stock equal to the exercise price per share of such SBT rolled-over option divided by the SBT Share Exchange Ratio. As converted, each such SBT rolled-over option will generally continue to be governed by the same terms and conditions as were applicable immediately prior to the Closing, except that the terms of the SBT option plan and agreements evidencing awards thereunder will be deemed amended such that a “transaction” is no longer a condition for the exercise of such option. In addition, New DraftKings will assume the SBT option plan (including by adjusting the share reserve available thereunder by the SBT Share Exchange Ratio) such that following the Closing, New DraftKings will be entitled to grant equity awards thereunder to the extent agreed by the parties and outlined in “The Business Combination Agreement — Employee Matters.”
Earnout Shares
The DEAC Founder Group (the “DEAC Earnout Group”), the SBT Sellers (the “SBT Earnout Group”) and the DK Equityholders and holders of former DraftKings options that were converted into options to purchase a number of shares of New DraftKings Class A Common Stock and holders of former DraftKings restricted stock units that were converted into New DraftKings restricted stock units (the “DK Earnout Group”) will have the right to receive the portion of 6,000,000 aggregate Earnout Shares described below, which will be released as follows:

one-third of the Earnout Shares will be released to such earnout recipients on a Pro Rata Basis (as defined below) if: (A) the volume weighted average share price of New DraftKings Class A common stock equals or exceeds $12.50 per share for 20 of any 30 consecutive trading days commencing after the Closing or (B) New DraftKings consummates a transaction which results in the stockholders of New DraftKings having the right to exchange their shares for cash, securities or other property having a value equaling or exceeding $12.50 per share;

one-third of the Earnout Shares will be released to such earnout recipients on a Pro Rata Basis if: (A) the volume weighted average share price of New DraftKings Class A common stock equals or exceeds $14.00 per share for 20 of any 30 consecutive trading days commencing after the Closing or (B) New DraftKings consummates a transaction which results in the stockholders of New DraftKings having the right to exchange their shares for cash, securities or other property having a value equaling or exceeding $14.00 per share; and

one-third of the Earnout Shares will be released to such earnout recipients on a Pro Rata Basis if: (A) the volume weighted average share price of New DraftKings Class A common stock equals or exceeds $16.00 per share for 20 of any 30 consecutive trading days commencing after the Closing or (B) New DraftKings consummates a transaction which results in the stockholders of New DraftKings having the right to exchange their shares for cash, securities or other property having a value equaling or exceeding $16.00 per share.

If the condition for more than one triggering event is met pursuant to the above, then all of the Earnout Shares to be released and distributed in connection with each such triggering event shall be released and delivered to the earnout recipients.
For the purposes of the release of Earnout Shares only, a “Pro Rata Basis” means (A) with respect to each member of the DEAC Earnout Group, in accordance with the ratio calculated by dividing (x) the number of shares of New DraftKings Class A common stock held by such member, by (y) the aggregate number of shares of New DraftKings Class A common stock held by the DEAC Earnout Group; (B) with respect to each member of the DK Earnout Group, in accordance with the ratio calculated by dividing
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(x) the sum of the number of shares of New DraftKings Class A common stock held and the number of shares of New DraftKings Class A common stock underlying exchanged DraftKings options and exchanged DraftKings restricted stock units held by such member, by (y) the sum of the aggregate number of shares of New DraftKings Class A common stock held by the DK Earnout Group and the aggregate number of shares of New DraftKings Class A common stock underlying exchanged DraftKings options and exchanged DraftKings restricted stock units, and in either of case (A) or (B), as of immediately following the Closing; and (C) with respect to each member of the SBT Earnout Group, in accordance with the ratio calculated by dividing (x) the number of SBT shares held by such member immediately prior to Closing, by (y) the aggregate number of shares of SBT held by all members of the SBT Earnout Group immediately prior to the Closing.
The members of the DEAC Earnout Group will each be entitled to the right to receive their respective pro rata shares (as among the DEAC Earnout Group) of 3,000,000 Earnout Shares. The members of the DK Earnout Group will each be entitled to the right to receive their respective pro rata shares (as among the DK Earnout Group) of 2,280,000 Earnout Shares. The members of the SBT Earnout Group will each be entitled to the right to receive their respective pro rata shares (as among the SBT Earnout Group) of 720,000 Earnout Shares. Any Earnout Shares not eligible to be released by the four-year anniversary of the Closing Date will be forfeited to New DraftKings and canceled, and no earnout recipient will have any rights with respect thereto.
Special Meeting of DEAC Stockholders and the Proposals (page 88)
The Special Meeting, which was adjourned, will be reconvened on April 23, 2020 at 9:00 a.m., New York City time, in virtual format. Stockholders may attend, vote and examine the list of DEAC stockholders entitled to vote at the Special Meeting by visiting https://www.cstproxy.com/​diamondeagleacquisitioncorp/sm2020 and entering the control number found on their proxy card, voting instruction form or notice they previously received. The purpose of the Special Meeting is to consider and vote on the Business Combination Proposal, the Reincorporation Proposal, the Charter Proposal, the Advisory Charter Proposals (on an advisory basis), the Stock Issuance Proposal, the Incentive Award Plan Proposal, the ESPP Proposal and the Adjournment Proposal.
Approval of the condition precedent proposals is a condition to the obligation of DEAC to complete the Business Combination.
Only holders of record of issued and outstanding DEAC Shares as of the close of business on March 20, 2020, the record date for the Special Meeting, are entitled to notice of, and to vote at, the Special Meeting or any adjournment or postponement of the Special Meeting. You may cast one vote for each share of DEAC common stock that you owned as of the close of business on that record date.
A quorum of stockholders is necessary to hold a valid meeting. A quorum will exist at the Special Meeting with respect to each matter to be considered at the Special Meeting if the holders of a majority of the outstanding shares of DEAC common stock as of the record date present in person (which would include presence at a virtual meeting) or represented by proxy at the Special Meeting. All shares represented by proxy are counted as present for purposes of establishing a quorum.
Approval of the Business Combination Proposal requires the affirmative vote of a majority of the votes cast by DEAC stockholders present in person (which would include presence at a virtual meeting) or represented by proxy at the Special Meeting and entitled to vote thereon. Abstentions and broker non-votes will have no effect on the outcome of the proposal.
Approval of the Reincorporation Proposal requires the affirmative vote of a majority of the outstanding DEAC Shares entitled to vote thereon, voting together as a single class. Abstentions and broker non-votes will have the same effect as a vote “AGAINST” such proposal.
Approval of the Charter Proposal requires the affirmative vote of a majority of the outstanding DEAC Shares entitled to vote thereon, voting together as a class. Abstentions and broker non-votes have the same effect as a vote “AGAINST” the proposal.
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Approval of each of the Advisory Charter Proposals, each of which is a non-binding vote, requires the affirmative vote of a majority of the votes cast by DEAC Stockholders present in person (which would include presence at a virtual meeting) or represented by proxy and entitled to vote at the Special Meeting. Abstentions and broker non-votes have no effect on the outcome of the proposal.
Approval of the Stock Issuance Proposal requires the affirmative vote of a majority of the votes cast by DEAC Stockholders present in person (which would include presence at a virtual meeting) or represented by proxy at the Special Meeting and entitled to vote thereon. Abstentions and broker non-votes have no effect on the outcome of the proposal.
Approval of the Incentive Award Plan Proposal requires the affirmative vote of a majority of the votes cast by DEAC Stockholders present in person (which would include presence at a virtual meeting) or represented by proxy at the Special Meeting and entitled to vote thereon. Abstentions and broker non-votes have no effect on the outcome of the proposal.
Approval of the ESPP Proposal requires the affirmative vote of a majority of the votes cast by DEAC Stockholders present in person (which would include presence at a virtual meeting) or represented by proxy at the Special Meeting and entitled to vote thereon. Abstentions and broker non-votes have no effect on the outcome of the proposal.
Approval of the Adjournment Proposal requires the affirmative vote of a majority of the votes cast by DEAC Stockholders present in person (which would include presence at a virtual meeting) or represented by proxy at the Special Meeting and entitled to vote thereon. Abstentions and broker non-votes have no effect on the outcome of the proposal.
Recommendation of DEAC’s Board of Directors (page 89)
The DEAC Board has unanimously determined that the Business Combination is in the best interests of, and advisable to, the DEAC Stockholders and recommends that the DEAC Stockholders adopt the BCA and thereby approve the Business Combination. The DEAC Board made its determination after consultation with its legal and financial advisors and consideration of a number of factors.
The DEAC Board recommends that you vote “FOR” the approval of the Business Combination Proposal, “FOR” the approval of the Reincorporation Proposal, “FOR” the approval of the Charter Proposal, “FOR” the approval, on an advisory basis, of the Advisory Charter Proposals, “FOR” the approval of the Stock Issuance Proposal, “FOR” the approval of the Incentive Award Plan Proposal, “FOR” the approval of the ESPP Proposal and “FOR” the approval of the Adjournment Proposal.
For more information about the DEAC Board’s recommendation and the proposals, see the sections entitled “The Special Meeting — Vote Required and DEAC Board Recommendation” beginning on page 89 and “The Business Combination Proposal — DEAC’s Board of Directors’ Reasons for Approval of the Business Combination” beginning on page 102.
DEAC’s Board of Directors’ Reasons for Approval of the Business Combination (page 102)
In considering the Business Combination, DEAC’s board of directors considered the following positive factors, although not weighted or in any order of significance:
High-Growth Industry.   The combination of DraftKings and SBT will establish one of the largest vertically integrated online sports betting, iGaming and DFS platforms to take advantage of the growing world-wide trend of online gaming regulation. Based on third-party data and industry reports, there is approximately a $450 billion global gaming industry and estimates that the U.S. online sports betting industry will be $18 billion of gross revenue at maturity. While the industry in the United States is nascent due to prior federal preemption, increased regulation by individual U.S. states has created a rapidly growing environment and a trend toward regulation. This represents a near greenfield opportunity for DraftKings which has already proven itself with its DFS product in 43 U.S. states with an industry leading 60%+ market share and a database of over 4 million unique paid users.
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Business with Revenue and Earnings Growth Potential.   DraftKings has an attractive financial profile characterized by strong existing growth and continued prospects of accelerated growth. From 2017 to 2021E, New DraftKings expects to achieve a revenue compound annual growth rate (“CAGR”) of over 31% and to have grown revenues by $460 million. DEAC believes that DraftKings is well positioned to continue its dynamic growth trajectory as it integrates SBT and expands its product offerings and geographic reach.
Compelling Unit Economics.   DraftKings is a high growth consumer facing Internet business that features compelling unit economics. This has been demonstrated in its core DFS business and has further developed in its rollout of online sports betting and iGaming. DraftKings’ iGaming and Sportsbook in New Jersey had an estimated gross profit margin of 32% for the full year 2019, while DraftKings had an overall estimated gross profit margin of 68% for the full year 2019, and there is the expectation to improve that margin as the business achieves greater scale nationally and integrates the SBT technology. Similarly, SBT’s business-to-business structure also yields strong unit economics.
Diversified Revenue Mix.   After the Business Combination, the combined company will have a diversified revenue mix, well suited to capture different parts of the value chain in the online sports and iGaming industries. While DraftKings’ business is consumer facing and reliant on marketing outreach to end-user consumers, SBT is a business-to-business software service provider with over 40+ customers worldwide. DEAC believes that this provides a financial advantage to the combined company because it will create diversified sources of revenue but also geographic dispersion to capture the growth outside of the United States as well as inside.
Experienced and Motivated Management Team.   DraftKings and SBT are led by a seasoned team of industry experts that have re-defined online daily fantasy sports, sports betting and iGaming in the United States and throughout the world.
Regulatory Approvals (page 106)
The Business Combination is subject to the expiration or termination of the waiting period (or any extension thereof) applicable under the HSR Act. Early termination of the waiting period was granted by the Federal Trade Commission and the waiting period ended on January 27, 2020.
Gaming Regulatory Approvals
The Business Combination is also subject to (i) the receipt of determinations by the Gambling Commission of Great Britain (the “UKGC”) that all gambling and other operating licenses issued by the UKGC to DraftKings, SBTech or any of their respective subsidiaries will continue in effect following the Closing without the imposition of any material limitations or conditions on the ability of New DraftKings to operate the businesses of DraftKings and SBTech following the Closing, as well as the grant by the UKGC of any personal management licenses to any persons who do not already hold a personal management license issued by the UKGC as needed to ensure compliance with such gambling and other operating licenses issued by the UKGC to DraftKings, SBTech and their respective subsidiaries; (ii) approvals by the gaming regulatory authority in Gibraltar with respect to the acquisition of SBTech and, indirectly, its Gibraltar subsidiary, and by the gaming regulatory authority in the Northern Territory of Australia of the Business Combination, including with respect to the qualifying interests in DraftKings and, indirectly, its Australian subsidiary, and in either case, any matters in connection with the Business Combination relating to control, management and operation of such entities; (iii) transactional waivers by the New Jersey Division of Gaming Enforcement authorizing certain entities to continue to engage in sports wagering gaming related business transactions with certain DraftKings and SBTech subsidiaries upon and following the Closing; (iv) approvals of transfer of ownership (or waivers of such approval requirements) and any necessary findings of suitability by the gaming regulatory authorities (as applicable) in Indiana and Mississippi with respect to certain subsidiaries of DraftKings and SBTech, as well as Iowa and Pennsylvania with respect to certain subsidiaries of DraftKings; and (v) written confirmation or such other approval necessary to permit SBTech to continue to provide, upon and following the Closing, services as contemplated by SBT Malta Limited’s agreement in effect with the Oregon State Lottery Commission.
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The parties have begun the process of making submissions to the applicable gaming regulatory authorities and are continuing to work to obtain the required gaming regulatory approvals prior to the Closing as needed to satisfy the gaming regulatory conditions to Closing, including the condition regarding the absence of any material adverse regulatory event with respect to DraftKings and SBT.
Conditions to Closing (page 123)
The Business Combination is subject to customary closing conditions, including regulatory approvals, including being subject to the expiration or termination of the waiting period (or any extension thereof) applicable under the HSR Act, receipt of approvals from certain gaming regulators, the absence of a material adverse regulatory event with respect to DraftKings and SBT and the required approvals of DEAC’s stockholders, DraftKings’ stockholders and SBT shareholders. The Closing is also conditioned on the effectiveness of the registration statement on Form S-4 of which this proxy statement/prospectus constitutes a part, and receipt of approval for listing the shares of New DraftKings Class A common stock to be issued as consideration under the BCA on the Nasdaq. DEAC is also required to have a minimum of $400,000,000 in cash comprising (i) the cash held in the trust account after giving effect to DEAC share redemptions, and (ii) proceeds from the Private Placement (provided that DraftKings and SBT (acting jointly) may waive this condition). The Business Combination is also subject to the receipt by the SBT Sellers’ Representative of certain tax rulings from the Israel Tax Authority, which condition may be waived by the SBT Sellers’ Representative. Unless waived, if any of these conditions are not satisfied, the Business Combination may not be consummated. Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001. The required approvals of DraftKings’ stockholders and SBT shareholders were obtained prior to the date of this proxy statement/​prospectus.
Termination and Termination Fee (page 127)
The BCA may be terminated at any time prior to the Closing:

