DraftKings going public via reverse merger | Hacker News Reader

DraftKings going public via reverse merger

axios.com

7 pointsnotlukesky7 comments

Sometime in 2010, I met the founder of FanDuel, who did a soft pitch on the company and the upside. I briefly contemplated applying.

A few years later, as the company rose to unicorn status, I was wondering if I should have done so. After the massive fall and the takeover that left the founder CEO with nothing but a lawsuit[1], I am now again padding myself on the back for not pursuing this.

The FanDuel / Draftkings story is now a cautionary tale of taking too much VC money with too little organic/non-purchased growth in my books.

[1] https://www.businessinsider.com/fanduel-founders-likely-to-l...

DK / FD have been a mess since the failed merger. Having a competitive duopoly pushed their marketing budgets through the roof and CPA ran miles ahead of per-customer lifetime worth.

This $400 million really isn't much of a lifeline based in their historical burn rates.

As for SBTech, they're really not that interesting, just a platform vendor

As for the valuation, I mean that seems to have come about via rattling pig bones doused in goat blood. A fund that can only just cover the claimed cash injection of the deal, DK had upto 60% wiped off after a $2billion valuation and a tech vendor to some medium size casinos.

Online gambling is recently legal in Indiana I guess? So much advertising. Offers of matching $500 credit if I open an account and make one bet. Almost worth just making a few silly bets and then taking out my money, relieving the VCs of a little money?

Most, if not all, gambling sites have restrictions such as rollovers that prevent you from doing this.

An example explanation from https://www.sportsbettingdime.com/guides/bonuses/explained/

"Understanding rollover with an example might help. Let’s say that you deposit $250 to a sportsbook that is offering a 50% bonus with a 5x rollover. This means that you’ll have $375 to bet with, but can’t withdraw the bonus money until you’ve placed $1,875 ((250+125)x5) in bets."

On pure coin flips, a 5x rollover of a double my initial fund still has a positive EV right? Though it won’t be as good as someone without a rollover.

That's why you lay your bets. 5 x turnover is really high as well. Most I encounter here in Australia just require one turnover.

Only IPOs where banks give all the money to the company and try to push shares onto all of our 401ks get respect around here, but more companies should consider public market exposure this way

Reply on news.ycombinator.com