What changed in this filing

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Item 1. Financial Statements

2023-11-03 compared with 2023-08-04 · 97 added, 84 removed, 657 unchanged (22% of the section changed)

3 unchanged sentences

(Amounts in thousands, except par value)

June 30, 2023

September 30, 2023

(Unaudited) December 31, 2022

10 unchanged sentences

Operating lease right-of-use assets 77,180 65,957

Equity method investment 9,638 10,080

Equity method investments 9,630 10,080

Deposits and other non-current assets 136,526 155,865

16 unchanged sentences

Class A common stock, $ 0.0001 par value;

900,000 shares authorized as of June 30, 2023 and December 31, 2022;

473,933 and 459,265 shares issued and 463,257 and 450,575 outstanding as of June 30, 2023 and December 31, 2022, respectively

900,000 shares authorized as of September 30, 2023 and December 31, 2022;

477,198 and 459,265 shares issued and 465,906 and 450,575 outstanding as of September 30, 2023 and December 31, 2022, respectively

Class B common stock, $ 0.0001 par value;

900,000 shares authorized as of June 30, 2023 and December 31, 2022;

393,014 shares issued and outstanding as of June 30, 2023 and December 31, 2022

900,000 shares authorized as of September 30, 2023 and December 31, 2022;

393,014 shares issued and outstanding as of September 30, 2023 and December 31, 2022

Treasury stock, at cost;

10,676 and 8,690 shares as of June 30, 2023 and December 31, 2022, respectively

11,292 and 8,690 shares as of September 30, 2023 and December 31, 2022, respectively

( 391,484 ) ( 332,133 )

8 unchanged sentences

(Amounts in thousands, except loss per share data)

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

40 unchanged sentences

Balances at June 30, 2023 463,257 $ 46 393,014 $ 39 $ 6,961,454 $ ( 5,606,219 ) $ 36,488 $ ( 373,317 ) $ 1,018,491

Exercise of stock options 1,359 — — — 5,506 — — — 5,506

Stock-based compensation expense — — — — 78,353 — — — 78,353

Shares issued for exercise of warrants 11 — — — 342 — — — 342

Purchase of treasury stock ( 617 ) — — — — — — ( 18,167 ) ( 18,167 )

Restricted stock unit vesting 1,896 — — — — — — — —

Net loss — — — — — ( 283,103 ) — — ( 283,103 )

Balances at September 30, 2023 465,906 $ 46 393,014 $ 39 $ 7,045,655 $ ( 5,889,322 ) $ 36,488 $ ( 391,484 ) $ 801,422

Class A Common Stock Class B Common Stock Additional

17 unchanged sentences

Restricted stock unit vesting 894 — — — — — — — —

Foreign currency translation — — — — — — — — —

Net loss — — — — — ( 217,103 ) — — ( 217,103 )

Balances at June 30, 2022 448,022 $ 45 393,014 $ 39 $ 6,490,012 $ ( 4,438,610 ) $ 36,488 $ ( 324,090 ) $ 1,763,884

Exercise of stock options 69 — — — 224 — — — 224

Stock-based compensation expense — — — — 126,038 — — — 126,038

Shares issued for exercise of warrants — — — — — — — — —

Purchase of treasury stock ( 267 ) — — — — — — ( 4,536 ) ( 4,536 )

Restricted stock unit vesting 840 — — — — — — — —

Net loss — — — — — ( 450,494 ) — — ( 450,494 )

Balances at September 30, 2022 448,664 $ 45 393,014 $ 39 $ 6,616,274 $ ( 4,889,104 ) $ 36,488 $ ( 328,626 ) $ 1,435,116

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(Amounts in thousands)

Six months ended June 30,

Nine months ended September 30,

Operating Activities:

45 unchanged sentences

Supplemental Disclosure of Cash Activities:

Decrease in cash reserved for users $ 88,556 $ 50,781

Increase in cash reserved for users $ 6,331 $ 104,405

Cash paid for interest $ — $ —

4 unchanged sentences

Description of Business

We are a digital sports entertainment and gaming company that provides users with online sports betting (“Sportsbook”), online casino (“iGaming”) and daily fantasy sports (“DFS”) product offerings, as well as DraftKings Marketplace (“Marketplace”), retail sportsbook, media and other consumer product offerings.