by mutual written consent of DraftKings, the SBT Sellers’ Representative and DEAC;

by each of DraftKings, the SBT Sellers’ Representative or DEAC if:

the Business Combination is not completed on or before June 30, 2020 (the “Outside Date,” which may be extended by an additional 31 days by the mutual written consent of DraftKings, the SBT Sellers’ Representative and DEAC); provided that this termination right will not be available to a party whose action or failure to act has been the primary cause of or resulted in the failure of the Business Combination to be consummated on or before the Outside Date;

any governmental authority issues an order or injunction or takes any other action permanently restraining, enjoining or otherwise prohibiting the consummation of the Business Combination, and such order or other action becomes final and non-appealable; provided that this termination right is not available to any party if such party has not complied in all material respects with its regulatory efforts covenants; or

the requisite approvals of DEAC’s stockholders are not obtained at the Special Meeting or any adjournment or postponement thereof.

by DraftKings if:

SBT, the SBT Sellers or DEAC has breached or failed to perform any of their respective representations, warranties, covenants or agreements set forth in the BCA, which breach or failure to perform (i) would give rise to the failure of certain conditions to the Closing to be satisfied and (ii) is incapable of being cured or is not cured by such party by the earlier of (x) 30 days following receipt of written notice from DraftKings of such breach or failure to perform and (y) the Outside Date; or
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DEAC withdraws, or amends, qualifies or modifies in a manner adverse to DraftKings, SBT or the SBT Sellers, its recommendation to DEAC’s stockholders to adopt and approve the Business Combination and the other proposals described in this proxy statement/prospectus, prior to the time requisite approvals of DEAC’s stockholders are obtained;

by the SBT Sellers’ Representative if:

DraftKings or DEAC has breached or failed to perform any of its representations, warranties, covenants or agreements set forth in the BCA, which breach or failure to perform (i) would give rise to the failure of certain conditions to the Closing to be satisfied and (ii) is incapable of being cured or is not cured by such party by the earlier of  (x) 30 days following receipt of written notice from the SBT Sellers’ Representative of such breach or failure to perform and (y) the Outside Date; or

DEAC withdraws, or amends, qualifies or modifies in a manner adverse to DraftKings, SBT or the SBT Sellers, its recommendation to DEAC’s stockholders to adopt and approve the Business Combination and the other proposals described in this proxy statement/prospectus, prior to the time requisite approvals of DEAC’s stockholders are obtained;

by DEAC if any of DraftKings, SBT or the SBT Sellers has breached or failed to perform any of its or their respective representations, warranties, covenants or agreements set forth in the BCA, which breach or failure to perform (i) would give rise to the failure of certain conditions to the Closing to be satisfied and (ii) is incapable of being cured or is not cured by such party by the earlier of  (x) 30 days following receipt of written notice from DEAC of such breach or failure to perform and (y) the Outside Date.
Termination Fee
In the event that the BCA is terminated, other than in circumstances where SBT or the SBT Sellers have breached or failed to perform any of their respective representations, warranties, covenants or agreements set forth in the BCA in such a manner that would give rise to a termination right as discussed above, DraftKings must pay to SBT a termination fee of  $3,000,000 (the “SBT Termination Fee”). Upon any valid termination of the BCA where the SBT Termination Fee becomes due and payable, the payment of the SBT Termination Fee will be in full and complete satisfaction of any and all monetary damages of SBT, its affiliates, and their respective representatives that may be claimed by SBT and its affiliates against DraftKings, its subsidiaries and any of their respective representatives arising out of or related to the BCA or the Business Combination (except in case of fraud or any willful and material breach of the BCA by DraftKings).
Redemption Rights (page 91)
Pursuant to DEAC’s Current Charter, a public stockholder may request that DEAC redeem all or a portion of their public shares (which would become shares of New DraftKings Class A common stock in the reincorporation) for cash if the Business Combination is consummated. You will be entitled to receive cash for any public shares to be redeemed only if you:

(a) hold public shares or (b) hold public shares through units and you elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares; and

prior to 12:00 p.m., New York City time, on April 22, 2020, (a) submit a written request to the transfer agent that DEAC redeem your public shares for cash and (b) deliver your public shares to the transfer agent, physically or electronically through DTC.
As noted above, holders of units must elect to separate the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. Holders may instruct their broker to do so, or if a holder holds units registered in its own name, the holder must contact the transfer agent directly and instruct them to do so. Public stockholders may elect to redeem all or a portion of their public shares even if they vote for the Business Combination Proposal. If the Business Combination is not
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consummated, the public shares will not be redeemed for cash. If a public stockholder properly exercises its right to redeem its public shares and timely delivers its public shares to Continental, DEAC’s transfer agent, DEAC will redeem such public shares upon the Closing for a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, calculated as of two business days prior to the consummation of the Business Combination, including interest earned on the funds held in the trust account and not previously released to us to fund our working capital requirements (subject to an annual limit of   $250,000) and/or to pay our taxes, divided by the number of then issued and outstanding public shares. If a public stockholder exercises its redemption rights, then it will be exchanging its redeemed public shares for cash and will no longer own such shares. See the section entitled “The Special Meeting — Redemption Rights” for a detailed description of the procedures to be followed if you wish to redeem your public shares for cash.
Notwithstanding the foregoing, a holder of public shares, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its public shares with respect to more than an aggregate of 20% of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the public shares, then any such shares in excess of that 20% limit would not be redeemed for cash.
Holders of our warrants will not have redemption rights with respect to the warrants.
No Delaware Appraisal Rights (page 319)
Pursuant to Section 262(b)(2) of the DGCL, DEAC Stockholders are not entitled to exercise dissenters’, appraisal, cash exit or similar rights in connection with the Business Combination. For more information, see the section entitled “No Delaware Appraisal Rights” beginning on page 319.
Proxy Solicitation (page 91)
Proxies may be solicited by mail, telephone or in person. DEAC has engaged Morrow to assist in the solicitation of proxies. If a stockholder grants a proxy, it may still vote its shares at the Special Meeting if it revokes its proxy before the Special Meeting. A stockholder also may change its vote by submitting a later-dated proxy as described in the section entitled “The Special Meeting — Revoking Your Proxy.”
Interests of DEAC’s Directors and Officers in the Business Combination (page 107)
When you consider the recommendation of DEAC’s board of directors in favor of approval of the Business Combination Proposal, you should keep in mind that DEAC’s initial stockholders, including its directors and officers, have interests in such proposal that are different from, or in addition to those of DEAC Stockholders and warrant holders generally. These interests include, among other things, the interests listed below:

If we are unable to complete our initial business combination by May 14, 2021, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than 10 business days thereafter, redeem the public shares and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our Board, liquidate and dissolve, subject in each case to our obligations under the DGCL to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our initial business combination by May 14, 2021. Our initial stockholders purchased the founder shares prior to our initial public offering for an aggregate purchase price of  $25,000. Upon the Closing, such founder shares will be exchanged for 10,000,000 shares of New DraftKings Class A common stock, 720,000 of which will be forfeited and 5,280,000 of which will be deposited into escrow and released in accordance with the terms of the BCA. Such securities, if unrestricted and freely tradable would be valued at approximately $142,500,000, based on the closing price of  $14.25 per share of our Class A common stock on The Nasdaq Capital Market on April 13, 2020.
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Simultaneously with the closing of our initial public offering, we consummated the sale of 6,333,334 private placement warrants at a price of  $1.50 per warrant in a private placement to our initial stockholders, including our independent directors (and/or one or more of their estate planning vehicles). The warrants are each exercisable commencing 30 days following the Closing for one share of DEAC Class A common stock at $11.50 per share. If we do not consummate a business combination transaction by May 14, 2021, then the proceeds from the sale of the private placement warrants will be part of the liquidating distribution to the public stockholders and the warrants held by our initial stockholders will be worthless. The warrants held by our initial stockholders had an aggregate market value of approximately $25,333,336 based upon the closing price of  $4.00 per warrant on The Nasdaq Capital Market on April 13, 2020.

Our Sponsor, officers and directors will lose their entire investment in us if we do not complete a business combination by May 14, 2021. Certain of them may continue to serve as officers and/or directors of New DraftKings after the Closing. As such, in the future they may receive any cash fees, stock options or stock awards that the New DraftKings board of directors determines to pay to its directors and/or officers.

Our initial stockholders and our officers and directors have agreed to waive their rights to liquidating distributions from the trust account with respect to their founder shares if DEAC fails to complete a business combination by May 14, 2021.

In order to protect the amounts held in the trust account, the Sponsor has agreed that it will be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have entered into a transaction agreement, reduce the amount of funds in the trust account. This liability will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the trust account or to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”).

Following the Closing, our Sponsor would be entitled to the repayment of any working capital loan and advances that have been made to DEAC and remain outstanding. As of the date of this proxy statement/prospectus, our Sponsor has not made any advances to us for working capital expenses. If we do not complete an initial business combination within the required period, we may use a portion of our working capital held outside the trust account to repay the working capital loans, but no proceeds held in the trust account would be used to repay the working capital loans.

Following the consummation of the Business Combination, we will continue to indemnify our existing directors and officers and will maintain a directors’ and officers’ liability insurance policy.

