While revenue grew in 2019 for SBTech, the company saw a decline in overall profits. This was due in large part to increased headcount as well as exits from the online market, according to a recent prospectus regarding the firm’s merger with DraftKings.
This proposed merger of the two companies will fall under the umbrella of the Diamond Eagle Acquisition Corp, a ‘special-purpose acquisition company’ founded by former Hollywood exec Jeff Sagansky.
SBTech’s total revenue hit $108.4 million ($86.7m) this past year, according to Diamond Eagle, a 2.9% increase over 2018.
Costs increased by 36.4% to $101.9 million. This was led by revenue-related outgoings of $60.6 million, primarily due to IT infrastructure development and expanding teams to facilitate both product delivery and bet processing.
This resulted in a total operating profit of $6.5 million, down 76.6% from 2018. The company paid $796,000 in tax, giving them a net profit of $5.6 million, down nearly 83% from the prior year.
The planned merger between SBTech and DraftKings was announced just before Christmas, part of DraftKings‘ plan to publicly trade the company.
The details of DraftKings’ IPO process have yet to be provided, but DraftKings Chief Executive Jason Robbins recently stated that he believes that the merger will be concluded sometime during the second quarter of this year.
By absorbing SBTech operations, DraftKings believes they will generate a projected net revenue of $540 million this year, with $140 million of that coming from SBTech.