We are a digital sports entertainment and gaming company that provides users with online sports betting (“Sportsbook”), online casino (“iGaming”) and daily fantasy sports (“DFS”) product offerings, as well as retail sportsbook, media and other consumer product offerings.

We are also involved in the design and development of sports betting and casino gaming software for online and retail sportsbooks and iGaming operators.

In May 2018, the Supreme Court (the “Court”) struck down on constitutional grounds the Professional and Amateur Sports Protection Act of 1992, a law that prohibited most states from authorizing and regulating sports betting.

Since the Court’s decision, many states have legalized sports betting.

As of June 30, 2023, 34 U.S.

As of September 30, 2023, 36 U.S.

states, the District of Columbia and Puerto Rico have legalized some form of sports betting.

2 unchanged sentences

jurisdictions with statutes legalizing iGaming are Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, Rhode Island and West Virginia.

As of June 30, 2023, we operate our Sportsbook product offering in Arizona, Colorado, Connecticut, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Oregon, Pennsylvania, Tennessee, Virginia, West Virginia, Wyoming and Ontario, Canada, and we operate retail sportsbooks in Colorado, Connecticut, Illinois, Iowa, Kansas, Louisiana, Michigan, Mississippi, New Hampshire, New Jersey and Washington.

As of June 30, 2023, we operate our iGaming product offering in Connecticut, Michigan, New Jersey, Pennsylvania, West Virginia and Ontario, Canada.

As of September 30, 2023, we operate our Sportsbook product offering in Arizona, Colorado, Connecticut, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Oregon, Pennsylvania, Tennessee, Virginia, West Virginia, Wyoming and Ontario, Canada, and we operate retail sportsbooks in Colorado, Connecticut, Illinois, Iowa, Kansas, Kentucky, Louisiana, Michigan, Mississippi, New Hampshire, New Jersey and Washington.

As of September 30, 2023, we operate our iGaming product offering in Connecticut, Michigan, New Jersey, Pennsylvania, West Virginia and Ontario, Canada.

The Company also has arrangements in place with land-based casinos to expand operations into additional states upon the passing of relevant legislation, the issuance of related regulations and the receipt of required licenses.

21 unchanged sentences

The Company consummated the GNOG Transaction on the GNOG Closing Date.

In the GNOG Transaction, the Company was determined to be the accounting acquirer and, as such, the acquisition is considered a business combination under

Accounting Standards Codification (“ASC”) Topic 805, Business Combinations , and was accounted for using the acquisition method of accounting.

In the GNOG Transaction, the Company was determined to be the accounting acquirer and, as such, the acquisition is considered a business combination under Accounting Standards Codification (“ASC”) Topic 805, Business Combinations , and was accounted for using the acquisition method of accounting.

These unaudited condensed consolidated financial statements include the accounts and operations of the Company, except that, due to the timing of the consummation of the GNOG Transaction, these unaudited condensed consolidated financial statements exclude the operations of GNOG prior to the GNOG Closing Date.

All intercompany accounts and transactions are eliminated upon consolidation.

Certain amounts, which are not material, in the prior year’s consolidated financial statements have been reclassified to conform to the current year presentation.

Certain amounts, which are not material, in the prior year’s consolidated financial statements have been reclassified to conform to the current year's presentation.

The Company regularly reviews its operating segments and the approach used by the chief operating decision maker (“CODM”) to evaluate performance and allocate resources.

3 unchanged sentences

However, beginning in the fourth quarter of 2022, as a result of the Company’s integration of the technology and expertise of SBTech, the Company began to view the B2B segment primarily as a cost center of the B2C segment and, therefore, began to operate its business and report its results as a single operating segment.

The Company’s determination that it operates as a single segment is consistent with the CODM's regular review of consolidated financial information for purposes of evaluating performance, allocating resources and planning and forecasting for future periods.

The Company’s determination that it operates as a single segment is consistent with the CODM's regular review of consolidated financial information for the purposes of evaluating performance, allocating resources and planning and forecasting for future periods.