Upon the Closing, subject to the terms and conditions of the BCA, our Sponsor, our officers and directors and their respective affiliates may be entitled to reimbursement for any reasonable out-of-pocket expenses related to identifying, investigating and consummating an initial business combination, and repayment of any other loans, if any, and on such terms as to be determined by DEAC from time to time, made by our Sponsor or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination.
At any time prior to the Special Meeting, during a period when they are not then aware of any material nonpublic information regarding DEAC or its securities, the initial stockholders, DraftKings and/or its affiliates and SBT and/or its affiliates may purchase shares and/or warrants from investors, or they may enter into transactions with such investors and others to provide them with incentives to acquire DEAC Shares or vote their DEAC Shares in favor of the Business Combination Proposal. The purpose of such share purchases and other transactions would be to increase the likelihood that (i) the proposals presented for approval at the Special Meeting are approved and/or (ii) DEAC satisfies the Minimum Proceeds Condition. Any such purchases of public shares and other transactions may thereby increase the likelihood of obtaining stockholder approval of the Business Combination. This may result in the completion of our Business Combination that may not otherwise have been possible. While the exact nature of any such
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incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and the transfer to such investors or holders of shares or rights owned by the initial stockholders for nominal value.
Entering into any such arrangements may have a depressive effect on DEAC Shares. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares it owns, either prior to or immediately after the Special Meeting.
If such transactions are effected, the consequence could be to cause the Business Combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the Special Meeting and would likely increase the chances that such proposals would be approved. As of the date of this proxy statement/prospectus, there have been no such discussions and no agreements to such effect have been entered into with any such investor or holder.
The existence of financial and personal interests of the DEAC directors and officers may result in a conflict of interest on the part of one or more of them between what he may believe is best for DEAC and what he may believe is best for him in determining whether or not to grant a waiver in a specific situation. See the sections entitled “Risk Factors” and “The Business Combination Proposal — Interests of DEAC’s Directors and Officers in the Business Combination” for a further discussion of this and other risks.
Stock Exchange Listing (page 267)
We expect the shares of New DraftKings Class A common stock to trade on Nasdaq under the symbol “DKNG” following the Closing.
Sources and Uses of Funds (page 109)
The following table summarizes the sources and uses for funding the transactions contemplated by the BCA. Where actual amounts are not known or knowable, the figures below represent DEAC’s good faith estimate of such amounts assuming a Closing as of April 2020.
(in millions)
Assuming No
Redemption(1)
Assuming
Maximum
Redemption(2)
Sources
Proceeds from Trust Account(3)
$ 404 $ 95
Private Placement
305 305
Convertible Notes(4)
109 109
Sellers’ Equity
2,700 2,700
DEAC Upfront Founder Equity(5)
37 37
Total Sources
$ 3,555 $ 3,246
Uses
Cash to Balance Sheet(6)
$ 541 $ 242
Cash to SBT Shareholders(7)
196 196
Sellers’ Equity
2,700 2,700
DEAC Upfront Founder Equity(5)
37 37
Transaction costs(8)
81 71
Total Uses
$ 3,555 $ 3,246
(1)
Assuming that no public stockholders exercise redemption rights with respect to their public shares for a pro rata portion of the trust account.
33

(2)
Assuming DEAC public stockholders redeem approximately 30,564,789 shares for aggregate redemption payments of  $308.7 million based on an estimated $10.10 liquidation value as of December 31, 2019.
(3)
Cash held in the trust account as of December 31, 2019.
(4)
Proceeds raised from the issuance of the Convertible Notes are not included in the calculation for determining satisfaction of the Minimum Proceeds Condition. Of the total proceeds, $69.1 million was received as of December 31, 2019.
(5)
Includes 80,000 founder shares that have been transferred to DEAC’s independent directors.
(6)
The midpoint of the Cash to Balance Sheet is $393 million.
(7)
This amount represents €180 million converted into U.S. dollars at $1.090:€1.00 (as of April 3, 2020). This amount is subject to adjustment for excess Net Debt Amount and Working Capital Amount pursuant to the Business Combination Agreement, and does not include certain SBT transaction costs to be paid by New DraftKings (which are reflected in “Transaction Costs”).
(8)
These estimated transaction-related costs include $14.0 million in deferred underwriting commissions related to DEAC’s initial public offering, estimated cash amount to be paid to stockholders of DraftKings that are deemed to be non-accredited investors and, for the “No Redemption” scenario, payment of  $10.0 million in bonuses to management of DraftKings upon closing of the Business Combination.
Material U.S. Tax Consequences of the Reincorporation and Exercise of Redemption Rights (page 313)
For a discussion summarizing the U.S. federal income tax considerations of the reincorporation and an exercise of redemption rights, please see “Material U.S. Federal Income Tax Considerations.” The tax consequences of the foregoing to any particular stockholder will depend on that stockholder’s particular facts and circumstances. Accordingly, please consult your tax advisor to determine the tax consequences to you of the reincorporation or an exercise of redemption rights.
Accounting Treatment of the Business Combination (page 110)
The merger between DraftKings and Merger Sub will be accounted for as a reverse recapitalization for which DraftKings has been determined to be the accounting acquirer (the “Reverse Recapitalization”). As the merger between DraftKings and Merger Sub will be accounted for as a Reverse Recapitalization, no goodwill or other intangible assets will be recorded, in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Under this method of accounting, DEAC will be treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Reverse Recapitalization will be treated as the equivalent of DraftKings issuing stock for the net assets of DEAC, accompanied by a recapitalization. The net assets of DEAC will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Reverse Recapitalization will be those of DraftKings.
DEAC’s acquisition of all of the issued and outstanding share capital of SBTech (the “SBTech Acquisition”) will be treated as a business combination under Accounting Standard Codification 805, “Business Combinations” (“ASC 805”) and will be accounted for using the acquisition method. New DraftKings will record the fair value of assets acquired and liabilities assumed from SBTech. Any excess amounts after allocating the estimated consideration to identifiable tangible and intangible assets acquired and liabilities assumed will be recorded as goodwill.
Comparison of Stockholders’ Rights (page 269)
Following the consummation of the Business Combination, the rights of DEAC Stockholders who become New DraftKings stockholders in the Business Combination will no longer be governed by the Current Charter and DEAC’s amended and restated bylaws (the “Current Bylaws” and, together with the Current Charter, the “Existing Organizational Documents”) and instead will be governed by the Proposed Charter and New DraftKings’ amended and restated bylaws (“New DraftKings Bylaws”). See “Comparison of Stockholders’ Rights” beginning on page 269.
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Stockholders Agreement (page 131)
On the Closing Date, New DraftKings and the DEAC Stockholder Group, the DK Stockholder Group and the SBT Stockholder Group will enter into the Stockholders Agreement, a copy of the form of which is attached to this proxy statement/prospectus as Annex B. The Stockholders Agreement provides, among other things, that:
Corporate Governance
Board Composition
Immediately following the Closing, the New DraftKings board of directors will initially be as set forth below:

DraftKings Directors.   Ten directors nominated by the DK Stockholder Group, which are expected to be the current DraftKings directors, including the Chief Executive Officer of New DraftKings and at least five directors who qualify as “independent” directors under The Nasdaq Stock Market listing rules.

SBT Directors.   Two directors nominated by Mr. Meckenzie, including at least one director who qualifies as an “independent” director under The Nasdaq Stock Market listing rules.

DEAC Director.   One director nominated by the DEAC Stockholder Group, who will qualify as “independent” under The Nasdaq Stock Market listing rules subject to approval by DraftKings (such approval not to be unreasonably withheld). Messrs. Sloan, Sagansky and Baker are deemed approved by DraftKings as prospective nominees if they qualify as “independent” under The Nasdaq Stock Market listing rules.

From the first annual meeting of stockholders following the Closing Date, Mr. Meckenzie will have the right to nominate one director (and any replacement of such director) to serve on the New DraftKings board of directors (subject to the Board’s approval not to be unreasonably withheld) so long as Mr. Meckenzie continues to hold at least 9% of the issued and outstanding shares of New DraftKings Class A common stock.

Subject to applicable law, Mr. Robins agrees to vote in favor of Mr. Meckenzie’s nominee at each annual meeting of stockholders so long as Mr. Meckenzie has such nomination right described above.
Committees
The composition of each committee of the New DraftKings board of directors will be in compliance with applicable Nasdaq Stock Market independence requirements.
Restrictions on Transfers
For a period of 180 days following the Closing (the “DK/SBT Lockup Period”), no member of the DK Stockholder Group or the SBT Stockholder Group (“Sellers”) may transfer any New DraftKings shares of common stock, subject to certain exceptions. Following the expiration of the DK/SBT Lockup Period, Sellers may transfer New DraftKings shares pursuant to an effective registration statement, or in transactions exempt from or not subject to registration requirements and certain transactions otherwise permitted during the DK/SBT Lockup Period.
Members of the DEAC Stockholder Group may not transfer or sell shares of New DraftKings Class A common stock (subject to certain customary exceptions) until the earliest of  (i) one year from the Closing, (ii) the last consecutive trading day where the volume-weighted average New DraftKings share price equals or exceeds $15.00 per share for at least for 20 out of 30 consecutive trading days, but in no event earlier than 180 days after the Closing and (iii) if New DraftKings consummates a transaction after the Business Combination which results in its stockholders having the right to exchange their shares for cash, securities or other property, at such time (the “DEAC Lockup Period”).
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The Chief Executive Officer of New DraftKings may not transfer any shares of New DraftKings common stock, subject to certain exceptions for a period of two years from the Closing (the “CEO Lockup Period”).
At any time, any member of the Stockholder Parties may transfer shares of New DraftKings common stock to any wholly-owned affiliate of such Stockholder Party or to any person wholly owning such stockholder.
Registration Rights
Within 30 days of the Closing, New DraftKings will file a shelf registration statement on Form S-1 with respect to resales of all shares of New DraftKings Class A common stock held by members of the Stockholder Parties (“Registrable Shares”) and will use its commercially reasonable efforts to cause such shelf registration statement to be declared effective as soon as practicable after the filing thereof, but no later than the earlier of  (i) 60 days (or 120 days if the SEC notifies New DraftKings that it will “review” such shelf registration statement) after the Closing and (ii) the tenth business day after the date New DraftKings is notified by the SEC that such shelf registration statement will not be “reviewed” or will not be subject to further review.
In the period following the expiration of the DK/SBT Lockup Period or the DEAC Lockup Period, if any member of the Stockholder Parties delivers notice to New DraftKings stating that it intends to effect an underwritten public offering of all or part of its Registrable Shares included on a shelf registration and reasonably expects aggregate gross proceeds of not less than $75,000,000, New DraftKings will enter into a customary underwriting agreement and will take all such other reasonable actions as are requested by the managing underwriter or underwriters in order to expedite or facilitate the disposition of such Registrable Securities; provided that New DraftKings will have no obligation to facilitate or participate in more than two underwritten offerings for each of the DK Stockholder Group, the SBT Stockholder Group and the DEAC Stockholder Group and no more than six underwritten offerings in the aggregate.
Whenever New DraftKings proposes to publicly sell or register for sale any of its securities in an underwritten offering pursuant to a registration statement other than on Form S-8 or on Form S-4, New DraftKings will give notice to the Stockholder Parties and will include all Registrable Shares that any member of the Stockholder Parties requests for inclusion within five days of receiving notice from New DraftKings, subject to any cut-back deemed necessary by an underwriter.
Unsuitable Persons
Each member of the Stockholder Parties acknowledges and agrees to the application of the provisions concerning unsuitability contained in the Proposed Charter of New DraftKings, which will be applicable to all holders of common stock or other equity securities of New DraftKings. DEAC is asking its stockholders to approve the provisions concerning unsuitability contained in the Proposed Charter by approving the adoption of the Proposed Charter, in the form attached hereto as Annex E, pursuant to the Charter Proposal and approving Advisory Charter Proposal I. Pursuant to such unsuitability provisions, common stock or any other equity securities of New DraftKings, or securities exchangeable or exercisable for, or convertible into, such other equity securities of New DraftKings, owned or controlled by any stockholder of New DraftKings whom the New DraftKings board of directors determines in good faith (following consultation with reputable outside gaming regulatory counsel), pursuant to a resolution adopted by the unanimous affirmative vote of all of the disinterested members of the New DraftKings board of directors, is an Unsuitable Person or by an affiliate of an Unsuitable Person, will be subject to mandatory sale and transfer to either New DraftKings or one or more third-party transferees, in such number and class(es)/series as determined by the New DraftKings board of directors, on the terms and conditions set forth in the Proposed Charter.
As described further in the Proposed Charter and below in “Description of New DraftKings Securities — Redemption Rights and Transfer Restrictions with Respect to Capital Stock Held by Unsuitable Persons and Their Affiliates” beginning on page 265, an Unsuitable Person is a person who (i) fails or refuses to file an application (or fails or refuses, as an alternative, to otherwise formally request from the relevant Gaming Authority a waiver or similar relief from filing such application) within 30 days (or such
36

