DraftKings (NASDAQ: DKNG) shares have fallen on Tuesday after Hindenburg Research announced it was short the stock.
Shares fell over 8% to lows of $44.66. They are currently trading at $46.86, down 7.35%.
In its report, Hindenburg said SBTech, a Bulgaria-based gaming technology firm that was part of the DraftKings SPAC deal, accounted for 25% of DraftKings total revenue, but that “SBTech also brings exposure to extensive dealings in black-market gaming, money laundering and organized crime.”
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“We estimate that roughly 50% of SBTech’s revenue continues to come from markets where gambling is banned, based on an analysis of DraftKings’ SEC filings, conversations with former employees, and supporting documents,” stated Hindenburg.
Hindenburg also questioned DraftKings promotional, and marketing spend, saying there is a lack of evidence of long-term customer brand loyalty.
DraftKings and Diamond Eagle Acquisition Corp announced a merger back in December 2019 that saw the sports betting firm go public.
It has been one of the more successful SPAC deals of recent times, climbing to highs of $74.38 in March as US states began to speed up the allowance of sports and online betting.
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