Prior periods have been reclassified to conform with the new segment presentation.

9 unchanged sentences

issued approximately 29.3 million shares of its Class A common stock in connection with the consummation of the GNOG Transaction.

Operating results for GNOG following the GNOG Closing Date are included in the Company’s consolidated statements of operations for the three and six months ended June 30, 2023 and 2022 .

Operating results for GNOG following the GNOG Closing Date are included in the Company’s consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022 .

Purchase Price Accounting for the GNOG Transaction

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The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the GNOG Transaction had been consummated as of the beginning of the periods presented or of results that may occur in the future.

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 Actual 2022 Pro Forma 2023 Actual 2022 Pro Forma

6 unchanged sentences

Intangible Assets

The Company has the following intangible assets, net as of June 30, 2023:

The Company has the following intangible assets, net as of September 30, 2023:

Weighted-Average Remaining Amortization Period Gross Carrying Amount Accumulated Amortization Net

19 unchanged sentences

Intangible assets, net $ 1,106,450 $ ( 329,516 ) $ 776,934

Amortization expense was $ 43.0 million and $ 86.2 million for the three and six months ended June 30, 2023, respectively, and $ 38.1 million and $ 66.2 million for the three and six months ended June 30, 2022, respectively.

Amortization expense was $ 45.1 million and $ 131.2 million for the three and nine months ended September 30, 2023, respectively, and $ 40.6 million and $ 106.8 million for the three and nine months ended September 30, 2022, respectively.

Current and Long-term Liabilities

4 unchanged sentences

In addition, the Company is required to pay quarterly in arrears a commitment fee equal to 0.25 % per annum of the unused portion of the Revolving Line of Credit.

As of June 30, 2023, the Credit Agreement provided a revolving line of credit of up to $ 125.0 million, and there was no principal outstanding under the Credit Agreement.

Net borrowing capacity available from the Credit Agreement as of June 30, 2023 totaled $ 122.7 million.

The Company is also subject to certain affirmative and negative covenants under the Credit Agreement, which the Company was in compliance with as of June 30, 2023.

As of June 30, 2023, the Company has been issued $ 140.0 million in surety bonds at a combined annual premium cost of 0.4 %, which are held for certain regulators’ use and benefit in order for the Company to satisfy state license requirements.

As of September 30, 2023, the Credit Agreement provided a revolving line of credit of up to $ 125.0 million, and there was no principal outstanding under the Credit Agreement.

Net borrowing capacity available from the Credit Agreement as of September 30, 2023 totaled $ 122.7 million.

The Company is also subject to certain affirmative and negative covenants under the Credit Agreement, which the Company was in compliance with as of September 30, 2023.

As of September 30, 2023, the Company has been issued $ 175.0 million in surety bonds at a combined annual premium cost of 0.4 %, which are held for certain regulators’ use and benefit in order for the Company to satisfy state license requirements.

There have been no claims against such bonds and the likelihood of future claims is remote.

16 unchanged sentences

As the Capped Call Transactions qualify for equity classification, the net cost of $ 124.0 million incurred in connection with the Capped Call Transactions was recorded as a reduction to additional paid-in capital on the Company’s consolidated balance sheet.

As of June 30, 2023, the Company’s convertible debt balance was $ 1,252.4 million, net of unamortized debt issuance costs of $ 12.6 million.

Amortization of debt issuance costs was $ 0.7 million and $ 1.3 million for the three and six months ended June 30, 2023, respectively, and $ 0.7 million and $ 1.3 million for the three and six months ended June 30, 2022, which are included in the interest expense line-item on the Company's consolidated statements of operations.

Although recorded at amortized cost on the Company’s consolidated balance sheets, the estimated fair value of the Convertible Notes was $ 946.7 million and $ 786.5 million as of June 30, 2023 and December 31, 2022, respectively, which was calculated using the estimated or actual bids and offers of the Convertible Notes in an over-the-counter market on the last business day of the period, which is a Level 1 fair value measurement.

As of September 30, 2023, the Company’s convertible debt balance was $ 1,253.1 million, net of unamortized debt issuance costs of $ 11.9 million.