shorter period imposed by any gaming authority, including any extensions of that period granted by the relevant gaming authority, but in no event more than such original thirty (30) days) after having been requested to file an application by New DraftKings (based on consultation with reputable outside gaming regulatory counsel), or has withdrawn or requested the withdrawal of a pending application (other than for technical reasons with the intent to promptly file an amended application), to be found suitable by any gaming authority or for any gaming license as required by gaming laws or gaming authorities for the purpose of obtaining a material gaming license for, or compliance with material gaming laws by, New DraftKings or any affiliated company, (ii) is denied or disqualified from eligibility for any material gaming license by any gaming authority in a final and non-appealable determination, (iii) is determined in a final and non-appealable determination by a gaming authority in any material gaming jurisdiction to be unsuitable to own or control any equity interests, or be affiliated, associated or involved with a person engaged in gaming activities, (iv) is determined in a final and non-appealable determination by a gaming authority to have caused, in whole or in part, any material gaming license of New DraftKings or any affiliated company to be lost, rejected, rescinded, suspended, revoked or not renewed by any gaming authority, or to have caused, in whole or in part, New DraftKings or any affiliated company to be threatened by any gaming authority with any such action with respect to a material gaming license, or (v) is reasonably likely to (1) preclude or materially delay, impede, impair, threaten or jeopardize any material gaming license held or desired in good faith to be held by New DraftKings or any affiliated company or New DraftKings’ or any affiliated company’s application for, right to the use of, entitlement to, or ability to obtain or retain, any material gaming license held or desired in good faith to be held by New DraftKings or any affiliated company, or (2) cause or otherwise be reasonably likely to result in the imposition of any materially burdensome terms or conditions on any material gaming license held or desired in good faith to be held by New DraftKings or any affiliated company.
In the event that any such stockholder reasonably believes that any of the above-described determinations of unsuitability by the New DraftKings board of directors were not made in good faith and such disagreement cannot be settled amicably by such stockholder and New DraftKings, such disagreement with respect to whether the determination(s) of the New DraftKings board of directors were made in good faith will be finally, exclusively and conclusively settled by mandatory arbitration conducted in accordance with the American Arbitration Association rules.
Termination
The Stockholders Agreement will be effective as of the Closing and will automatically terminate on the earlier of  (i) the date on which no member of the DEAC Stockholder Group nor the SBT Stockholder Group holds any shares of New DraftKings common stock, (ii) the dissolution, liquidation or winding up of New DraftKings and (iii) upon the unanimous agreement of all members of the Stockholder Parties.
Summary of Risk Factors (page 47)
In evaluating the proposals to be presented at the Special Meeting, a DEAC Stockholder should carefully read this proxy statement/prospectus and especially consider the factors discussed in the section entitled “Risk Factors.”
Emerging Growth Company (page 241)
Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a registration statement under the Securities Act declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
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This may make comparison of the DEAC’s consolidated financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
We will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the closing of DEAC’s initial public offering, (b) in which we have total annual revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common equity that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” have the meaning associated with it in the JOBS Act.
Controlled Company Exemption (page 293)
Upon the completion of the Business Combination, Mr. Robins will be the beneficial owner of all the outstanding shares of New DraftKings Class B common stock and as such, will control the voting power of our outstanding capital stock, as a result of which Mr. Robins will have the power to elect a majority of New DraftKings’ directors. Pursuant to The Nasdaq Stock Market listing standards, a company of which more than 50% of the voting power for the election of directors is held by an individual, a group or another company qualifies as a “controlled company.” Therefore, we will not be subject to The Nasdaq Stock Market listing standards that would otherwise require us to have: (i) a board of directors comprised of a majority of independent directors; (ii) compensation of our executive officers determined by a majority of the independent directors or a compensation committee comprised solely of independent directors; (iii) a compensation committee charter which, among other things, provides the compensation committee with the authority and funding to retain compensation consultants and other advisors; and (iv) director nominees selected, or recommended for the Board’s selection, either by a majority of the independent directors or a nominating committee comprised solely of independent directors.
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SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF DEAC
DEAC is providing the following selected historical financial information to assist you in your analysis of the financial aspects of the Business Combination.
DEAC’s consolidated statement of operations data for the period from March 27, 2019 (date of inception) to December 31, 2019 and balance sheet data as of December 31, 2019 is derived from DEAC’s audited consolidated financial statements included elsewhere in this proxy statement/prospectus.
The information is only a summary and should be read in conjunction with DEAC’s consolidated financial statements and related notes and “DEAC’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere herein. The historical results included below and elsewhere in this proxy statement/prospectus are not indicative of the future performance of DEAC.
Statement of Operations Data
For the Period
from
March 27, 2019
(inception) to
December 31, 2019
(in actual dollars and shares)
Revenue
$
General and administrative expenses
1,857,305
Loss from operations
(1,857,305)
Other income — interest on Trust Account
5,111,208
Provision for income tax
(944,494)
Net income
$ 2,309,409
Weighted average Class A common stock outstanding
40,000,000
Basic and diluted net income per share, Class A
$ 0.09
Weighted average Class B common stock outstanding
10,010,045
Basic and diluted net loss per share, Class B
$ (0.15)
Balance Sheet Data
December 31, 2019
(in actual dollars)
Total assets
$ 404,771,673
Total liabilities
15,493,133
Total shareholders’ equity and Class A common shares subject to possible redemptions
389,278,540
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SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF DRAFTKINGS
The following table shows selected historical financial information of DraftKings for the periods and as of the dates indicated.
The selected historical financial information of DraftKings as of December 31, 2019 and 2018, and for the years ended December 31, 2019, 2018 and 2017 was derived from the audited historical consolidated financial statements of DraftKings included elsewhere in this proxy statement/prospectus.
The following selected historical financial information should be read together with the consolidated financial statements and accompanying notes and “DraftKings’ Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this proxy statement/prospectus. The selected historical financial information in this section is not intended to replace DraftKings’ consolidated financial statements and the related notes. DraftKings’ historical results are not necessarily indicative of DraftKings’ future results.
As explained elsewhere in this proxy statement/prospectus, the financial information contained in this section relates to DraftKings, prior to and without giving pro forma effect to the impact of the Business Combination and, as a result, the results reflected in this section may not be indicative of the results of New DraftKings going forward. See the sections entitled “Summary — Information About the Parties to the Business Combination — DraftKings Inc.” and “Unaudited Pro Forma Condensed Combined Financial Information” included elsewhere in this proxy statement/prospectus.
For the year ended December 31,
Statement of Operations Data
2019
2018
2017
(in thousands)
Revenue
323,410 $ 226,277 $ 191,844
Total costs and expenses
469,955 303,058 265,042
Loss from operations
(146,545) (76,781) (73,198)
Other income (expense):
Interest income (expense), net
1,348 666 (1,541)
Gain on initial equity method investment
3,000
Other expense, net
(607)
Income Tax Provision
58 105 210
Loss from equity method investment
479
Net Loss
$ (142,734) $ (76,220) $ (75,556)
Statement of Cash Flows Data
Net cash provided by (used in) operating activities
(78,880) (45,579) (88,437)
Net cash provided by (used in) investing activities
(42,271) (26,672) (7,715)
Net cash provided by (used in) financing activities
79,776 140,892 118,531
As of December 31,
Balance Sheet Data
2019
2018
(in thousands)
Total assets
$ 330,725 $ 299,393
Total liabilities
380,305 223,343
Total redeemable convertible preferred stock and stockholders’ deficit
(49,580) 76,050
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Key Performance Indicators
DraftKings’ reports the following financial and operational key performance indicators, which are used by management to assess its performance:
Adjusted EBITDA.   DraftKings’ defines and calculates Adjusted EBITDA as net loss before the impact of interest income or expense, income tax expense and depreciation and amortization, as further adjusted for the following items: stock-based compensation, transaction-related costs, litigation, settlement and related costs and certain other non-recurring, non-cash and non-core items. See “DraftKings’ Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Information” for important information about the limitations of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net loss, the most directly comparable financial measure calculated in accordance with U.S. GAAP.
Monthly Unique Payers (“MUPs”).   We define MUPs as the number of unique paid users (“payers”) per month who had a paid engagement (i.e., participated in a real-money DFS contest, sports betting or casino game) across one or more of our product offerings via our platform. For reported periods longer than one month, we average the MUPs for the months in the reported period.
A “unique paid user” or “unique payer” is any person who had one or more paid engagements via our platform during the period (i.e., a user that participates in a paid engagement across each of our product offerings counts as a single unique payer for the period). This measure does not include users who have not played with funds deposited in their wallet on our platform. We exclude users who have made a deposit but have not yet had a paid engagement. Unique payers or unique paid users include users who have participated in a paid engagement with promotional incentives, which are fungible with other funds deposited in their wallets on our platform; the number of these users included in MUPs has not been material to date and a substantial majority of such users are repeat users who have had paid engagements both prior to and after receiving incentives.
Average Revenue per MUP (ARPMUP).   We define and calculate ARPMUP as the average monthly revenue for a reporting period, divided by MUPs (i.e., the average number of unique payers) for the same period.
The following table presents our key performance indicators for the periods indicated:
Year ended December 31,
2019
2018
2017
Adjusted EBITDA (dollars in thousands)(1)
$ (98,640) $ (58,850) $ (48,884)
Monthly Unique Payers (MUPs) (in thousands)(2)
684 601 574
Average Revenue per MUP (ARPMUP) (in whole dollars)(2)
$ 39 $ 31 $ 28
(1)
Adjusted EBITDA is a non-GAAP financial measure. See “DraftKings’ Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Information” below for our definition of and additional information about Adjusted EBITDA and reconciliation to net loss, the most directly comparable U.S. GAAP financial measure.
(2)
For important information about how we use our MUPs and ARPMUP, see “DraftKings’ Management’s Discussion and Analysis of Financial Condition and Results of Operations — Our Business Model — Growing Our User Base.” Our business is seasonal and our results of operations and key performance indicators may not be comparable between fiscal quarters or between comparative year-over-year periods. See “DraftKings’ Management’s Discussion and Analysis of Financial Condition and Results of Operations — Quarterly Performance Trend and Seasonality.”
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SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF SBT
The following table shows selected historical financial information of SBTech for the periods and as of the dates indicated.
The selected historical financial information of SBTech as of December 31, 2019 and 2018, and for the years ended December 31, 2019, 2018 and 2017 was derived from the audited historical consolidated financial statements of SBTech included elsewhere in this proxy statement/prospectus.
The following selected historical financial information should be read together with the consolidated financial statements and accompanying notes and “SBT’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this proxy statement/prospectus. The selected historical financial information in this section is not intended to replace SBTech’s consolidated financial statements and the related notes. SBTech’s historical results are not necessarily indicative of SBTech’s future results.
As explained elsewhere in this proxy statement/prospectus, the financial information contained in this section relates to SBTech, as prepared in accordance with International Financial Reporting Standards and presented in Euros, prior to and without giving pro forma effect to the impact of the Business Combination and, as a result, the results reflected in this section may not be indicative of the results of New DraftKings going forward. See the sections entitled “Summary — Information About the Parties to the Business Combination — SBTech (Global) Limited” and “Unaudited Pro Forma Condensed Combined Financial Information” included elsewhere in this proxy statement/prospectus.
For the year ended December 31,
Statement of Operations Data
2019
2018
2017
(in thousands)
Revenue
96,857 94,147 66,087
Total costs and expenses
90,820 66,560 49,393
Operating income
6,037 27,587 16,694
Other income:
Financial income
23 97 37
Financial expenses
846 340 177
Income tax expense
638 565 264
Net profit
4,576 26,779 16,290
Statement of Cash Flows Data
Net cash provided by (used in) operating activities
19,525 30,949 18,260
Net cash provided by (used in) investing activities
(18,399) (17,384) (14,307)
Net cash provided by (used in) financing activities
(13,537) (1,184) 190
As of December 31,
Balance Sheet Data
2019
2018
(in thousands)
Total assets
98,853 72,656
Total liabilities
45,976 14,207
Total equity
52,877 58,449
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SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following summary unaudited pro forma condensed combined financial data (the “summary pro forma data”) gives effect to the Business Combination contemplated by the Business Combination Agreement described in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.” The merger between DraftKings and Merger Sub will be accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with U.S. GAAP. Under this method of accounting, DEAC will be treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Reverse Recapitalization will be treated as the equivalent of DraftKings issuing stock for the net assets of DEAC, accompanied by a recapitalization. The net assets of DEAC will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Reverse Recapitalization will be those of DraftKings. The SBTech Acquisition will be treated as a business combination under Financial Accounting Standards Board’s ASC 805, and will be accounted for using the acquisition method of accounting. DraftKings will record the fair value of assets acquired and liabilities assumed from SBTech. The summary unaudited pro forma condensed combined balance sheet data as of December 31, 2019 gives pro forma effect to the Business Combination as if it had occurred on December 31, 2019. The summary unaudited pro forma condensed combined statement of operations data for the year ended December 31, 2019 give pro forma effect to the Business Combination as if it had occurred on January 1, 2019.
The summary pro forma data have been derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial information of the combined company appearing elsewhere in this proxy statement/ prospectus and the accompanying notes. The unaudited pro forma condensed combined financial information is based upon, and should be read in conjunction with, the historical consolidated financial statements of DEAC, DraftKings and SBTech and related notes included in this proxy statement/ prospectus. The summary pro forma data have been presented for informational purposes only and are not necessarily indicative of what the combined company’s financial position or results of operations actually would have been had the Business Combination been completed as of the dates indicated. In addition, the summary pro forma data do not purport to project the future financial position or operating results of the combined company.
The following table presents summary pro forma data after giving effect to the Business Combination, assuming two redemption scenarios as follows:

Assuming No Redemptions:   This presentation assumes that no public stockholders of DEAC exercise redemption rights with respect to their public shares for a pro rata share of the funds in the trust account.

Assuming Maximum Redemptions:   This presentation assumes that stockholders holding 30,564,789 DEAC public shares will exercise their redemption rights for their pro rata share (approximately $10.10 per share) of the funds in DEAC’s trust account. This scenario gives effect to DEAC’s public share redemptions of 30,564,789 shares for aggregate redemption payments of $308.7 million. The Business Combination Agreement includes as a condition to closing the Business Combination that, at the Closing, DEAC will have a minimum of  $400.0 million in cash comprising (i) the cash held in the trust account after giving effect to DEAC share redemptions and (ii) proceeds from the Private Placement, provided that DraftKings and SBTech are entitled to waive that condition. After giving effect to the proceeds from the Private Placement, approximately $95.3 million would be needed from the trust account in order to meet the Minimum Proceeds Condition of  $400.0 million.
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Pro Forma
Combined
(Assuming No
Redemptions)
Pro Forma
Combined
(Assuming
Maximum
Redemptions)
(in thousands, except share and per share data)
Summary Unaudited Pro Forma Condensed Combined
Statement of Operations Data Year Ended December 31, 2019
Revenue
$ 431,834 $ 431,834
Net loss per share – basic and diluted
$ (0.42) $ (0.46)
Weighted-average Class A shares outstanding – basic and diluted
336,631,006 306,066,216
Summary Unaudited Pro Forma Condensed Combined
Balance Sheet Data as of December 31, 2019
Total assets
$ 1,622,021 $ 1,323,346
Total liabilities
363,770 363,770
Total equity
1,258,251 959,576
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COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE FINANCIAL INFORMATION
The following table sets forth historical comparative share information for DEAC, DraftKings and SBT and unaudited pro forma combined share information after giving effect to the Business Combination, assuming two redemption scenarios as follows:

Assuming No Redemptions:   This presentation assumes that no public stockholders of DEAC exercise redemption rights with respect to their public shares for a pro rata share of the funds in the trust account.

