Financial services company Morgan Stanley leads a consortium in extending a $500 million loan line to DraftKings, the popular daily fantasy sports provider.
DraftKings Secures $500 Million Credit Facility for Expansion
Sports betting and iGaming giant DraftKings is gearing up for significant growth in the coming years, thanks to a new $500 million credit facility. The financing, led by Morgan Stanley, will provide the company with greater liquidity and flexibility in its operations.
The company, which currently operates mobile sports betting in 25 states plus Washington D.C., and iGaming products in five states and Ontario, Canada, plans to launch mobile sports betting in Missouri pending regulatory approval. DraftKings' CEO, Jason Robins, confirmed the company's intention to explore opening a prediction market, with plans to launch before the next US presidential election.
The new credit facility replaces a previous one worth $125 million taken out in 2022, and the previous credit line, provided by Banc of California and Citizens Bank, has been closed and fully replaced. The exact rates for the new credit facility are not specified, but at current interest rates, the difference between the rates offered by the new and old credit facilities is likely to be over a percentage point, making it a cheaper way for DraftKings to borrow.
DraftKings' fiscal health, supported by a $1.26 billion cash reserve and strong cash flow, positions it to fund its expansion plans, potential acquisitions, shareholder returns, and innovation projects from this credit capacity. The company's use of capital focuses on growth, operational efficiency, and strategic diversification of its gaming offerings.
In recent months, DraftKings has been actively diversifying its offerings. This year, the company launched player vs player poker games in a second state. The exact intentions on how the money from the new credit facility will be used have not been announced, but the funds could accelerate DraftKings' launch into new markets, pursue acquisitions to broaden product verticals, and invest in technology and marketing to sustain competitive advantage in the evolving sports betting and iGaming landscape.
DraftKings is targeting significant growth in 2025, with a revenue forecast of $6.2 billion to $6.4 billion and adjusted EBITDA of $800 million to $900 million, partly driven by expansion initiatives and product innovations. With the new credit facility in place, DraftKings is well-positioned to achieve these ambitious goals.
DraftKings, with the new $500 million credit facility, can potentially invest in technology to enhance its operations and competitive edge in the sports betting and iGaming industry. The company's financial health, bolstered by the credit facility, aims to fuel growth, acquisitions, and product diversification in the technology sector.