Amortization of debt issuance costs was $ 0.7 million and $ 2.0 million for the three and nine months ended September 30, 2023, respectively, and $ 0.7 million and $ 2.0 million for the three and nine months ended September 30, 2022, which are included in the interest expense line-item on the Company's consolidated statements of operations.

Although recorded at amortized cost on the Company’s consolidated balance sheets, the estimated fair value of the Convertible Notes was $ 963.8 million and $ 786.5 million as of September 30, 2023 and December 31, 2022, respectively, which was calculated using the estimated or actual bids and offers of the Convertible Notes in an over-the-counter market on the last business day of the period, which is a Level 1 fair value measurement.

Indirect Taxes

7 unchanged sentences

The Company’s activities by jurisdiction may vary from period to period, which could result in differences in the applicability of indirect taxes from period to period.

As of June 30, 2023 and December 31, 2022, the Company’s estimated contingent liability for indirect taxes was $ 67.3 million and $ 60.3 million, respectively.

As of September 30, 2023 and December 31, 2022, the Company’s estimated contingent liability for indirect taxes was $ 68.3 million and $ 60.3 million, respectively.

The estimated contingent liability for indirect taxes is recorded within other long-term liabilities on the condensed consolidated balance sheets and general and administrative expenses on the condensed consolidated statements of operations.

3 unchanged sentences

Simultaneously with the closing of the IPO, DEAC completed the private sale of 6.3 million warrants to DEAC’s sponsor (the “Private Warrants”), each of which entitles the holder to purchase one share of DraftKings Inc.’s Class A common stock at an exercise price of $ 11.50 per share.

As of June 30, 2023, there were no Public Warrants outstanding and 1.5 million Private Warrants outstanding.

As of September 30, 2023, there were no Public Warrants outstanding and 1.5 million Private Warrants outstanding.

On May 5, 2022, in connection with the consummation of the GNOG Transaction, Old DraftKings entered into an assignment and assumption agreement (the “Old DraftKings Warrant Assignment Agreement”) with DraftKings Inc., Computershare Trust Company, N.A.

6 unchanged sentences

Effective as of the consummation of the GNOG Transaction, each of the outstanding GNOG Private Warrants became exercisable for 0.365 of a share of DraftKings Inc.'s Class A common stock, or approximately 2.1 million shares of DraftKings Inc.’s Class A common stock in the aggregate, on the existing terms and conditions of such GNOG Private Warrants, except as otherwise described in the assignment and assumption agreement relating to the GNOG Private Warrants entered into on the GNOG Closing Date.

As of June 30, 2023, there were 5.9 million GNOG Private Warrants outstanding.

As of September 30, 2023, there were 5.9 million GNOG Private Warrants outstanding.

The Company classifies the Public Warrants, the Private Warrants and the GNOG Private Warrants pursuant to ASC Topic 815, Derivatives and Hedging, as derivative liabilities with subsequent changes in their respective fair values recognized in its consolidated statement of operations at each reporting date.

As of June 30, 2023, the fair value of the Company’s warrant liability was $ 46.3 million.

Due to fair value changes during the three and six months ended June 30, 2023, the Company recorded losses on the remeasurement of its warrant liabilities of $ 20.0 million and $ 37.1 million, respectively.

The Company recorded gains on remeasurement of its warrant liability of $ 14.3 million and $ 27.0 million for the three and six months ended June 30, 2022, respectively.

During the three and six months ended June 30, 2023, approximately 0.1 million Private Warrants were exercised and no GNOG Private Warrants were exercised.

As of September 30, 2023, the fair value of the Company’s warrant liability was $ 53.7 million .

Due to fair value changes during the three and nine months ended September 30, 2023, the Company recorded losses on the remeasurement of its warrant liabilities of $ 7.8 million and $ 44.8 million, respectively.

The Company recorded a loss on the remeasurement of its warrant liability of $ 6.8 million for the three months ended September 30, 2022 and a gain on the remeasurement of its warrant liability of $ 20.2 million for the nine months ended September 30, 2022, respectively.