Assuming Maximum Redemptions:   This presentation assumes that stockholders holding 30,564,789 DEAC public shares will exercise their redemption rights for their pro rata share (approximately $10.10 per share) of the funds in DEAC’s trust account. This scenario gives effect to DEAC’s public share redemptions of 30,564,789 shares for aggregate redemption payments of $308.7 million. The Business Combination Agreement includes as a condition to closing the Business Combination that, at the Closing, DEAC will have a minimum of  $400.0 million in cash comprising (i) the cash held in the trust account after giving effect to DEAC share redemptions and (ii) proceeds from the Private Placement, provided that DraftKings and SBT are entitled to waive that condition. After giving effect to the proceeds from the Private Placement, approximately $95.3 million would be needed from the trust account in order to meet the Minimum Proceeds Condition of  $400.0 million.
The pro forma book value information reflects the Business Combination as if it had occurred on December 31, 2019. The weighted average shares outstanding and net earnings per share information reflect the Business Combination as if it had occurred on January 1, 2019.
This information is only a summary and should be read together with the selected historical financial information summary included elsewhere in this proxy statement/prospectus, and the historical financial statements of DEAC, DraftKings, and SBT and related notes. The unaudited pro forma combined per share information of DEAC, DraftKings, and SBT is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial statements and related notes included elsewhere in this proxy statement/prospectus.
The unaudited pro forma combined earnings per share information below does not purport to represent the earnings per share which would have occurred had the companies been combined during the periods presented, nor earnings per share for any future date or period.
Combined Pro Forma
Diamond
Eagle
(Historical)
Pro Forma
Combined
(Assuming No
Redemption)
Pro Forma
Combined
(Assuming
Maximum
Redemption)
As of and for the Year ended December 31, 2019
Book Value per share(1)
$ 0.10 $ 3.74 $ 3.14
Weighted average shares outstanding of Class A common stock – basic and diluted
40,000,000 336,631,006 306,066,216
Weighted average shares outstanding of Class B common stock – basic and diluted
10,010,045
Net income per share of Class A common stock – basic and
diluted
$ 0.09
Net loss per share of Class B common stock – basic and diluted
$ (0.15)
Net loss per share of Class A common stock – basic and diluted
$ (0.42) $ (0.46)
(1)
Book value per share = (Total equity excluding preferred shares)/shares outstanding.
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MARKET PRICE, TICKER SYMBOL AND DIVIDEND INFORMATION
DEAC
Market Price and Ticker Symbol
DEAC’s units, Class A common stock and public warrants are currently listed on The Nasdaq Capital Market under the symbols “DEACU,” “DEAC,” and “DEACW,” respectively.
The closing price of the units, Class A common stock and public warrants on December 20, 2019, the last trading day before announcement of the execution of the Business Combination Agreement, was $10.58, $10.17 and $1.35, respectively. As of March 20, 2020, the record date for the Special Meeting, the closing price for each unit, Class A common stock and public warrant was $12.15, $11.48, and $1.86, respectively.
Holders
As of March 20, 2020, there was one holder of record of our units, one holder of record of our Class A common stock, six holders of record of our Class B common stock and one holder of record of our public warrants. The number of holders of record does not include a substantially greater number of “street name” holders or beneficial holders whose units, Class A common stock and warrants are held of record by banks, brokers and other financial institutions.
Dividend Policy
DEAC has not paid any cash dividends on DEAC Shares to date and does not intend to pay any cash dividends prior to the completion of the Business Combination. The payment of cash dividends in the future will be dependent upon New DraftKings revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of the Business Combination. The payment of any cash dividends subsequent to the Business Combination will be within the discretion of New DraftKings’ board of directors at such time.
DraftKings
There is no public market for shares of DraftKings’ common stock.
SBT
There is no public market for SBT’s ordinary shares.
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RISK FACTORS
DEAC Stockholders should carefully consider the following factors, in addition to those factors discussed elsewhere in this proxy statement/prospectus, before voting at the Special Meeting.
Risk Factors Relating to the Business and Industry of New DraftKings
Competition within the broader entertainment industry is intense and our existing and potential users may be attracted to competing forms of entertainment such as television, movies and sporting events, as well as other entertainment and gaming options on the Internet. If our offerings do not continue to be popular, our business could be harmed.
New DraftKings will operate in the global entertainment and gaming industries within the broader entertainment industry with its business-to-consumer offerings such as DFS, Sportsbook and iGaming, and its business-to-business offerings through the SBT platform. Our users will face a vast array of entertainment choices. Other forms of entertainment, such as television, movies, sporting events and in-person casinos, are more well established and may be perceived by our users to offer greater variety, affordability, interactivity and enjoyment. We will compete with these other forms of entertainment for the discretionary time and income of our users. If we are unable to sustain sufficient interest in our recently launched sports betting and iGaming platforms in comparison to other forms of entertainment, including new forms of entertainment, our business model may not continue to be viable.
The specific industries in which New DraftKings will operate are characterized by dynamic customer demand and technological advances, and there is intense competition among online gaming and entertainment providers. A number of established, well-financed companies producing online gaming and/or interactive entertainment products and services compete with our offerings, and other well-capitalized companies may introduce competitive services. Such competitors may spend more money and time on developing and testing products and services, undertake more extensive marketing campaigns, adopt more aggressive pricing or promotional policies or otherwise develop more commercially successful products or services than ours, which could negatively impact our business. Our competitors may also develop products, features, or services that are similar to ours or that achieve greater market acceptance. Such competitors may also undertake more far-reaching and successful product development efforts or marketing campaigns, or may adopt more aggressive pricing policies. Furthermore, new competitors, whether licensed or not, may enter the iGaming industry. There has also been considerable consolidation among competitors in the entertainment and gaming industries and such consolidation and future consolidation could result in the formation of larger competitors with increased financial resources and altered cost structures, which may enable them to offer more competitive products, gain a larger market share, expand offerings and broaden their geographic scope of operations. If we are not able to maintain or improve our market share, or if our offerings do not continue to be popular, our business could suffer.
Economic downturns and political and market conditions beyond our control could adversely affect our business, financial condition and results of operations.
Our financial performance will be subject to global and U.S. economic conditions and their impact on levels of spending by users and advertisers. Economic recessions have had, and may continue to have, far reaching adverse consequences across many industries, including the global entertainment and gaming industries, which may adversely affect our business and financial condition. In the past decade, global and U.S. economies have experienced tepid growth following the financial crisis in 2008 – 2009 and there appears to be an increasing risk of a recession due to international trade and monetary policy and other changes. If the national and international economic recovery slows or stalls, these economies experience another recession or any of the relevant regional or local economies suffers a downturn, we may experience a material adverse effect on our business, financial condition, results of operations or prospects.
In addition, changes in general market, economic and political conditions in domestic and foreign economies or financial markets, including fluctuation in stock markets resulting from, among other things, trends in the economy as a whole may reduce users’ disposable income and advertisers’ budgets. Any one of these changes could have a material adverse effect on our business, financial condition, results of operations or prospects.
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Reductions in discretionary consumer spending could have an adverse effect on our business, financial condition, results of operations and prospects.
Our business will be particularly sensitive to reductions from time to time in discretionary consumer spending. Demand for entertainment and leisure activities, including gaming, can be affected by changes in the economy and consumer tastes, both of which are difficult to predict and beyond our control. Unfavorable changes in general economic conditions, including recessions, economic slowdowns, sustained high levels of unemployment, and rising prices or the perception by consumers of weak or weakening economic conditions, may reduce our users’ disposable income or result in fewer individuals engaging in entertainment and leisure activities, such as daily fantasy sports, sports betting and iGaming. As a result, we cannot ensure that demand for our offerings will remain constant. Adverse developments affecting economies throughout the world, including a general tightening of availability of credit, decreased liquidity in certain financial markets, increased interest rates, foreign exchange fluctuations, increased energy costs, acts of war or terrorism, transportation disruptions, natural disasters, declining consumer confidence, sustained high levels of unemployment or significant declines in stock markets, as well as concerns regarding pandemics, epidemics and the spread of contagious diseases, could lead to a further reduction in discretionary spending on leisure activities, such as daily fantasy sports and gaming.
For example, the recent outbreak of the novel coronavirus (“COVID-19”), a virus causing potentially deadly respiratory tract infections originating in China, has negatively affected economic conditions regionally as well as globally and has caused a reduction in consumer spending. Efforts to contain the effect of the virus have included travel restrictions and restrictions on public gatherings. Many businesses have eliminated non-essential travel and canceled in-person events to reduce instances of employees and others being exposed to large public gatherings, and governments across the United States have restricted business activities and strongly encouraged, instituted orders or otherwise restricted individuals from leaving their home. These efforts have intensified significantly in recent weeks and are likely to expand further. To date, sports seasons and sporting events in multiple countries, including in the United States, have been canceled or postponed and large public gatherings have been banned. These changes have reduced customers’ use of, and spending on, our product offerings, and have caused us to issue refunds for canceled events, and retail casinos where we have a branded Sportsbook have closed. These changes have significantly impacted our business, and may materially impact our financial condition and results of operations depending on the length of time that these disruptions exist and whether the sports seasons and sporting events will ultimately be suspended, postponed, or canceled. Relatedly, if a large number of our employees and/or a subset of our key employees and executives are impacted by COVID-19, DraftKings’ ability to continue to operate effectively may be negatively impacted. The ultimate severity of the coronavirus outbreak is uncertain at this time and therefore we cannot predict the full impact it may have on our end markets and our operations; however, the effect on our results could be material and adverse. Any significant or prolonged decrease in consumer spending on entertainment or leisure activities could adversely affect the demand for our offerings, reducing our cash flows and revenues, and thereby materially harming our business, financial condition, results of operations and prospects.
We may experience fluctuations in our operating results, which make our future results difficult to predict and could cause our operating results to fall below expectations.
DraftKings’ quarterly financial results have fluctuated in the past and we expect New DraftKings financial results to fluctuate in the future. These fluctuations may be due to a variety of factors, some of which are outside of our control and may not fully reflect the underlying performance of our business.
New DraftKings’ financial results in any given quarter may be influenced by numerous factors, many of which we are unable to predict or are outside of our control, including the impact of seasonality and our betting results, and the other risks and uncertainties set forth herein. In particular our betting operations will have significant exposure to, and may be materially impacted by, sporting events and seasons, which can result in short-term volatility in betting win margins and user engagement, thus impacting revenues. While DraftKings has been able to forecast revenues from its daily fantasy sports business with greater precision than for new offerings, we cannot provide assurances that consumers will engage with our DFS platform on a consistent basis. Consumer engagement in our daily fantasy sports, sports betting and iGaming services may decline or fluctuate as a result of a number of factors, including the popularity of the
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underlying sports, the user’s level of satisfaction with our platforms, our ability to improve and innovate, our ability to adapt our platform, outages and disruptions of online services, the services offered by our competitors, our marketing and advertising efforts or declines in consumer activity generally as a result of economic downturns, among others. Any decline or fluctuation in the recurring portion of our business may have a negative impact on our business, financial condition, results of operations or prospects.
In our iGaming product offering, operator losses are limited per stake to a maximum payout. When looking at bets across a period of time, however, these losses can potentially be significant. Our quarterly financial results may also fluctuate based on whether we pay out any jackpots to our iGaming users during the relevant quarter. As part of our iGaming offering, we offer progressive jackpot games. Each time a progressive jackpot game is played, a portion of the amount wagered by the user is contributed to the jackpot for that specific game or group of games. Once a jackpot is won, the progressive jackpot is reset with a predetermined base amount. While we maintain a provision for these progressive jackpots, the cost of the progressive jackpot payout would be a cash outflow for the business in the period in which it is won with a potentially significant adverse effect on our financial condition and cash flows. Because winning is underpinned by a random mechanism, we cannot predict with absolute certainty when a jackpot will be won. In addition, DraftKings does not insure against random outcomes or jackpot wins.
Our projections will be subject to significant risks, assumptions, estimates and uncertainties, including assumptions regarding future legislation and changes in regulations, both inside and outside of the United States. As a result, our projected revenues, market share, expenses and profitability may differ materially from our expectations.
New DraftKings will operate in rapidly changing and competitive industries and our projections will be subject to the risks and assumptions made by management with respect to our industries. Operating results are difficult to forecast because they generally depend on our assessment of the timing of adoption of future legislation and regulations by different states, which are uncertain. Furthermore, if we invest in the development of new products or distribution channels that do not achieve significant commercial success, whether because of competition or otherwise, we may not recover the often substantial “up front” costs of developing and marketing those products and distribution channels, or recover the opportunity cost of diverting management and financial resources away from other products or distribution channels.
Additionally, as described above under “— Reductions in discretionary consumer spending could have an adverse effect on our business, financial condition, results of operations and prospects,” our business may be affected by reductions in consumer spending from time to time as a result of a number of factors which may be difficult to predict. This may result in decreased revenue levels, and we may be unable to adopt measures in a timely manner to compensate for any unexpected shortfall in income. This inability could cause our operating results in a given quarter to be higher or lower than expected. If actual results differ from our estimates, analysts may negatively react and our stock price could be materially impacted.
We will have a new business model, which will make it difficult for us to forecast our financial results, create uncertainty as to how investors will evaluate our prospects, and increase the risk that we will not be successful.
DraftKings was incorporated in 2011 and began operating the DFS product offering in 2012. DraftKings expanded from its DFS product offering to include Sportsbook and iGaming product offerings in 2018. New DraftKings will have a new business model, and new offerings, including a sports betting technology platform. Accordingly, it will be difficult for us to forecast our future financial results, and it will be uncertain how our new business model will affect investors’ perceptions and expectations, which can be idiosyncratic and vary widely, with respect to our prospects. Additionally, as a result of the Business Combination, we will be the only vertically integrated U.S.-based sports betting and online gaming company and it may be difficult for investors to evaluate our business due to the lack of similarly situated competitors. Furthermore, our new business model may not be successful. Consequently, you should not rely upon DraftKings’ past quarterly financial results as indicators of our future financial performance, and our financial results and stock price may be negatively affected.
