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DraftKings shares fall after companies warn about black market links

Stakes in sports betting power DraftKings plunged Tuesday morning, claiming the company was exposed to gambling and organized crime in the international black market.

DraftKings shares opened at $ 44.95 on Tuesday. It fell about 11% from $ 50.62 at the closing price on Monday. According to MarketWatch dataAfter being published by the infamous short-selling Hindenburg Research Long report Regarding the alleged illegal activity, he said it was shorting the company.

The market shrugged partially in shock later that day, with DraftKings shares recovering to nearly $ 49 late Tuesday morning.

In a Hindenburg report, the company merged DraftKings 2020 with Bulgarian sports gambling technology company SBTech. $ 3.3 Billion Blank Check Transaction Under the DraftKings flag last April, the merged company was exposed to serious open market operations, including SBTech’s track record of operating lucrative gambling businesses in China, Vietnam and Thailand.

Hindenburg confirmed some of its claims, while others were based on interviews with anonymous former employees.

The company is known for other recent brutal things Short cell report At hype companies such as Nikola, Clover Health and Lordstown Motors.

DraftKings Communications Director Stephen Miraglia did not deny a particular claim in a statement to the post.

Man on the desk
Hindenburg is known for other recent brutal things Short cell report At companies such as Nikola, Clover Health and Lordstown Motors.
Boston Globe via Getty Images

“This report is written by someone who is running out of DraftKings stock and has an incentive to lower it,” said Miragria. “The business combination with SBTech was completed in 2020. We thoroughly reviewed their business practices and were pleased with the results. We do not comment on speculations or claims made by former SBTech employees.”

DraftKings insiders have benefited significantly from the company’s listing and have not disclosed the risks posed by the 2020 SBTech merger, for a total of $ 1.4 billion since April last year, according to Hindenberg. Sold the stock.

Founded in 2007 and selling back-end infrastructure to other gambling companies in exchange for reduced revenue, SBTech began many years before it was integrated with DraftKings, “long-term black market operations. Has a continuous record over. Hindenburg.

DraftKings CEO Jason Robins
DraftKings and SBTech merged in April 2020 as part of a $ 3.3 billion SPAC transaction.
Getty Images on TechCrunch

Ann Archive version The 2014 SBTech site has a “strong turnkey Asian system” that allows gambling operators to accept payments in currencies such as Vietnamese dong and Indonesian rupiah, even if gambling is prohibited in both Vietnam and Indonesia. Is being advertised.

According to the report, SBTech made money by collecting 10-30% of its revenue from operators who used the software and being able to charge higher fees in countries where gambling is illegal.

When a tweet about the US legalizing sports betting occurred in 2017, SBTech spun off its sketchy gambling business to another company called BTi / CoreTech to clean up the brand’s image and bring it to the US market. It is reported that there is a possibility of entering.

DraftKings ads at baseball stadium
SBTech allegedly stopped its business in Iran while considering a deal in Oregon due to concerns over US sanctions.
Icon Sportswire via Getty Images

According to Hindenberg, BTi / CoreTech sold SBTech’s software to customers in countries where gambling is illegal through virtually the same business model, but acted as SBTech’s customers rather than subsidiaries in paper.

To show integration between companies, Hindenburg pointed out evidence, including a LinkedIn post claiming that employees work for both BTi / CoreTech and SBTech. Both companies are managed by SBTech owner Shalom Meckenzie and allegedly operated outside their office in Sofia, Bulgaria.

According to Hindenburg, the newly formed BTi / CoreTech clients are reported to be involved in organized crime in Asia. This includes a site called 12Bet connected to an international syndicate called Triads, and another site called Fun88, which was the target of a government raid in 2019. Both sites seem to be dealing with the short-selling BTi / CoreTech.

Draft Kings logo
The market shrugged partially in shock later that day, with DraftKings shares recovering to nearly $ 49 late Tuesday morning.
Boston Globe via Getty Images

US Supreme Court while BTi / CoreTech was allegedly active in Asia Lifting the federal ban on sports gambling In 2019, the state began writing its own gambling law. SBTech Enter the US market Finally, he signed a merger agreement with DraftKings.

DraftKings still seems to be fetching millions from BTi / CoreTech.Draft Kings 2020 SEC filing, The company revealed that SBTech “relies primarily on one reseller for revenue in Asia.”

The company did not appoint a reseller who accounted for 52% of SBTech’s revenue in 2020 and 46% of its 2019 revenue, but Hindenburg said a former employee that the reseller was BTi / CoreTech. I’m quoting.

A former employee claims in a Hindenburg report that SBTech itself and gambling were operated in Iran, which is illegal, from 2014 or 2015 to 2019. The company allegedly shut down its Iranian business while considering trading in Oregon due to concerns over US sanctions.

DraftKings shares fall after companies warn about black market links

Source link DraftKings shares fall after companies warn about black market links

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