During the three and nine months ended September 30, 2023, 0.1 million Private Warrants were exercised and no GNOG Private Warrants were exercised.

Fair Value Measurements

6 unchanged sentences

• Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The following tables set forth the fair value of the Company’s financial assets and liabilities measured at fair value as of June 30, 2023 and December 31, 2022 based on the three-tier fair value hierarchy:

June 30, 2023

The following tables set forth the fair value of the Company’s financial assets and liabilities measured at fair value as of September 30, 2023 and December 31, 2022 based on the three-tier fair value hierarchy:

September 30, 2023

Level 1 Level 2 Level 3 Total

31 unchanged sentences

The Company measures the fair value of these derivative instruments using option pricing models and, accordingly, classifies these assets as Level 3.

During the six months ended June 30, 2023, we sold Level 3 derivative instruments with a fair value at December 31, 2022 of $ 6.2 million for proceeds of $ 5.3 million and there were no new Level 3 derivative instruments purchased by or issued to the Company.

During the nine months ended September 30, 2023, we sold Level 3 derivative instruments with a fair value at December 31, 2022 of $ 6.2 million for proceeds of $ 5.3 million and there were no new Level 3 derivative instruments purchased by or issued to the Company.

The table below includes a range and an average weighted by relative fair value of the significant unobservable inputs used to measure the fair value of the Level 3 derivative instruments.

A change in these significant unobservable inputs might result in a significantly higher or lower fair value measurement at the reporting date.

June 30, 2023

September 30, 2023

December 31, 2022

8 unchanged sentences

(6) Represents the asset and liability balance for the digital assets held by the Company for its users, which are classified as Level 2 because the Company measures the fair value of these digital assets using observable inputs for similar transactions.

For the three and six months ended June 30, 2023, the Company recorded zero and $ 0.1 million of unrealized gains on its financial assets carried at fair value, respectively.

During the three and six months ended June 30, 2022, the Company recorded $ 5.6 million of unrealized losses and $ 31.8 million of unrealized gains, respectively, which primarily resulted from those financial assets categorized as Level 3.

For the three and nine months ended September 30, 2023, the Company recorded zero unrealized gains or losses and $ 0.1 million of unrealized gains on its financial assets carried at fair value, respectively.

For the three and nine months ended September 30, 2022, the Company recorded $ 0.7 million and $ 32.5 million of unrealized gains, respectively, which primarily resulted from those financial assets categorized as Level 3.

Those unrealized gains and losses are included within other income, net in the condensed consolidated statements of operations.

3 unchanged sentences

The deferred revenue balances were as follows:

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

3 unchanged sentences

Deferred revenue primarily represents contract liabilities related to the Company’s obligation to transfer future value in relation to in period transactions in which the Company has received consideration.

These obligations are primarily related to incentive programs and wagered amounts associated with unsettled or pending outcomes that fluctuate based on volume of activity.

Such obligations are recognized as liabilities when awarded to users and are recognized as revenue when those liabilities are later resolved.

Revenue Disaggregation

Disaggregation of revenue for the three and six months ended June 30, 2023 and 2022 is as follows:

Three months ended June 30, Six months ended June 30,

Disaggregation of revenue for the three and nine months ended September 30, 2023 and 2022 is as follows:

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

4 unchanged sentences

Online gaming includes Sportsbook, iGaming and DFS, which have certain similar attributes and patterns of recognition.

Sources of other revenue primarily include media, Marketplace and other online consumer products.

Sources of other revenue primarily include media and other consumer product offerings.

The opening and closing balances of the Company's accounts receivable from contracts with customers were $ 51.1 million and $ 27.8 million for the nine months ended September 30, 2023, respectively, and $ 45.9 million and $ 41.0 million for the nine months ended September 30, 2022, respectively.

Stock-Based Compensation

4 unchanged sentences

PSP awards are performance-based equity awards which establish performance objectives related to one or two particular fiscal years.

LTIP awards generally vest when revenue and/or Adjusted EBITDA targets are achieved amongst other conditions, while PSP awards generally vest upon achievement of revenue and Adjusted EBITDA targets and have a range of payouts amongst other conditions.