DraftKings has a history of losses and we may continue to incur losses in the future.
Since DraftKings was incorporated in 2011, it has experienced net losses and negative cash flows from operations. DraftKings experienced net losses of  $143 million, $76 million and $76 million in the years
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ended December 31, 2019, 2018 and 2017, respectively. We may continue to experience losses in the future, and we cannot assure you that we will achieve profitability. We may continue to incur significant losses in future periods. We expect our operating expenses to increase in the future as we expand our operations. Furthermore, as a public company, we will incur additional legal, accounting and other expenses that DraftKings did not incur as a private company. If our revenue does not grow at a greater rate than our expenses, we will not be able to achieve or maintain profitability. We may incur significant losses in the future for many reasons, including the other risks and uncertainties described in this proxy statement/​prospectus. Additionally, we may encounter unforeseen expenses, operating delays, or other unknown factors that may result in losses in future periods. If our expenses exceed our revenue, our business may be negatively impacted and we may never achieve or maintain profitability.
Our results of operations may fluctuate due to seasonality and other factors and, therefore, our periodic operating results will not be guarantees of future performance.
Our DFS and Sportsbook operations may fluctuate due to seasonal trends and other factors. We believe that significant sporting events such as the playoffs and championship games, tend to impact, among other things, revenues from operations, key metrics and customer activity, and as such, DraftKings’ historical revenues generally have been highest in the fourth quarter. A majority of DraftKings’ current sports betting and DFS revenue is and will continue to be generated from bets placed on, or contests relating to, the National Football League and the National Basketball Association, each of which have their own respective off-seasons, which may cause decreases in our future revenues during such periods. New DraftKings’ revenues may also be affected by the scheduling of major sporting events that do not occur annually, such as the World Cup, or the cancellation of sporting events and races. In addition, certain individuals or teams advancing or failing to advance and their scores and other results within specific tournaments, games or events may impact New DraftKings’ financial performance.
The success, including win or hold rates, of existing or future sports betting and iGaming products depends on a variety of factors and is not completely controlled by us.
The sports betting and iGaming industries are characterized by an element of chance. Accordingly, DraftKings employs theoretical win rates to estimate what a certain type of sports bet or iGame, on average, will win or lose in the long run. Net win is impacted by variations in the hold percentage (the ratio of net win to total amount wagered), or actual outcome, on our iGames and sports betting we offer to our users. DraftKings uses the hold percentage as an indicator of an iGame’s or sports bet’s performance against its expected outcome. Although each iGame or sports bet generally performs within a defined statistical range of outcomes, actual outcomes may vary for any given period. In addition to the element of chance, win rates (hold percentages) may also (depending on the game involved) be affected by the spread of limits and factors that are beyond our control, such as a user’s skill, experience and behavior, the mix of games played, the financial resources of users, the volume of bets placed and the amount of time spent gambling. As a result of the variability in these factors, the actual win rates on our online iGames and sports bets may differ from the theoretical win rates we have estimated and could result in the winnings of our iGame’s or sports bet’s users exceeding those anticipated. The variability of win rates (hold rates) also have the potential to negatively impact our financial condition, results of operations, and cash flows.
Our success also depends in part on our ability to anticipate and satisfy user preferences in a timely manner. As we will operate in a dynamic environment characterized by rapidly changing industry and legal standards, our products will be subject to changing consumer preferences that cannot be predicted with certainty. We will need to continually introduce new offerings and identify future product offerings that complement our existing platforms, respond to our users’ needs and improve and enhance our existing platforms to maintain or increase our user engagement and growth of our business. We may not be able to compete effectively unless our product selection keeps up with trends in the digital sports entertainment and gaming industries in which we compete, or trends in new gaming products.
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We will rely on information technology and other systems and platforms, and any failures, errors, defects or disruptions in our systems or platforms could diminish our brand and reputation, subject us to liability, disrupt our business, affect our ability to scale our technical infrastructure and adversely affect our operating results and growth prospects. Our games and other software applications and systems, and the third-party platforms upon which they are made available could contain undetected errors.
Our technology infrastructure will be critical to the performance of our platform and offerings and to user satisfaction. We devote significant resources to network and data security to protect our systems and data. However, our systems may not be adequately designed with the necessary reliability and redundancy to avoid performance delays or outages that could be harmful to our business. We cannot assure you that the measures we take to prevent or hinder cyber-attacks and protect our systems, data and user information and to prevent outages, data or information loss, fraud and to prevent or detect security breaches, including a disaster recovery strategy for server and equipment failure and back-office systems and the use of third parties for certain cybersecurity services, will provide absolute security. DraftKings and SBT have experienced, and we may in the future experience, website disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, human or software errors and capacity constraints. See “Summary — Recent Developments”. Such disruptions have not had a material impact on either company, individually or in the aggregate; however, future disruptions from unauthorized access to, fraudulent manipulation of, or tampering with our computer systems and technological infrastructure, or those of third parties, could result in a wide range of negative outcomes, each of which could materially adversely affect our business, financial condition, results of operations and prospects.
Additionally, our products may contain errors, bugs, flaws or corrupted data, and these defects may only become apparent after their launch. If a particular product offering is unavailable when users attempt to access it or navigation through our platforms is slower than they expect, users may be unable to place their bets or set their line-ups in time and may be less likely to return to our platforms as often, if at all. Furthermore, programming errors, defects and data corruption could disrupt our operations, adversely affect the experience of our users, harm our reputation, cause our users to stop utilizing our platforms, divert our resources and delay market acceptance of our offerings, any of which could result in legal liability to us or harm our business, financial condition, results of operations and prospects.
If our user base and engagement continue to grow, and the amount and types of offerings continue to grow and evolve, we will need an increasing amount of technical infrastructure, including network capacity and computing power, to continue to satisfy our users’ needs. Such infrastructure expansion may be complex, and unanticipated delays in completing these projects or availability of components may lead to increased project costs, operational inefficiencies, or interruptions in the delivery or degradation of the quality of our offerings. In addition, there may be issues related to this infrastructure that are not identified during the testing phases of design and implementation, which may only become evident after we have started to fully use the underlying equipment or software, that could further degrade the user experience or increase our costs. As such, New DraftKings could fail to continue to effectively scale and grow our technical infrastructure to accommodate increased demands. In addition, our business may be subject to interruptions, delays or failures resulting from adverse weather conditions, other natural disasters, power loss, terrorism, cyber-attacks, public health emergencies (such as the coronavirus) or other catastrophic events.
We believe that if our users have a negative experience with our offerings, or if our brand or reputation is negatively affected, users may be less inclined to continue or resume utilizing our products or recommend our platform to other potential users. As such, a failure or significant interruption in our service would harm our reputation, business and operating results.
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Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Any such breach could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, and regulatory penalties, disruption of our operations and the services we provide to users, damage to our reputation, and a loss of confidence in our products and services, which could adversely affect our business.
The secure maintenance and transmission of user information is a critical element of our operations. Our information technology and other systems that maintain and transmit user information, or those of service providers, business partners or employee information may be compromised by a malicious third-party penetration of our network security, or that of a third-party service provider or business partner, or impacted by intentional or unintentional actions or inactions by our employees, or those of a third-party service provider or business partner. As a result, our users’ information may be lost, disclosed, accessed or taken without our guests’ consent. We have experienced cyber-attacks, attempts to breach our systems and other similar incidents in the past. For example, we have been and expect that we will continue to be subject to attempts to gain unauthorized access to or through our information systems or those we develop for our customers, whether by our employees or third parties, including cyber-attacks by computer programmers and hackers who may develop and deploy viruses, worms or other malicious software programs. To date these attacks have not had a material impact on our operations or financial results, but we cannot provide assurance that they will not have a material impact in the future.
We rely on encryption and authentication technology licensed from third parties in an effort to securely transmit confidential and sensitive information, including credit card numbers. Advances in computer capabilities, new technological discoveries or other developments may result in the whole or partial failure of this technology to protect transaction data or other confidential and sensitive information from being breached or compromised. In addition, websites are often attacked through compromised credentials, including those obtained through phishing and credential stuffing. Our security measures, and those of our third-party service providers, may not detect or prevent all attempts to breach our systems, denial-of-service attacks, viruses, malicious software, break-ins, phishing attacks, social engineering, security breaches or other attacks and similar disruptions that may jeopardize the security of information stored in or transmitted by our websites, networks and systems or that we or such third parties otherwise maintain, including payment card systems, which may subject us to fines or higher transaction fees or limit or terminate our access to certain payment methods. We and such third parties may not anticipate or prevent all types of attacks until after they have already been launched. Further, techniques used to obtain unauthorized access to or sabotage systems change frequently and may not be known until launched against us or our third-party service providers.
In addition, security breaches can also occur as a result of non-technical issues, including intentional or inadvertent breaches by our employees or by third parties. These risks may increase over time as the complexity and number of technical systems and applications we use also increases. Breaches of our security measures or those of our third-party service providers or cybersecurity incidents could result in unauthorized access to our sites, networks and systems; unauthorized access to and misappropriation of user information, including users’ personally identifiable information, or other confidential or proprietary information of ourselves or third parties; viruses, worms, spyware or other malware being served from our sites, networks or systems; deletion or modification of content or the display of unauthorized content on our sites; interruption, disruption or malfunction of operations; costs relating to breach remediation, deployment of additional personnel and protection technologies, response to governmental investigations and media inquiries and coverage; engagement of third-party experts and consultants; litigation, regulatory action and other potential liabilities. In the past, we have experienced social engineering, phishing, malware and similar attacks and threats of denial-of-service attacks, none of which to date has been material to our business; however, such attacks could in the future have a material adverse effect on our operations. If any of these breaches of security should occur and be material, our reputation and brand could be damaged, our business may suffer, we could be required to expend significant capital and other resources to alleviate problems caused by such breaches, and we could be exposed to a risk of loss, litigation or regulatory action
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and possible liability. We cannot guarantee that recovery protocols and backup systems will be sufficient to prevent data loss. Actual or anticipated attacks may cause us to incur increasing costs, including costs to deploy additional personnel and protection technologies, train employees and engage third-party experts and consultants.
In addition, any party who is able to illicitly obtain a user’s password could access the user’s transaction data or personal information, resulting in the perception that our systems are insecure. Any compromise or breach of our security measures, or those of our third-party service providers, could violate applicable privacy, data protection, data security, network and information systems security and other laws and cause significant legal and financial exposure, adverse publicity and a loss of confidence in our security measures, which could have a material adverse effect on our business, financial condition, results of operations and prospects. We continue to devote significant resources to protect against security breaches or we may need to in the future to address problems caused by breaches, including notifying affected subscribers and responding to any resulting litigation, which in turn, diverts resources from the growth and expansion of our business.
DraftKings primarily relies, and we will rely, on Amazon Web Services to deliver our offerings to users on our platform and any disruption of or interference with our use of Amazon Web Services could adversely affect our business, financial condition, results of operations and prospects.
DraftKings currently hosts its sports betting, iGaming and daily fantasy sports platforms and supports its operations using Amazon Web Services (“AWS”), a third-party provider of cloud infrastructure services. New DraftKings will continue to rely on AWS in addition to those service providers used by SBT. We do not, and will not, have control over the operations of the facilities or infrastructure of the third-party service providers that we use. Such third parties’ facilities are vulnerable to damage or interruption from natural disasters, cybersecurity attacks, terrorist attacks, power outages and similar events or acts of misconduct. Our platform’s continuing and uninterrupted performance will be critical to our success. DraftKings has experienced, and we expect that in the future we will experience, interruptions, delays and outages in service and availability from these third-party service providers from time to time due to a variety of factors, including infrastructure changes, human or software errors, website hosting disruptions and capacity constraints. In addition, any changes in these third parties’ service levels may adversely affect our ability to meet the requirements of our users. Since our platform’s continuing and uninterrupted performance is critical to our success, sustained or repeated system failures would reduce the attractiveness of our offerings. It may become increasingly difficult to maintain and improve our performance, especially during peak usage times, as we expand and the usage of our offerings increases. Any negative publicity arising from these disruptions could harm our reputation and brand and may adversely affect the usage of our offerings.
Our commercial agreement with AWS will remain in effect until terminated by AWS or us. AWS may only terminate the agreement for convenience after complying with the contractual 30 day prior notice requirement, except for extraordinary circumstances as laid out in AWS standard terms. AWS may also terminate the agreement for cause upon a breach of the agreement or for failure to pay amounts due, in each case, subject to AWS providing prior written notice and a 30-day cure period. In the event that our agreement with AWS is terminated or we add additional cloud infrastructure service providers, such as the one currently used by SBT, we may experience significant costs or downtime in connection with the transfer to, or the addition of, new cloud infrastructure service providers. Although alternative providers could host our platform on a substantially similar basis to AWS, transitioning the cloud infrastructure currently hosted by AWS to alternative providers could potentially be disruptive and we could incur significant one-time costs.