LTIP awards generally vest when revenue and/or Adjusted EBITDA targets are achieved amongst other conditions, while PSP awards generally vest upon achievement of revenue and/or Adjusted EBITDA targets and have a range of payouts amongst other conditions.

All stock-based compensation awards expire seven to ten years after the grant date thereof.

The following table shows restricted stock unit (“RSU”) and stock option activity for the six months ended June 30, 2023:

The following table shows restricted stock unit (“RSU”) and stock option activity for the nine months ended September 30, 2023:

Time-Based PSP LTIP Total Weighted Average Exercise Price of Options Weighted Average FMV

5 unchanged sentences

Forfeited ( 285 ) ( 1,508 ) — ( 893 ) — ( 387 ) ( 3,073 ) 6.88 21.98

Outstanding at June 30, 2023 11,760 20,917 2,102 14,429 11,152 5,649 66,009 $ 6.53 $ 22.03

As of June 30, 2023, total unrecognized stock-based compensation expense of $ 670.4 million related to granted and unvested stock-based compensation arrangements is expected to be recognized over a weighted-average period of 2.8 years.

The following tables shows stock compensation expense for the three and six months ended June 30, 2023 and 2022:

Three months ended June 30, 2023 Three months ended June 30, 2022

Outstanding at September 30, 2023 11,422 19,433 1,727 13,892 10,506 5,344 62,324 $ 6.68 $ 22.35

As of September 30, 2023, total unrecognized stock-based compensation expense of $ 602.4 million related to granted and unvested stock-based compensation arrangements is expected to be recognized over a weighted-average period of 2.7 years.

The following tables shows stock compensation expense for the three and nine months ended September 30, 2023 and 2022:

Three months ended September 30, 2023 Three months ended September 30, 2022

Options RSUs Total Options RSUs Total

4 unchanged sentences

Total $ 1,849 $ 76,504 $ 78,353 $ 3,577 $ 122,461 $ 126,038

Six months ended June 30, 2023 Six months ended June 30, 2022

Nine months ended September 30, 2023 Nine months ended September 30, 2022

Options RSUs Total Options RSUs Total

7 unchanged sentences

During the three months ended March 31, 2022, the Company recorded a cumulative catch-up adjustment of $ 20.7 million in additional stock-based compensation expense related to its updated expectation of achieving higher revenue targets than originally estimated for certain PSP awards which have a range of payouts.

The Company’s provision (benefit) for income taxes for the three and six months ended June 30, 2023 and 2022 is as follows:

Three months ended June 30, Six months ended June 30,

The Company’s provision (benefit) for income taxes for the three and nine months ended September 30, 2023 and 2022 is as follows:

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

Income tax provision (benefit) $ 1,291 $ 3,177 $ 3,310 $ ( 77,580 )

The effective tax rates for the three months ended June 30, 2023 and 2022 were ( 0.9 )% and 27.2 %, respectively, and the effective tax rates for the six months ended June 30, 2023 and 2022 were ( 0.4 )% and 10.6 %, respectively.

The difference between the Company’s effective tax rates for the three and six month periods ended June 30, 2023 and 2022 and the U.S.

statutory tax rate of 21% was primarily due to a valuation allowance related to the Company’s deferred tax assets, offset partially by current state tax and current foreign tax.

Additionally, the Company recorded a discrete income tax benefit of $ 76.8

million during the second quarter of 2022 which was attributable to non-recurring partial releases of the Company’s U.S.

The effective tax rates for the three months ended September 30, 2023 and 2022 were ( 0.5 )% and ( 0.7 )%, respectively, and the effective tax rates for the nine months ended September 30, 2023 and 2022 were ( 0.4 )% and 6.4 %, respectively.

The difference between the Company’s effective tax rates for the three and nine month periods ended September 30, 2023 and 2022 and the U.S.

statutory tax rate of 21% was primarily due to a valuation allowance related to the Company’s deferred tax assets,

offset partially by current state tax and current foreign tax.

Additionally, the Company recorded a discrete income tax benefit of $ 76.8 million during the second quarter of 2022 which was attributable to non-recurring partial releases of the Company’s U.S.

valuation allowance as a result of the purchase accounting for GNOG.

2 unchanged sentences

The computation of loss per share and weighted-average shares of the Company's Class A common stock outstanding for the periods presented are as follows:

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

3 unchanged sentences

Basic and diluted $ ( 0.61 ) $ ( 1.00 ) $ ( 1.64 ) $ ( 2.63 )

There were no preferred or other dividends declared for the three and six months ended June 30, 2023.

There were no preferred or other dividends declared for the three and nine months ended September 30, 2023.

For the periods presented, the following securities were not required to be included in the computation of diluted shares outstanding:

June 30, 2023 June 30, 2022

September 30, 2023 September 30, 2022

Class A common stock resulting from exercise of all warrants $ 3,630 $ 3,761

7 unchanged sentences

Pursuant to the Master Engagement Letter, Raine Securities will act as a financial advisor to DraftKings in connection with certain proposed transactions, and DraftKings will pay Raine Securities certain fees and expenses from time to time on the terms and conditions described in the related statements of work.

For the three and six months ended June 30, 2023, the Company incurred no fees payable to the Financial Advisor.

During the three and six months ended June 30, 2022, the Company incurred $ 8.5 million of fees payable to the Financial Advisor.

For the three and nine months ended September 30, 2023, the Company incurred no fees payable to the Financial Advisor.

During the three and nine months ended September 30, 2022, the Company incurred $ 8.5 million of fees payable to the Financial Advisor.

Receivables from Equity Method Investment

1 unchanged sentence

The operational support is primarily in the form of general and administrative services.

As of June 30, 2023 and December 31, 2022, the Company had no receivables and $ 0.2 million of receivables, respectively, from DKFS, LLC related to those services and expenses to be reimbursed to the Company, which are included within non-current assets in its condensed consolidated balance sheets.

As of September 30, 2023 and December 31, 2022, the Company had no receivables and $ 0.2 million of receivables, respectively, from DKFS, LLC related to those services and expenses to be reimbursed to the Company, which are included within non-current assets in its condensed consolidated balance sheets.

The Company has committed to invest up to $ 17.5 million into DBDK Venture Fund I, LP, a Delaware limited partnership and a subsidiary of DKFS, LLC.

As of June 30, 2023, the Company had invested a total of $ 6.7 million of the total commitment.

As of September 30, 2023, the Company had invested a total of $ 6.7 million of the total commitment.

Transactions with a Former Director and their Immediate Family Members

For the three and six months ended June 30, 2023, the Company had $ 0.5 million and $ 1.2 million in sales, respectively, to entities owned by an immediate family member of a former director of the Company.

The Company had an associated accounts receivable balance of $ 0.1 million and $ 0.2 million a s of June 30, 2023 and December 31, 2022, respectively, included in accounts receivable in its condensed consolidated balance sheets.

For the three and nine months ended September 30, 2023, the Company had $ 0.2 million and $ 1.4 million in sales, respectively, to entities owned by an immediate family member of a former director of the Company.

The Company had an associated accounts receivable balance of $ 0.1 million and $ 0.2 million a s of September 30, 2023 and December 31, 2022, respectively, included in accounts receivable in its condensed consolidated balance sheets.

In 2022, from time to time, the Company chartered, without mark-up, a private plane owned by an entity controlled by Jason Robins, the Company’s Chief Executive Officer, utilizing aircraft services from Jet Aviation Flight Services, Inc.

2 unchanged sentences

The Company had no direct or indirect interest in such private plane.

During the three and six months ended June 30, 2023, the Company incurred no expense for use of the aircraft under these chartering services.

During the three and six months ended June 30, 2022, the Company incurred no expense and a $ 0.7 million expense for use of the aircraft under these chartering services, respectively.

During the three and nine months ended September 30, 2023, the Company incurred no expense for use of the aircraft under these chartering services.

During the three and nine months ended September 30, 2022, the Company incurred no expense and a $ 0.7 million expense for use of the aircraft under these chartering services, respectively.

On March 30, 2022, the Company entered into a one-year lease of an aircraft from an entity controlled by Mr.