Any of the above circumstances or events may harm our reputation and brand, reduce the availability or usage of our platform, lead to a significant loss of revenue, increase our costs and impair our ability to attract new users, any of which could adversely affect our business, financial condition and results of operations.
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We rely on third-party providers to validate the identity and identify the location of our users, and if such providers fail to perform adequately, provide accurate information or we do not maintain business relationships with them, our business, financial condition and results of operations could be adversely affected.
There is no guarantee that the third-party geolocation and identity verification systems that we rely on will perform adequately, or be effective. We rely on our geolocation and identity verification systems to ensure we are in compliance with certain laws and regulations, and any service disruption to those systems would prohibit us from operating our platform, and would adversely affect our business. Additionally, incorrect or misleading geolocation and identity verification data with respect to current or potential users received from third-party service providers may result in us inadvertently allowing access to our offerings to individuals who should not be permitted to access them, or otherwise inadvertently deny access to individuals who should be able to access our offerings, in each case based on inaccurate identity or geographic location determination. Our third-party geolocation services provider relies on its ability to obtain information necessary to determine geolocation from mobile devices, operating systems, and other sources. Changes, disruptions or temporary or permanent failure to access such sources by our third-party services providers may result in their inability to accurately determine the location of our users. Moreover, our inability to maintain our existing contracts with third-party services providers, or to replace them with equivalent third parties, may result in our inability to access geolocation and identity verification data necessary for our day-to-day operations. If any of these risks materializes, we may be subject to disciplinary action, fines, lawsuits, and our business, financial condition and results of operations could be adversely affected.
Our platform contains third-party open source software components, and failure to comply with the terms of the underlying open source software licenses could restrict our ability to provide our offerings.
Our platform contains software modules licensed to us by third-party authors under “open source” licenses. Use and distribution of open source software may entail greater risks than use of third-party commercial software, as open source licensors generally do not provide support, warranties, indemnification or other contractual protections regarding infringement claims or the quality of the code. In addition, the public availability of such software may make it easier for others to compromise our platform.
Some open source licenses contain requirements that we make available source code for modifications or derivative works we create based upon the type of open source software we use, or grant other licenses to our intellectual property. If we combine our proprietary software with open source software in a certain manner, we could, under certain open source licenses, be required to release the source code of our proprietary software to the public. This would allow our competitors to create similar offerings with lower development effort and time and ultimately could result in a loss of our competitive advantages. Alternatively, to avoid the public release of the affected portions of our source code, we could be required to expend substantial time and resources to re-engineer some or all of our software.
Although we monitor our use of open source software to avoid subjecting our platform to conditions we do not intend, the terms of many open source licenses have not been interpreted by U.S. or foreign courts, and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to provide or distribute our platform. From time to time, there have been claims challenging the ownership of open source software against companies that incorporate open source software into their solutions. As a result, we could be subject to lawsuits by parties claiming ownership of what we believe to be open source software. Moreover, we cannot assure you that our processes for controlling our use of open source software in our platform will be effective. If we are held to have breached or failed to fully comply with all the terms and conditions of an open source software license, we could face infringement or other liability, or be required to seek costly licenses from third parties to continue providing our offerings on terms that are not economically feasible, to re-engineer our platform, to discontinue or delay the provision of our offerings if re-engineering could not be accomplished on a timely basis or to make generally available, in source code form, our proprietary code, any of which could adversely affect our business, financial condition and results of operations.
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We rely on third-party payment processors to process deposits and withdrawals made by our users into the platform, and if we cannot manage our relationships with such third parties and other payment-related risks, our business, financial condition and results of operations could be adversely affected.
We rely on a limited number of third-party payment processors to process deposits and withdrawals made by our users into our platform. If any of our third-party payment processors terminates its relationship with us or refuses to renew its agreement with us on commercially reasonable terms, we would need to find an alternate payment processor, and may not be able to secure similar terms or replace such payment processor in an acceptable time frame. Further, the software and services provided by our third-party payment processors may not meet our expectations, contain errors or vulnerabilities, be compromised or experience outages. Any of these risks could cause us to lose our ability to accept online payments or other payment transactions or make timely payments to users on our platform, any of which could make our platform less trustworthy and convenient and adversely affect our ability to attract and retain our users.
Nearly all of our payments are made by credit card, debit card or through other third-party payment services, which subjects us to certain regulations and to the risk of fraud. We may in the future offer new payment options to users that may be subject to additional regulations and risks. We are also subject to a number of other laws and regulations relating to the payments we accept from our users, including with respect to money laundering, money transfers, privacy and information security. If we fail to comply with applicable rules and regulations, we may be subject to civil or criminal penalties, fines and/or higher transaction fees and may lose our ability to accept online payments or other payment card transactions, which could make our offerings less convenient and attractive to our users. If any of these events were to occur, our business, financial condition and results of operations could be adversely affected.
For example, if we are deemed to be a money transmitter as defined by applicable regulation, we could be subject to certain laws, rules and regulations enforced by multiple authorities and governing bodies in the United States and numerous state and local agencies who may define money transmitter differently. For example, certain states may have a more expansive view of who qualifies as a money transmitter. Additionally, outside of the United States, we could be subject to additional laws, rules and regulations related to the provision of payments and financial services, and if we expand into new jurisdictions, the foreign regulations and regulators governing our business that we are subject to will expand as well. If we are found to be a money transmitter under any applicable regulation and we are not in compliance with such regulations, we may be subject to fines or other penalties in one or more jurisdictions levied by federal or state or local regulators, including state Attorneys General, as well as those levied by foreign regulators. In addition to fines, penalties for failing to comply with applicable rules and regulations could include criminal and civil proceedings, forfeiture of significant assets or other enforcement actions. We could also be required to make changes to our business practices or compliance programs as a result of regulatory scrutiny.
Additionally, our payment processors require us to comply with payment card network operating rules, which are set and interpreted by the payment card networks. The payment card networks could adopt new operating rules or interpret or reinterpret existing rules in ways that might prohibit us from providing certain offerings to some users, be costly to implement or difficult to follow. We have agreed to reimburse our payment processors for fines they are assessed by payment card networks if we or the users on our platform violate these rules. Any of the foregoing risks could adversely affect our business, financial condition and results of operations.
We rely on other third-party sports data providers for real-time and accurate data for sporting events, and if such third parties do not perform adequately or terminate their relationships with us, our costs may increase and our business, financial condition and results of operations could be adversely affected.
DraftKings and SBT rely on third-party sports data providers such as SportRadar and BetGenius to obtain accurate information regarding schedules, results, performance and outcomes of sporting events. We rely on this data to determine when and how bets are settled or how users rank in their fantasy contests. DraftKings and SBT have experienced, and we may continue to experience, errors in this data feed which may result in us incorrectly settling bets or ranking users in their contests. If we cannot adequately resolve the issue with our users, our users may have a negative experience with our offerings, our brand or
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reputation may be negatively affected and our users may be less inclined to continue or resume utilizing our products or recommend our platform to other potential users. As such, a failure or significant interruption in our service would harm our reputation, business and operating results.
Furthermore, if any of our sports data partners terminates its relationship with us or refuses to renew its agreement with us on commercially reasonable terms, we would need to find an alternate provider, and may not be able to secure similar terms or replace such providers in an acceptable time frame. Any of these risks could increase our costs and adversely affect our business, financial condition and results of operations. Further, any negative publicity related to any of our third-party partners, including any publicity related to regulatory concerns, could adversely affect our reputation and brand, and could potentially lead to increased regulatory or litigation exposure.
We rely on other third-party service providers and if such third parties do not perform adequately or terminate their relationships with us, our costs may increase and our business, financial condition and results of operations could be adversely affected.
Our success depends in part on our relationships with other third-party service providers. For example, we rely on third parties for content delivery, load balancing and protection against distributed denial-of-service attacks. If those providers do not perform adequately, our users may experience issues or interruptions with their experiences. Furthermore, if any of our partners terminates its relationship with us or refuses to renew its agreement with us on commercially reasonable terms, we would need to find an alternate provider, and may not be able to secure similar terms or replace such providers in an acceptable time frame. We also rely on other software and services supplied by third parties, such as communications and internal software, and our business may be adversely affected to the extent such software and services do not meet our expectations, contain errors or vulnerabilities, are compromised or experience outages. Any of these risks could increase our costs and adversely affect our business, financial condition and results of operations. Further, any negative publicity related to any of our third-party partners, including any publicity related to regulatory concerns, could adversely affect our reputation and brand, and could potentially lead to increased regulatory or litigation exposure.
We incorporate technology from third parties into our platform. We cannot be certain that our licensors are not infringing the intellectual property rights of others or that the suppliers and licensors have sufficient rights to the technology in all jurisdictions in which we may operate. Some of our license agreements may be terminated by our licensors for convenience. If we are unable to obtain or maintain rights to any of this technology because of intellectual property infringement claims brought by third parties against our suppliers and licensors or against us, or if we are unable to continue to obtain the technology or enter into new agreements on commercially reasonable terms, our ability to develop our platform containing that technology could be severely limited and our business could be harmed. Additionally, if we are unable to obtain necessary technology from third parties, we may be forced to acquire or develop alternate technology, which may require significant time and effort and may be of lower quality or performance standards. This would limit and delay our ability to provide new or competitive offerings and increase our costs. If alternate technology cannot be obtained or developed, we may not be able to offer certain functionality as part of our offerings, which could adversely affect our business, financial condition and results of operations.
If we fail to detect fraud or theft, including by our users and employees, our reputation may suffer which could harm our brand and reputation and negatively impact our business, financial condition and results of operations and can subject us to investigations and litigation.
We have in the past incurred, and may in the future incur, losses from various types of financial fraud, including use of stolen or fraudulent credit card data, claims of unauthorized payments by a user and attempted payments by users with insufficient funds. Bad actors use increasingly sophisticated methods to engage in illegal activities involving personal information, such as unauthorized use of another person’s identity, account information or payment information and unauthorized acquisition or use of credit or debit card details, bank account information and mobile phone numbers and accounts. Under current credit card practices, we may be liable for use of funds on our platform with fraudulent credit card data, even if the associated financial institution approved the credit card transaction.
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Acts of fraud may involve various tactics, including collusion. Successful exploitation of our systems could have negative effects on our product offerings, services and user experience and could harm our reputation. Failure to discover such acts or schemes in a timely manner could result in harm to our operations. In addition, negative publicity related to such schemes could have an adverse effect on our reputation, potentially causing a material adverse effect on our business, financial condition, results of operations and prospects. In the event of the occurrence of any such issues with our existing platform or product offerings, substantial engineering and marketing resources and management attention, may be diverted from other projects to correct these issues, which may delay other projects and the achievement of our strategic objectives.
In addition, any misappropriation of, or access to, users’ or other proprietary information or other breach of our information security could result in legal claims or legal proceedings, including regulatory investigations and actions, or liability for failure to comply with privacy and information security laws, including for failure to protect personal information or for misusing personal information, which could disrupt our operations, force us to modify our business practices, damage our reputation and expose us to claims from our users, regulators, employees and other persons, any of which could have an adverse effect on our business, financial condition, results of operations and prospects.
Despite measures we have taken to detect and reduce the occurrence of fraudulent or other malicious activity on our platform, we cannot guarantee that any of our measures will be effective or will scale efficiently with our business. Our failure to adequately detect or prevent fraudulent transactions could harm our reputation or brand, result in litigation or regulatory action and lead to expenses that could adversely affect our business, financial condition and results of operations.
If Internet and other technology-based service providers experience service interruptions, our ability to conduct our business may be impaired and our business, financial condition and results of operations could be adversely affected.
A substantial portion of our network infrastructure is provided by third parties, including Internet service providers and other technology-based service providers. See “— DraftKings primarily relies, and we will rely, on Amazon Web Services to deliver our offerings to users on our platform and any disruption of or interference with our use of Amazon Web Services could adversely affect our business, financial condition, results of operations and prospects.” We require technology-based service providers to implement cyber-attack-resilient systems and processes. However, if Internet service providers experience service interruptions, including because of cyber-attacks, or due to an event causing an unusually high volume of Internet use (such as a pandemic or public health emergency), communications over the Internet may be interrupted and impair our ability to conduct our business. Internet service providers and other technology-based service providers may in the future roll out upgraded or new mobile or other telecommunications services, such as 5G or 6G services, which may not be successful and thus may impact the ability of our users to access our platform or offerings in a timely fashion or at all. In addition, our ability to process e-commerce transactions depends on bank processing and credit card systems. To prepare for system problems, we continuously seek to strengthen and enhance our current facilities and the capabilities of our system infrastructure and support. Nevertheless, there can be no assurance that the Internet infrastructure or our own network systems will continue to be able to meet the demand placed on us by the continued growth of the Internet, the overall online gaming industry and our users. Any difficulties these providers face, including the potential of certain network traffic receiving priority over other traffic (i.e., lack of net neutrality), may adversely affect our business, and we exercise little control over these providers, which increases our vulnerability to problems with the services they provide. Any system failure as a result of reliance on third parties, such as network, software or hardware failure, including as a result of cyber-attacks, which causes a loss of our users’ property or personal information or a delay or interruption in our online services and products and e-commerce services, including our ability to handle existing or increased traffic, could result in a loss of anticipated revenue, interruptions to our platform and offerings, cause us to incur significant legal, remediation and notification costs, degrade the customer experience and cause users to lose confidence in our offerings, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects.
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We rely on strategic relationships with casinos, tribes and horse-tracks in order to be able to offer our products in certain jurisdictions. If we cannot establish and manage such relationships with such partners, our business, financial condition and results of operations could be adversely affected.
Under some states’ sports betting laws, online sports betting is limited to a finite number of retail operators, such as casinos, tribes or tracks, who own a “skin” or “skins” under that state’s law. A “skin” is a legally-authorized license from a state to offer online sports betting services provided by a casino. The “skin” provides a market access opportunity for mobile operators to operate in the jurisdiction pending licensure and other required approvals by the state’s regulator. The entities that control those “skins’, and the numbers of  “skins” available, are typically determined by a state’s sports betting law. In most of the jurisdictions in which we offer sports betting and iGaming, we currently rely on a casino, tribe or track in order to get a “skin.” These “skins” are what allows us to gain access to jurisdictions where online operators are required to have a retail relationship. If we cannot establish, renew or manage our relationships, our relationships could terminate and we would not be allowed to operate in those jurisdictions until we enter into new ones. As a result, our business, financial condition and results of operations could be adversely affected.
Our growth will depend, in part, on the success of our strategic relationships with third parties. Overreliance on certain third parties, or our inability to extend existing relationships or agree to new relationships may cause unanticipated costs for us and impact our financial performance in the future.
DraftKings relies, and we expect to continue to rely, on relationships with sports leagues and teams, professional athletes and athlete organizations, advertisers, casinos and other third parties in order to attract users to our platform. These relationships along with providers of online services, search engines, social media, directories and other websites and ecommerce businesses direct consumers to the DraftKings platform. In addition, many of the parties with whom we have advertising arrangements provide advertising services to other companies, including other fantasy sports and gaming platforms with whom we compete. While we believe there are other third parties that could drive users to our platform, adding or transitioning to them may disrupt our business and increase our costs. In the event that any of DraftKings’ existing relationships or our future relationships fails to provide services to us in accordance with the terms of our arrangement, or at all, and we are not able to find suitable alternatives, this could impact our ability to attract consumers cost effectively and harm our business, financial condition, results of operations and prospects.
Our growth prospects may suffer if we are unable to develop successful offerings or if we fail to pursue additional offerings. In addition, if we fail to make the right investment decisions in our offerings and technology platform, we may not attract and retain key users and our revenue and results of operations may decline.
DraftKings was founded in 2011 with a singular focus on the DFS industry and has primarily focused its efforts in the last eight years on growing the DFS product offering. DraftKings recently expanded its product offerings to include its Sportsbook and iGaming offerings. DraftKings has rapidly expanded and we anticipate expanding further as new product offerings mature and as we pursue our growth strategies.
The industries in which we operate are subject to rapid and frequent changes in standards, technologies, products and service offerings, as well as in customer demands and expectations and regulations. We must continuously make decisions regarding which offerings and technology to invest in to meet customer demand in compliance with evolving industry standards and regulatory requirements and must continually introduce and successfully market new and innovative technologies, offerings and enhancements to remain competitive and effectively stimulate customer demand, acceptance and engagement. Our ability to engage, retain, and increase our user base and to increase our revenue will depend heavily on our ability to successfully create new offerings, both independently and together with third parties. We may introduce significant changes to our existing platforms and offerings or develop and introduce new and unproven products, with which we have little or no prior development or operating experience. The process of developing new offerings and systems is inherently complex and uncertain, and new offerings may not be well received by users, even if well-reviewed and of high quality. If we are unable to develop technology and products that address users’ needs or enhance and improve our existing platforms and offerings in a timely manner, that could have a material adverse effect on our business, financial condition, results of operations and prospects.
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Although we intend to continue investing in our research and development efforts, if new or enhanced offerings fail to engage our users or partners, we may fail to attract or retain users or to generate sufficient revenue, operating margin, or other value to justify our investments, any of which may seriously harm our business. In addition, management may not properly ascertain or assess the risks of new initiatives, and subsequent events may alter the risks that were evaluated at the time we decided to execute any new initiative. Creating additional offerings can also divert our management’s attention from other business issues and opportunities. Even if our new offerings attain market acceptance, those new offerings could exploit the market share of our existing product offerings or share of our users’ wallets in a manner that could negatively impact their ecosystem. Furthermore, such expansion of our business increases the complexity of our business and places a significant strain on our management, operations, technical systems and financial resources and we may not recover the often-substantial up-front costs of developing and marketing new offerings, or recover the opportunity cost of diverting management and financial resources away from other offerings. In the event of continued growth of our operations, products or in the number of third-party relationships, we may not have adequate resources, operationally, technologically or otherwise to support such growth and the quality of our platforms, offerings or our relationships with third parties could suffer. In addition, failure to effectively identify, pursue and execute new business initiatives, or to efficiently adapt our processes and infrastructure to meet the needs of our innovations, may adversely affect our business, financial condition, results of operations and prospects.
Any new offerings may also require our users to utilize new skills to use our platform. This could create a lag in adoption of new offerings and new user additions related to any new offerings. To date, new offerings and enhancements on our existing platforms have not hindered our user growth or engagement, but that may be the result of a large portion of our user base being in a younger demographic and more willing to invest the time to learn to use our products most effectively. To the extent that future users, including those in older demographics, are less willing to invest the time to learn to use our products, and if we are unable to make our products easier to learn to use, our user growth or engagement could be affected, and our business could be harmed. We may develop new products that increase user engagement and costs without increasing revenue.
Additionally, we may make bad or unprofitable decisions regarding these investments. If new or existing competitors offer more attractive offerings, we may lose users or users may decrease their spending on our platforms. New customer demands, superior competitive offerings, new industry standards or changes in the regulatory environment could render our existing offerings unattractive, unmarketable or obsolete and require us to make substantial unanticipated changes to our platforms or business model. Our failure to adapt to a rapidly changing market or evolving customer demands could harm our business, financial condition, results of operations and prospects.
Our growth will depend on our ability to attract and retain users, and the loss of our users, failure to attract new users in a cost-effective manner, or failure to effectively manage our growth could adversely affect our business, financial condition, results of operations and prospects.
Our ability to achieve growth in revenue in the future will depend, in large part, upon our ability to attract new users to our offerings, retain existing users of our offerings and reactivate users in a cost-effective manner. Achieving growth in our community of users may require us to increasingly engage in sophisticated and costly sales and marketing efforts, which may not make sense in terms of return on investment. We expect to use a variety of free and paid marketing channels, in combination with compelling offers and exciting games to achieve our objectives. For paid marketing, we intend to leverage a broad array of advertising channels, including television, radio, social media platforms, such as Facebook, Instagram, Twitter and Snap, affiliates and paid and organic search, and other digital channels, such as mobile display. If the search engines on which we rely modify their algorithms, change their terms around gaming, or if the prices at which we may purchase listings increase, then our costs could increase, and fewer users may click through to our website. If links to our website are not displayed prominently in online search results, if fewer users click through to our website, if our other digital marketing campaigns are not effective, of it the costs of attracting users using any of our current methods significantly increase, then our ability to efficiently attract new users could be reduced, our revenue could decline and our business, financial condition and results of operations could be harmed.
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In addition, our ability to increase the number of users of our offerings will depend on continued user adoption of DFS, Sportsbook and iGaming. Growth in the DFS, Sportsbook and iGaming industries and the level of demand for and market acceptance of our product offerings will be subject to a high degree of uncertainty. We cannot assure that consumer adoption of our product offerings will continue or exceed current growth rates, or that the industry will achieve more widespread acceptance.
Additionally, as technological or regulatory standards change and we modify our platform to comply with those standards, we may need users to take certain actions to continue playing, such as performing age verification checks or accepting new terms and conditions. Users may stop using our product offerings at any time, including if the quality of the user experience on our platform, including our support capabilities in the event of a problem, does not meet their expectations or keep pace with the quality of the customer experience generally offered by competitive offerings.
Our core values of focusing on our users first and acting for the long term may conflict with the short-term interests of our business.
One of our operating principles is to put our users first, which we believe is essential to our success and serves the best, long-term interests of our company and our stakeholders. Therefore, we have made in the past and we may make in the future, certain investments or changes in strategy that we think will benefit our users, even if our decision negatively impacts our operating results in the short term.
DraftKings’ business model depends upon the continued compatibility between the DraftKings app and the major mobile operating systems and upon third-party platforms for the distribution of the DraftKings’ product offerings. If Google Play or the Apple App Store prevent users from downloading our apps or block advertising from being delivered to our users, our ability to grow our revenue, profitability and prospects may be adversely affected.
The substantial majority of DraftKings’ users access its DFS, Sportsbook and iGaming product offerings primarily on mobile devices, and we believe that this will continue to be increasingly important to New DraftKings’ long-term success. DraftKings’ business model depends upon the continued compatibility between the DraftKings app and the major mobile operating systems. Third parties with whom DraftKings does not have any formal relationships control the design of mobile devices and operating systems. These parties frequently introduce new devices, and from time to time they may introduce new operating systems or modify existing ones. Network carriers may also impact the ability to download apps or access specified content on mobile devices.
In addition, DraftKings relies upon third-party platforms for distribution of its product offerings. The DFS product offering is delivered as a free application through both the Apple App Store and the Google Play Store and is also accessible via mobile and traditional websites. The Sportsbook and iGaming product offerings are primarily distributed through the Apple App Store and a traditional website. The Google Play store and Apple App Store are global application distribution platforms and the main distribution channels for the DraftKings’ app. As such, the promotion, distribution and operation of the DraftKings’ app are subject to the respective distribution platforms’ standard terms and policies for application developers, which are very broad and subject to frequent changes and interpretation. Furthermore, the distribution platforms may not enforce their standard terms and policies for application developers consistently and uniformly across all applications and with all publishers.
There is no guarantee that popular mobile devices will start or continue to support or feature our product offerings, or that mobile device users will continue to use our product offerings rather than competing products. DraftKings is, and we will continue to be, dependent on the interoperability of our platforms with popular mobile operating systems, technologies, networks and standards that we do not control, such as the Android and iOS operating systems, and any changes, bugs, technical or regulatory issues in such systems, our relationships with mobile manufacturers and carriers, or in their terms of service or policies that degrade our offerings’ functionality, reduce or eliminate our ability to distribute our offerings, give preferential treatment to competitive products, limit our ability to deliver high quality offerings, or impose fees or other charges related to delivering our offerings, could adversely affect our product usage and monetization on mobile devices.
Moreover, DraftKings’ products require high-bandwidth data capabilities in order to place time-sensitive bets. If the growth of high-bandwidth capabilities, particularly for mobile devices, is slower
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than we expect, our user growth, retention, and engagement may be seriously harmed. Additionally, to deliver high-quality content over mobile cellular networks, DraftKings’ product offerings must work well with a range of mobile technologies, systems, networks, regulations, and standards that DraftKings does not control. In particular, any future changes to the iOS or Android operating systems may impact the accessibility, speed, functionality, and other performance aspects of our platforms, which issues are likely to occur in the future from time to time. In addition, the adoption of any laws or regulations that adversely affect the growth, popularity, or use of the Internet, including laws governing Internet neutrality, could decrease the demand for our products and increase our cost of doing business. Specifically, any laws that would allow mobile providers in the United States to impede access to content, or otherwise discriminate against content providers like us, such as providing for faster or better access to our competitors, over their data networks, could have a material adverse effect on our business, financial condition, results of operations and prospects.
Furthermore, we may not successfully cultivate relationships with key industry participants or develop product offerings that operate effectively with these technologies, systems, networks, regulations, or standards. If it becomes more difficult for our users to access and use our plat