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Robins for $ 0.6 million and otherwise on terms and conditions substantially the same as the Original Aircraft Lease, effective upon the expiration thereof (collectively with the Original Aircraft Lease, the “Aircraft Leases”).

The audit and compensation committees of the Company’s Board of Directors approved this arrangement, as well as the Aircraft Leases, based, among other things, on the requirements of the overall security program that Mr.

The audit and compensation committees of the Company’s Board of Directors approved this arrangement, as well as the Aircraft Leases, based on, among other things, the requirements of the overall security program that Mr.

Robins and his family fly private and the committees' assessment that such an arrangement is more efficient and flexible and better ensures safety, confidentiality and privacy.

During the three and six months ended June 30, 2023, the Company incurred $ 0.1 million and $ 0.3 million of expense under the Aircraft Leases, respectively.

During the three and nine months ended September 30, 2023, the Company incurred $ 0.1 million and $ 0.5 million of expense under the Aircraft Leases, respectively.

Leases, Commitments and Contingencies

3 unchanged sentences

Our lease agreements generally do not contain any material residual value guarantees or material restrictive covenants.

As of June 30, 2023, the Company’s lease agreements typically have terms not exceeding ten years .

As of September 30, 2023, the Company’s lease agreements typically have terms not exceeding ten years .

Payments under the Company’s lease arrangements may be fixed or variable, and variable lease payments primarily represent costs related to common area maintenance and utilities.

The components of lease cost are as follows:

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

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Total lease cost $ 7,286 $ 7,841 $ 20,030 $ 22,247

Supplemental cash flow and other information for the six months ended June 30, 2023 and 2022 related to operating leases was as follows:

Six months ended June 30,

Supplemental cash flow and other information for the nine months ended September 30, 2023 and 2022 related to operating leases was as follows:

Nine months ended September 30,

Cash paid for amounts included in the measurement of lease liabilities:

1 unchanged sentence

Right-of-use assets obtained in exchange for new operating lease liabilities $ 22,221 $ 23,056

The weighted-average remaining lease term for the Company's operating leases was 7.8 years, and the weighted-average discount rate for the Company's operating leases was 6.5 %, in each case as of June 30, 2023.

The weighted-average remaining lease term for the Company's operating leases was 7.5 years, and the weighted-average discount rate for the Company's operating leases was 6.5 %, in each case as of September 30, 2023.

The Company calculated the weighted-average discount rate using incremental borrowing rates, which equal the rates of interest that it would pay to borrow funds on a fully collateralized basis over a similar term.

1 unchanged sentence

Years Ending December 31,

From July 1, 2023 to December 31, 2023 $ 1,510

From October 1, 2023 to December 31, 2023 $ 3,711

Thereafter 50,372

5 unchanged sentences

Years Ending December 31,

From July 1, 2023 to December 31, 2023 $ 235,243

From October 1, 2023 to December 31, 2023 $ 126,691

Thereafter 265,029

24 unchanged sentences

Despite the potential for significant damages, the Company does not believe, based on currently available information, that the outcome of this proceeding will have a material adverse effect on the Company's financial condition, although the outcome could be material to the Company's operating results for any particular period, depending, in part, upon the operating results for such period.

Securities Matters Related to Allegations in the Hindenburg Report

Securities Matters Arising From the Hindenburg Report and Related Matters

On July 2, 2021, the first of two substantially similar federal securities law putative class actions was filed in the U.S.

5 unchanged sentences

On January 10, 2023, the court granted the Company's motion to dismiss and final judgment was entered dismissing the action with prejudice.

Beginning on July 9, 2021, the Company received subpoenas from the SEC seeking documents concerning, among other things, certain of the allegations raised in the Hindenburg Report, as well as the Company’s disclosures regarding its compliance policies and procedures, and related matters.

Beginning on July 9, 2021, the Company received subpoenas from the SEC seeking documents concerning, among other things, certain of the allegations raised in the Hindenburg Report, as well as the Company’s adherence to and disclosures regarding its compliance policies and procedures, and related matters.

The Company intends to comply with the related requests and is cooperating with the SEC’s ongoing inquiry.

124 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements