What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-02-14 compared with 2024-02-16 · 849 added, 439 removed, 1128 unchanged (53% of the section changed)

7 unchanged sentences

Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with U.S.

Based on the Company’s assessment, management has concluded that its internal control over financial reporting was effective as of December 31, 2023 to provide reasonable assurance regarding the

reliability of financial reporting and the preparation of financial statements in accordance with U.S.

Consistent with published SEC guidance, management excluded from its

assessment of internal control over financial reporting Jackpocket, Inc., which was acquired on May 22, 2024, and Simplebet, Inc., which was acquired on December 3, 2024, as their respective assets and revenue constituted less than five percent of our consolidated total assets and revenue as of and for the year ended December 31, 2024.

Based on the Company’s assessment, management has concluded that its internal control over financial reporting was effective as of December 31, 2024 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S.

Management has reviewed its assessment with the Audit Committee.

The Company’s independent registered public accounting firm, BDO USA, P.C., has issued an audit report on the Company’s internal control over financial reporting, which appears in Part II, Item 15 “ Exhibits, Financial Statement Schedules ” of this Annual Report.

The Company’s independent registered public accounting firm, BDO USA, P.C., has issued an audit report on the Company’s internal control over financial reporting, which appears in Part IV, Item 15 “Exhibits, Financial Statement Schedules” of this Annual Report.

Changes in Internal Control Over Financial Reporting

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Certain of our directors and executive officers have made, and may from time to time enter into trading plans or make elections to have shares sold or withheld to cover withholding taxes or pay the exercise price of options, which may be designed to satisfy the affirmative defense conditions of Rule 10b5-1 under the Exchange Act or may constitute non-Rule 10b5-1 trading arrangements (as defined in Item 408(c) of Regulation S-K).

During the fiscal quarter ended December 31, 2023, except as noted above, none of our directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was designed to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any non-Rule 10b5-1 trading arrangement .

On November 14, 2024 , our President, DraftKings North America and a member of our Board of Directors , Matthew Kalish , entered into a prepaid variable forward sale contract with an unaffiliated third-party buyer, which may constitute a non-Rule 10b5-1 trading arrangement (the “Kalish PVF Contract”).

The Kalish PVF Contract obligates Mr.

Kalish to deliver to such unaffiliated third-party buyer up to an aggregate of 785,000 shares of the Company’s Class A common stock following the November 17, 2027 maturity date.

On November 20, 2024 , our Chief Financial Officer , Alan Ellingson , entered into a trading arrangement designed to satisfy the affirmative defense conditions of Rule 10b5-1 under the Exchange Act (the “Ellingson 10b5-1 Plan”).

The Ellingson 10b5-1 Plan provides for the sale of up to $1,000,000 of the Company’s Class A common stock and terminates on November 14, 2025 , or earlier if all transactions under such trading arrangement are completed.

On November 27, 2024 , Mr.

Kalish entered into a trading arrangement designed to satisfy the affirmative defense conditions of Rule 10b5-1 under the Exchange Act (the “Kalish 10b5-1 Plan”).

The Kalish 10b5-1 Plan provides for the sale of up to 1,680,000 shares of the Company’s Class A common stock and terminates on November 11, 2025 , or earlier if all transactions under such trading arrangement are completed.

On December 6, 2024 , Jocelyn Moore , a member of our Board of Directors , entered into a trading arrangement designed to satisfy the affirmative defense conditions of Rule 10b5-1 under the Exchange Act (the “Moore 10b5-1 Plan”).

The Moore 10b5-1 Plan provides for the sale of up to 6,556 shares of the Company’s Class A common stock and terminates on November 28, 2025 , or earlier if all transactions under such trading arrangement are completed.

On December 9, 2024 , our Chief Legal Officer , R.

Stanton Dodge , entered into a prepaid variable forward sale contract with an unaffiliated third-party buyer, which may constitute a non-Rule 10b5-1 trading arrangement (the “Dodge PVF Contract”).

The Dodge PVF Contract obligates Mr.

Dodge to deliver to such unaffiliated third-party buyer up to an aggregate of 500,000 shares of the Company’s Class A common stock following the November 18, 2026 maturity date.

On December 13, 2024 , Mr.

Dodge entered into a trading arrangement designed to satisfy the affirmative defense conditions of Rule 10b5-1 under the Exchange Act (the “Dodge 10b5-1 Plan”).

The Dodge 10b5-1 Plan provides for the sale of

up to 1,899,972 shares of the Company’s Class A common stock and terminates on May 15, 2026 , or earlier if all transactions under such trading arrangement are completed.

Letter Agreements

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Robins, Kalish and Liberman during the applicable Base Salary Reduction period.

For fiscal 2025, because no bonuses with respect to the 2024 performance period were awarded to Messrs.

Robins, Kalish and Liberman and each agreed to the Base Salary Reductions, the Company granted one-time cash distributions (each, a “One-Time Distribution”) of $52,061, $33,371 and $36,382, respectively, to cover applicable deductions with respect to annual employee contributions towards medical, dental and vision coverages and the Company’s 401(k) plan.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

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Consolidated Statements of Operations

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Changes in Stockholders' Equity

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We have audited the accompanying consolidated balance sheets of DraftKings Inc.

(the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

(the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

11 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Assessment of the probability of achieving the vesting performance criteria of performance-based stock compensation plan awards

As described in Notes 2 and 11 to the consolidated financial statements, the Company issues stock options and other stock awards to employees with performance-based vesting conditions pursuant to its performance-based stock compensation plan (“PSP Awards”).

The Company recognizes compensation cost for PSP Awards on a tranche-by-tranche basis (the accelerated attribution method), based on the probability of achieving the performance criteria.

PSP Awards granted in 2023 and 2022 vest based on achievement of revenue and Adjusted EBITDA targets and have a range of payouts from 0% to 200%.

For the year ended December 31, 2023, stock-based compensation expense attributable to all PSP Awards was $126.1 million.

We identified the assessment of the probability of achieving the performance-based vesting criteria and the related estimated payment of certain PSP Awards as a critical audit matter.

The revenue and Adjusted EBITDA projections used in the probability assessment for certain PSP Awards require significant judgement due to the subjectivity of the revenue growth rates, Adjusted EBITDA margins and certain other assumptions used in the projections.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Business Combinations - Valuation of Customer Relationships

As described in Notes 2 and 3 to the consolidated financial statements, in May 2024, the Company acquired Jackpocket, Inc.

(“Jackpocket”) for total consideration of $773.1 million.

The Company accounted for the acquisition in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations, which requires assets acquired and liabilities assumed to be recognized at their fair values as of the acquisition date.

The Company valued customer relationships acquired in connection with the Jackpocket acquisition by using the multi-period excess earnings method, which requires the use of significant estimates and assumptions, including revenue growth rates and attrition rates.

The Company recognized $174.0 million of customer relationships within intangible assets, net in connection with the Jackpocket acquisition.

We identified the valuation of customer relationships acquired in connection with the acquisition of Jackpocket as a critical audit matter.

Estimating the fair value of the acquired customer relationships using the multi-period excess earnings method required the use of revenue growth rate and attrition rate assumptions.

The estimate of fair value of the acquired customer relationships is sensitive to changes in these assumptions.

Auditing these elements involved especially challenging auditor judgment due to the nature and extent of audit effort required to address these matters.

The primary procedures we performed to address this critical audit matter included:

• Evaluating the reasonableness of the revenue growth rate and attrition rate assumptions used in the estimate of the fair value of the acquired customer relationships by evaluating them on a combined basis for consistency with historical financial information.

• Testing the completeness and accuracy of a sample of the historical financial information used to determine the revenue growth rate and attrition rate on a combined basis by inspecting Jackpocket’s financial records.

• Testing the design and operating effectiveness of the control over the determination of the revenue growth rates and attrition rate assumptions on a combined basis.

Stock-based Compensation - Assessment of the probability of achieving the vesting performance criteria of performance-based stock compensation plan awards

As described in Notes 2 and 11 to the consolidated financial statements, the Company has historically issued performance-based stock compensation plan awards (“PSP Awards”).

PSP awards are performance-based equity awards which establish performance objectives related to a particular fiscal year.

The Company recognizes compensation cost for awards with performance-based vesting conditions on a tranche-by-tranche basis (the accelerated attribution method), based on the probability of achieving the performance criteria.

PSP Awards granted in 2024, 2023 and 2022 vest based on achievement of revenue targets and Adjusted EBITDA targets and have a range of payouts from 0% to 200%.

For the year ended December 31, 2024, stock-based compensation cost attributable to all PSP Awards was $169.8 million.

We identified the assessment of the probability of achieving the performance criteria related to a particular fiscal year for PSP Awards granted in 2023 and 2022 as a critical audit matter.

The revenue and Adjusted EBITDA projections used in the probability assessment related to a particular fiscal year for PSP Awards granted in 2023 and 2022 require significant judgment due to the subjectivity of the projected revenue growth rates and Adjusted EBITDA margins.

Auditing these elements required especially challenging and subjective auditor judgment due to the nature and extent of effort required to address these matters.

The primary procedures we performed to address this critical audit matter included evaluating the reasonableness of the revenue growth rates, Adjusted EBITDA margins and certain other assumptions used in the projections by:

• Comparing the Company’s revenue and Adjusted EBITDA projections for the current year to current year results.

• Evaluating the consistency of the revenue growth rates and certain other assumptions with external industry data.

• Comparing the forecasted growth in revenue, forecasted Adjusted EBITDA margins and certain other assumptions to

historical results.

The primary procedures we performed to address this critical audit matter included evaluating the reasonableness of the revenue growth rates and Adjusted EBITDA margins by:

• Evaluating the consistency of the projected revenue growth rates and Adjusted EBITDA margins with analysts’ reports for the Company.

• Evaluating the consistency of the projected revenue growth rates with historical market data.

• Comparing the projected revenue growth rates and Adjusted EBITDA margins to historical results.

• Testing the design and operating effectiveness of the control over the review of the projected revenue growth rates and Adjusted EBITDA margins.

/s/ BDO USA, P.C.

9 unchanged sentences

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and our report dated February 16, 2024 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and our report dated February 14, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

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We believe that our audit provides a reasonable basis for our opinion.

As indicated in the accompanying “Item 9A, Management’s Report on Internal Control over Financial Reporting”, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Jackpocket, Inc.

(“Jackpocket”) and Simplebet, Inc.

(“Simplebet”), which were acquired on May 22, 2024 and December 3, 2024, respectively, and which are included in the consolidated balance sheet of the Company as of December 31, 2024, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the year then ended.

Jackpocket constituted less than 5% of total assets and revenues as of December 31, 2024 and for the year then ended.

Simplebet constituted less than 5% of total assets and revenues as of and for the year ended December 31, 2024.

Management did not assess the effectiveness of internal control over financial reporting of Jackpocket and Simplebet because of the timing of the acquisitions which were completed on May 22, 2024 and December 3, 2024 respectively.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Jackpocket and Simplebet.

Definition and Limitations of Internal Control over Financial Reporting

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Total liabilities $ 3,273,099 $ 3,104,560

Commitments and contingent liabilities (Notes 7 and 15)

Commitments and contingent liabilities (Note 7 and 16)

Stockholders’ equity:

Class A common stock, $ 0.0001 par value;

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

484,598 and 459,265 shares issued and 472,697 and 450,575 outstanding at December 31, 2023 and December 31, 2022, respectively

900,000 shares authorized as of December 31, 2024 and 2023;

504,722 and 484,598 shares issued and 489,071 and 472,697 outstanding as of December 31, 2024 and 2023, respectively

Class B common stock, $ 0.0001 par value;

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

393,014 shares issued and outstanding at December 31, 2023 and December 31, 2022

900,000 shares authorized as of December 31, 2024 and 2023;

393,014 shares issued and outstanding as of December 31, 2024 and 2023

Treasury stock, at cost;

11,901 and 8,690 shares as of December 31, 2023 and December 31, 2022, respectively

15,651 and 11,901 shares as of December 31, 2024 and 2023, respectively

( 563,146 ) ( 412,182 )

8 unchanged sentences

(Amounts in thousands, except per share amounts)

Years ended December 31,

Year Ended December 31,

2024 2023 2022

10 unchanged sentences

Other (loss) gain, net ( 23,514 ) ( 224 ) 20,700

Loss before income tax provision (benefit) and loss (income) from equity method investment ( 791,253 ) ( 1,442,958 ) ( 1,517,644 )

Loss before income tax (benefit) provision and loss from equity method investment ( 593,158 ) ( 791,253 ) ( 1,442,958 )

Income tax (benefit) provision ( 86,341 ) 10,170 ( 67,866 )

Loss (income) from equity method investment 719 2,895 ( 2,718 )

Loss from equity method investment 468 719 2,895

Net loss attributable to common stockholders $ ( 507,285 ) $ ( 802,142 ) $ ( 1,377,987 )

2 unchanged sentences

See accompanying notes to consolidated financial statements.

Due to the timing of the GNOG Transaction (as defined below), the above periods exclude the operations of GNOG (as defined below) prior to the closing date of May 5, 2022.

DRAFTKINGS INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Amounts in thousands)

Year ended December 31,

2023 2022 2021

Net loss attributable to common stockholders $ ( 802,142 ) $ ( 1,377,987 ) $ ( 1,523,195 )

Other comprehensive (loss) income

Foreign currency translation adjustments, net of nil tax

— — ( 47,046 )

Comprehensive loss $ ( 802,142 ) $ ( 1,377,987 ) $ ( 1,570,241 )

See accompanying notes to consolidated financial statements.

Due to the timing of the GNOG Transaction (as defined below), the above periods exclude the operations of GNOG (as defined below) prior to the closing date of May 5, 2022.

DRAFTKINGS INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

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Paid in Capital Accumulated

Deficit Accumulated Other

Deficit Accumulated

Comprehensive

3 unchanged sentences

Exercise of stock options 2,227 — — — 9,165 — — — 9,165

Stock-based compensation expense — — — — 378,321 — — — 378,321

Stock-based compensation — — — — 396,217 — — — 396,217

Equity consideration issued for acquisitions 8,784 1 — — 376,701 — — — 376,702

Exercise of warrants 1,011 — — — 46,484 — — — 46,484

Purchase of treasury stock ( 3,211 ) — — — — — — ( 80,049 ) ( 80,049 )

Purchase of treasury stock for RSU withholding ( 2,608 ) — — — — — — ( 102,897 ) ( 102,897 )

Restricted stock unit vesting 8,102 1 — — — — — — 1

Purchase of treasury stock under Stock Repurchase Program ( 1,142 ) — — — — — — ( 48,067 ) ( 48,067 )

Net loss — — — — — ( 507,285 ) — — ( 507,285 )

2 unchanged sentences

Paid in Capital Accumulated

Deficit Accumulated Other

Deficit Accumulated

Comprehensive

3 unchanged sentences

Exercise of stock options 3,943 — — — 16,540 — — — 16,540

Stock-based compensation expense — — — — 578,799 — — — 578,799

Equity consideration issued for acquisition 29,252 3 — — 460,125 — — — 460,128

Purchase of treasury stock ( 1,560 ) — — — — — — ( 25,519 ) ( 25,519 )

Stock-based compensation — — — — 378,321 — — — 378,321

Exercise of warrants 153 — — — 4,942 — — — 4,942

Purchase of treasury stock for RSU withholding ( 3,211 ) — — — — — — ( 80,049 ) ( 80,049 )

Restricted stock unit vesting 21,237 1 — — — — — — 1

3 unchanged sentences

Paid in Capital Accumulated

Deficit Accumulated Other

Deficit Accumulated

Comprehensive

3 unchanged sentences

Exercise of stock options 3,267 — — — 8,743 — — — 8,743

Stock-based compensation expense — — — — 683,293 — — — 683,293

Purchase of capped call options — — — — ( 123,970 ) — — — ( 123,970 )

Stock-based compensation — — — — 578,799 — — — 578,799

Equity consideration issued for acquisition 29,252 3 — — 460,125 — — — 460,128

Exercise of warrants 337 — — — 9,205 — — — 9,205

Purchase of treasury stock ( 323 ) — — — — — — ( 17,830 ) ( 17,830 )

Purchase of treasury stock for RSU withholding ( 1,560 ) — — — — — — ( 25,519 ) ( 25,519 )

Restricted stock unit vesting 11,835 1 — — — — — — 1

Foreign currency translation — — — — — — ( 47,046 ) — ( 47,046 )

Other — — — — 2,098 — — — 2,098

Net loss — — — — — ( 1,377,987 ) — — ( 1,377,987 )

1 unchanged sentence

See accompanying notes to consolidated financial statements.

Due to the timing of the GNOG Transaction (as defined below), the above periods exclude the operations of GNOG (as defined below) prior to the closing date of May 5, 2022.

DRAFTKINGS INC.

5 unchanged sentences

Net loss attributable to common shareholders $ ( 507,285 ) $ ( 802,142 ) $ ( 1,377,987 )

Adjustments to reconcile net loss to net cash flows used in operating activities:

Adjustments to reconcile net loss to net cash flows provided by (used in) operating activities:

Depreciation and amortization 270,854 201,920 169,252

Non-cash interest expense, net 386 870 2,109

Stock-based compensation expense 398,463 578,799 683,293

Non-cash interest (income) expense, net ( 15 ) 386 870

Stock-based compensation 381,367 398,463 578,799

Loss (gain) on remeasurement of warrant liabilities 4,945 57,543 ( 29,396 )

Loss (gain) from equity method investment 719 2,895 ( 2,718 )

Loss from equity method investment 468 719 2,895

Loss (gain) on marketable equity securities and other financial assets, net 12,940 75 ( 10,999 )

Loss on sale of Vegas Sports Information Network, LLC 5,865 — —

Deferred income taxes ( 92,733 ) 5,849 ( 73,407 )

Other expenses, net 554 ( 7,268 ) —

Other expenses (income), net 6,280 554 ( 7,268 )

Change in operating assets and liabilities, net of effect of acquisitions:

Receivables reserved for users 248,320 ( 141,687 ) ( 105,320 )

Accounts receivables 3,558 2,506 ( 1,787 )

Accounts receivable ( 10,116 ) 3,558 2,506

Prepaid expenses and other current assets ( 26,266 ) 2,451 ( 26,217 )

5 unchanged sentences

Other long-term liabilities 25,269 11,087 15,383

Net cash flows used in operating activities ( 1,751 ) ( 625,519 ) ( 419,508 )

Net cash flows provided by (used in) operating activities 417,767 ( 1,751 ) ( 625,519 )

Cash Flows from Investing Activities:

2 unchanged sentences

Acquisition of gaming licenses ( 14,983 ) ( 12,105 ) ( 7,213 )

Proceeds from (purchase of) marketable equity securities and other financial assets 24,425 — ( 25,000 )

Proceeds from marketable equity securities and other financial assets — 24,425 —

Cash paid for acquisitions, net of cash acquired ( 441,487 ) — ( 96,507 )

2 unchanged sentences

Cash Flow from Financing Activities:

Proceeds from issuance of convertible notes, net — — 1,248,025

Purchase of capped call options — — ( 123,970 )

Proceeds from exercise of warrants — 288 44

Purchase of treasury stock ( 80,049 ) ( 25,519 ) ( 17,830 )

Purchase of treasury stock for RSU withholding ( 102,897 ) ( 80,049 ) ( 25,519 )

Purchase of treasury stock under Stock Repurchase Program ( 48,067 ) — —

Proceeds from exercise of stock options 9,165 16,540 8,743

Other financing activities ( 2,667 ) — —

Net cash flows (used in) provided by financing activities ( 63,221 ) ( 16,732 ) 1,138,813

Effect of foreign exchange rates on cash and cash equivalents, restricted cash, and cash reserved for users — — 583

Net (decrease) increase in cash and cash equivalents, restricted cash, and cash reserved for users ( 155,332 ) ( 851,017 ) 524,866

Net cash flows used in financing activities ( 144,466 ) ( 63,221 ) ( 16,732 )

Net decrease in cash and cash equivalents, restricted cash, and cash reserved for users ( 293,300 ) ( 155,332 ) ( 851,017 )

Cash and cash equivalents, restricted cash, and cash reserved for users at the beginning of period 1,623,493 1,778,825 2,629,842

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Investing activities included in accounts payable and accrued expenses 3,462 569 9,155

Equity consideration issued for acquisitions — 460,128 33,149

Decrease in warrant liabilities from cashless exercise of warrants 4,654 — —

Equity consideration issued in connection with acquisitions 376,702 — 460,128

Fair value of contingent consideration in connection with acquisitions 77,965 — —

Decrease of warrant liabilities from cashless exercise of warrants 46,484 4,654 —

Supplemental Disclosure of Cash Activities:

(Decrease) increase in cash reserved for users ( 128,363 ) ( 7,297 ) 189,232

Cash paid for interest — — —

Cash paid for income taxes, net of refunds 8,341 10,366 5,632

Increase (decrease) in cash reserved for users 184,117 ( 128,363 ) ( 7,297 )

Cash paid for income taxes 5,268 8,341 10,366

See accompanying notes to consolidated financial statements.

Due to the timing of the GNOG Transaction (as defined below), the above periods exclude the operations of GNOG (as defined below) prior to the closing date of May 5, 2022.

DRAFTKINGS INC.

3 unchanged sentences

We are a digital sports entertainment and gaming company.

We provide 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 (“PASPA”), a law that prohibited most states from authorizing and regulating sports betting.

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

We provide users with online and retail sports betting (together, “Sportsbook”), online casino (“iGaming”) and daily fantasy sports (“DFS”) product offerings, as well as digital lottery courier, media, and other product offerings.

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.

As of December 31, 2024, 39 U.S.

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

Of those 37 legal jurisdictions, 32 have legalized online sports betting.

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

Of those 41 jurisdictions, 33 have legalized online sports betting.

32 of those 33 jurisdictions are live, and DraftKings operates in 26 of them.

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

As of December 31, 2023, we operate our online sports betting product offering in Arizona, Colorado, Connecticut, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Massachusetts, New Hampshire, New Jersey, New York, Oregon, Pennsylvania, Tennessee, Virginia, West Virginia, Wyoming and Ontario, Canada and we operate retail sportsbooks in Arizona, Colorado, Connecticut, Illinois, Iowa, Kansas, Louisiana, Michigan, Mississippi, New Hampshire, New Jersey and Washington.

As of December 31, 2024, the U.S jurisdictions with statutes legalizing iGaming are Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, Rhode Island and West Virginia.

As of December 31, 2024, we operate our Sportsbook product offering in Arizona, Colorado, Connecticut, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Tennessee, Vermont, Virginia, Washington, D.C., West Virginia, Wyoming and Ontario, Canada and we operate retail sportsbooks in Arizona, Colorado, Connecticut, Illinois, Iowa, Kansas, Kentucky, Louisiana, Michigan, Mississippi, New Hampshire, New Jersey, Washington and Wisconsin.

As of December 31, 2024, the Company offers its iGaming product offering in Connecticut, Michigan, New Jersey, Pennsylvania, West Virginia and Ontario, Canada.

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

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.

These 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 consolidated financial statements exclude the operations of GNOG prior to the GNOG Closing Date.

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

Prior to the fourth quarter of 2022, the Company had two distinct operating segments:

a business-to-consumer (“B2C”) segment, which included its Sportsbook, iGaming and DFS product offerings, as well as media and other consumer product offerings, and a business-to-business (“B2B”) segment, which had principal activities involving the design and development of gaming software.

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 the purposes of evaluating performance, allocating resources and planning and forecasting for future periods.

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

Foreign Currency and Comprehensive Loss

Prior to January 1, 2022, the Company's reporting currency was the U.S.

dollar while the functional currency of the Company’s significant non-U.S.

subsidiaries was the Euro.

The financial statements of the Company’s significant non-U.S.

subsidiaries were translated into United States dollars in accordance with ASC 830, Foreign Currency Matters , using period-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues, costs and expenses and historical rates for equity.

For the period ending December 31, 2021, the translation gain is included in the consolidated statements of comprehensive loss.

Effective as of January 1, 2022, the Company’s reporting currency remained the U.S.

dollar and the functional currency of the Company's significant non-U.S.

subsidiaries’ functional currency was changed from the Euro to the U.S.

Accordingly, the Company did not have to translate the financial statements of its significant non-U.S.

subsidiaries for the years ended December 31, 2023 and 2022.

During 2023, 2022 and 2021, foreign currency transactions did not have a material impact on net loss.

Use of Estimates

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Actual results could differ from those estimates.

Significant estimates and assumptions reflected in the financial statements relate to and include, but are not limited to, the valuation and expensing of equity awards, accounting for contingencies and uncertainties, purchase price allocations, including fair value estimates of intangible assets, the estimated useful lives of fixed assets and intangible assets, internally developed software costs and accrued expenses.

Going Concern

The Company currently expects that its cash will be sufficient to fund its operating expenses and capital expenditure requirements for at least twelve months after February 16, 2024.

The Company has experienced operating losses and negative operating cash flows for the years ended December 31, 2023, 2022 and 2021.

While certain jurisdictions will experience improved operating cash flow, the Company expects to continue to incur annual operating losses for the next twelve months.

purchase price allocations, including fair value estimates of intangible assets, the estimated useful lives of fixed assets and intangible assets, internally developed software costs and accrued expenses.

Concentration Risks and Uncertainties

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, and cash reserved for users.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, cash reserved for users, and loans receivable.

The Company maintains separate accounts for cash and cash reserved for users primarily across several financial institutions.

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The Company relies on a limited number of vendors to support operations.

In particular, a single vendor is currently the primary provider of web services that allow the Company to host its Sportsbook, iGaming and DFS product offerings.

interruption in the services provided by this supplier could have a material adverse effect on its business, financial condition and results of operations.

In particular, a single vendor is currently the primary provider of web services that allow the Company to host its Sportsbook, iGaming, DFS and digital lottery courier product offerings.

Any interruption in the services provided by this supplier could have a material adverse effect on its business, financial condition and results of operations.

The Company’s growth prospects and market potential will depend on its ability to obtain and maintain licenses to operate in a number of jurisdictions, and if the Company fails to obtain and maintain such licenses, its business, financial condition, results of operations and prospects could be impaired.

We conduct business in numerous countries that carry high levels of currency, political, compliance and economic risk.

For example, we have offices in Ukraine and Israel, and the military conflict between Russia and Ukraine and the evolving conflict in Israel and Gaza and any business interruptions or other spillover effects from such conflicts could adversely affect our operations.

For example, we have offices in Ukraine and Israel, and the military conflict between Russia and Ukraine and the evolving conflict in the Middle East and any business interruptions or other spillover effects from such conflicts could adversely affect our operations.

Business Combinations

The Company accounts for business combinations under the acquisition method of accounting, in accordance with ASC 805, which requires assets acquired and liabilities assumed to be recognized at their fair values as of the acquisition date.

The Company accounts for business combinations under the acquisition method of accounting, in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”), which requires assets acquired and liabilities assumed to be recognized at their fair values as of the acquisition date.

Any fair value of purchase consideration in excess of the fair value of the assets acquired less liabilities assumed is recorded as goodwill.

The fair values of the assets acquired and liabilities assumed are determined based upon the valuation of the acquired business and involve management making significant estimates and assumptions.

Acquisition costs are expensed as incurred and recorded in general and administrative expenses on the consolidated statement of operations.

Cash and Cash Equivalents

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Restricted cash refers to cash that is held by the company but cannot be used for continuing operations.

Restricted cash as of December 31, 2023, primarily relates to collateral for a letter of credit in connection with a cyber-security insurance policy entered into in 2023.

Restricted cash as of December 31, 2024, primarily relates to collateral for a letter of credit in connection with a cyber-security insurance policy.

Cash Reserved for Users

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Receivables Reserved for Users

Receivables for user deposits not yet received are stated at the amount the Company expects to collect from a payment processor, which includes an allowance for credit losses if appropriate.

Receivables for user deposits not yet received are stated at the amount the Company expects to collect from a payment processor, which includes an allowance for credit losses, if applicable.

These receivables arise, primarily, due to process timing between when a user deposits and when the Company receives that deposit from the payment processor.

The allowance for credit losses is determined based on the Company’s assessment of the probability of the non-payment of the receivable.

This provision is netted against the receivable balance with the loss being recognized within general and administrative expenses in the consolidated statements of operations.

As of and for the years ending December 31, 2023 and December 31, 2022, the provision did not have a material impact on the Company’s consolidated financial statements.

Accounts Receivables

Accounts receivables are recorded at amortized cost, less any allowance for credit losses.

Accounts Receivable

Accounts receivable is recorded at amortized cost, less any allowance for credit losses.

The allowance for credit losses is determined based on the Company’s assessment of the probability of non-payment of the receivable after all means of collection have been exhausted and the potential for recovery is considered remote.

This provision is netted against the receivable balance with the loss being recognized within general and administrative expenses in the consolidated statements of operations.

As of and for the years ending December 31, 2023 and December 31, 2022, the provision did not have a material impact on the Company’s consolidated financial statements.

As of and for the years ending December 31, 2024 and 2023, the provision did not have a material impact on the Company’s consolidated financial statements.

Digital Assets and Liabilities

On March 31, 2022, the SEC issued Staff Accounting Bulletin No.

121 (“SAB 121”).

SAB 121 sets out interpretive guidance from the staff of the SEC regarding the accounting for obligations to safeguard digital assets that an entity holds for its users, which was effective from the first interim period commencing after June 15, 2022, with retroactive application as of the beginning of the fiscal year to which the interim or annual period relates.

In accordance with SAB 121, the Company recognized a liability for the obligation to safeguard its users’ assets and recognized an associated asset for non-fungible tokens (“NFTs”) held for its users.

In accordance with Staff Accounting Bulletin No.

121 (“SAB 121”), the Company recognized a liability for the obligation to safeguard its users’ assets and recognized an associated asset for non-fungible tokens (“NFTs”) held for its users.

Both the liability and the associated asset are measured at the fair value of the NFTs being safeguarded.

Refer to Note 8 hereof for disclosures required in accordance with ASC 820, Fair Value Measurement .

Refer to “ Note 8 – Fair Value Measurements” hereof for disclosures required in accordance with ASC 820, Fair Value Measurement .

On January 23, 2025, the SEC published SAB No.

122 (“SAB 122”) to rescind SAB 121.

Full retrospective application of SAB 122 is required for annual periods beginning after December 15, 2024, but entities are permitted to early adopt SAB 122 in any interim or annual financial statement period included in filings with the SEC on or after January 30, 2025.

The new guidance requires removal of the safeguarding obligation and corresponding asset from the balance sheet unless a loss contingency exists.

The Company does not anticipate this having a material impact upon adoption.

Property and Equipment, Net

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Intangible Assets, Net

The Company’s intangible assets consist of developed technology, customer relationships, internally-developed software, gaming licenses, trademarks and tradenames and digital assets.

The Company’s intangible assets primarily consist of developed technology, customer relationships, internally-developed software, gaming market access and licenses, trademarks and tradenames and digital assets.

The related amortization expense is classified as cost of revenue in the consolidated statements of operations.

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Developed Technology

Developed technology primarily relates to the design and development of sports betting and casino gaming software for online and retail sportsbook and casino gaming products acquired from SBTech and other acquisitions and recorded at fair value at the date of acquisition.

Developed technology primarily relates to the design and development of sports betting and casino gaming software for online and retail sports betting and casino gaming products purchased through acquisitions and recorded at fair value at the date of acquisition.

Internally Developed Software

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When intangible assets are retired or disposed of, the cost and accumulated amortization thereon are removed, and any resulting gain or losses are included in the consolidated statements of operations.

Gaming Licenses

Gaming Market Access and Licenses

The Company incurs fees in connection with applying for and maintaining good standing in jurisdictions via business licenses.

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The Company has purchased certain digital assets, including crypto currencies, with cash that is not required to currently support its operations.

The Company accounts for digital assets in accordance with ASC 350, Intangibles—Goodwill and Other (Topic 350).

The Company accounts for digital assets in accordance with ASC 350, Intangibles—Goodwill and Other.

Accordingly, if the fair market value at any point during the reporting period is lower than the carrying value an impairment loss equal to the difference will be recognized in the consolidated statement of operations.

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The Company determined that there was no impairment of long-lived assets during 2024, 2023, or 2022.

The Company regularly reviews its reporting units and the approach used by the CODM and segment management to evaluate performance and allocate resources.

Prior to 2023, the Company’s business was classified into three reporting units:

B2C, Media and B2B.

However, as a result of the Company’s integration of its B2B business and change in reporting structure to the CODM, the Company determined that it only had one reporting unit as of October 1, 2023, the Company’s annual goodwill impairment assessment date.

In testing goodwill for impairment, the Company has the option to begin with a qualitative assessment, commonly referred to as “Step 0,” to determine whether it is more likely than not that the fair value of a reporting unit containing goodwill is less than its carrying value.

This qualitative assessment may include, but is not limited to, reviewing factors such as macroeconomic conditions, industry and market considerations, cost factors, entity-specific financial performance and other events, such as changes in the Company’s management, strategy and primary user base.

If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company performs a quantitative goodwill impairment analysis by comparing the carrying amount to the fair value of the reporting unit.

If the carrying amount exceeds the fair value, goodwill will be written down to the fair value and recorded as impairment expense in the consolidated statements of operations.

The Company performs its impairment testing annually and when circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.

The Company performed its annual impairment assessment of goodwill as of October 1, 2023 and, with consideration regarding the change in reporting units, concluded that goodwill was not impaired.

The Company performs its evaluation for the impairment of goodwill associated with the Company’s reporting units on an annual basis as of each October 1, or more frequently if an event occurs or circumstances change that would indicate that a reporting unit’s carrying amount may be impaired.

The Company reviews its reporting unit structure each year, or more frequently based on changes in our organization.

The Company concluded that it has one reporting unit.

In 2024 and 2023, the annual goodwill impairment assessment was performed on the Company’s one reporting unit, while in 2022, the Company performed its annual assessment on the historic three reporting units that were then in effect.

In the fourth quarter of 2024, 2023 and 2022, as part of its annual evaluations, the Company utilized the option to first assess qualitative factors to determine whether it was necessary to perform the quantitative goodwill impairment assessment.

As part of these assessments, the

Company reviews qualitative factors, which include, but are not limited to, reviewing factors such as macroeconomic conditions, industry and market considerations, cost factors, entity-specific financial performance and other events, such as changes in the Company’s management, strategy and primary user base.

In accordance with applicable guidance, an entity is not required to calculate the fair value of a reporting unit if, after assessing these qualitative factors, the Company determines that it is more likely than not that the fair value of each of its reporting units is greater than its respective carrying amount.

As of October 1, 2024, 2023 and 2022, the Company determined that it was more likely than not that the fair value of each of its reporting unit exceeded its respective carrying amount and, therefore, a quantitative assessment was not required.

As a result, no goodwill impairment resulted from the assessments as of October 1, 2024, 2023 and 2022.

As of December 31, 2024, the Company had no accumulated goodwill impairment losses.

Contingent Consideration

Contingent consideration in a business combination is included as part of the acquisition cost and is recognized at fair value as of the acquisition date.

For contingent consideration, management is responsible for determining the appropriate valuation model and estimated fair value, and in doing so, considers a number of factors, including information provided by an outside valuation advisor.

Contingent consideration liabilities are reported at their estimated fair values based on probability-adjusted present values of the consideration expected to be paid, using significant inputs and estimates.

Key inputs to the valuations are the projections of future financial results in relation to the business, revenue volatility, equity volatility, and operational leverage ratio as well as management judgment regarding the probability of achieving a future performance target.

The fair value of contingent consideration liabilities is remeasured each reporting period, with changes in the fair value included in current operations.

The remeasured liability amount could be significantly different from the amount at the acquisition date, resulting in material charges or credits in subsequent reporting periods.

Equity Method Investments

The Company has a 49.9 % membership interest in DKFS, LLC, also known as DRIVE by DraftKings as of December 31, 2023.

In addition, 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 December 31, 2023, the Company had invested a total of $ 7.6 million of the total commitment, which represents ownership of approximately 28.6 % in t he fund.

The Company has equity method investments in DKFS, LLC, DBDK Venture Fund I, L.P.

and DBDK Venture Fund II, L.P.

The Company uses the equity method to account for investments in which the Company has the ability to exercise significant influence over the operating and financial policies of the investee, but it does not exercise control and is not the primary beneficiary.

The Company’s judgment regarding its level of influence over the equity method investee includes considering key factors, such as ownership interest, representation on the board of directors, and participation in policy-making decisions.

The Company’s carrying value in the equity method investee is reflected in the caption “Equity method investments”

on the consolidated balance sheets.

Changes in value of DKFS, LLC and DBDK Venture Fund I, LP are recorded in “Loss (income) from equity method investment” on the consolidated statements of operations.

The Company’s carrying value in the equity method investee is reflected in the caption “Equity method investments” on the consolidated balance sheets.

Changes in value of DKFS, LLC, DBDK Venture Fund I, L.P.

and DBDK Venture Fund II, L.P.

are recorded in “Loss (income) from equity method investment” on the consolidated statements of operations.

Under the equity method, the Company’s investment is initially measured at cost and subsequently increased or decreased to recognize the Company’s share of income and losses of the investee, capital contributions and distributions and impairment losses.

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There was no such impairment recorded during 2024, 2023, or 2022.

The Company determines if an arrangement is a lease at inception and categorizes it as either operating or finance based on the criteria of ASC 842.

The Company determines if an arrangement is a lease at inception and categorizes it as either operating or finance based on the criteria of ASC 842, Leases .

An arrangement contains a lease when the arrangement conveys the right to control the use of an identified asset over the lease term.

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Revenue Recognition

The Company records revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”).

The Company records revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”).

ASC 606 requires companies to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

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The following is a description of the Company’s revenue streams:

Online gaming

Sportsbook or sports betting involves a user wagering money on an outcome or series of outcomes occurring.

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DFS revenue is generated from contest entry fees from contestants, net of prizes and customer incentives awarded to contestants.

Sportsbook, iGaming, and DFS, each as described above, create a single performance obligation for the Company to operate contests or games and award prizes or payouts to users based on results.

Revenue is recognized at the conclusion of each wager, wagering game hand or contest.

Sportsbook, iGaming, and DFS create a single performance obligation for the Company to operate contests or games and award prizes or payouts to users based on results.

Revenue is recognized at the conclusion of each wager, wagering game hand, and contest.

Incentives can be used across online gaming product offerings.

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User incentives in certain cases create liabilities when awarded to players and in those cases are generally recognized as revenue upon redemption.

Gaming software

The Company contracts with business customers to provide sports and casino betting software solutions.

Gaming software revenue is recognized when control of the solutions is transferred to the customer in an amount that reflects the consideration to which the Company expects to be entitled to in exchange for providing control of the sports betting and casino software.

The Company’s direct customer contract revenue is generally calculated as a percentage of the wagering revenue generated by the business customer using our software and is recognized in the periods in which those wagering and related activities conclude.

Our direct customer arrangements do not provide the customers with the right to take possession of our software, but only the right to purchase access to the Company’s sports and casino wagering software for a defined contractual period.

Digital Lottery Courier

Digital lottery courier revenue is earned by facilitating the purchase of official state lottery tickets on behalf of customers through a mobile application or website.

This revenue comes primarily from service fees for processing and fulfilling ticket orders, along with commissions earned from state lotteries on ticket sales and certain winning tickets, where applicable.

Revenue is not recognized from the face value of lottery tickets or customer prize winnings, as the service acts solely as a courier and assumes no risk from game outcomes.

Media and advertising revenue

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Non-fungible token (“NFT”) content

The Company launched DraftKings Marketplace during the third quarter of 2021.

The Company launched DraftKings Marketplace (“Marketplace”) during the third quarter of 2021.

Marketplace is a digital collectibles (non-fungible token or “NFT”) ecosystem designed for mainstream accessibility that offers curated initial NFT drops (“Primary Sales”).

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The revenue is recognized for each sale when the NFT transfers to the end user.

The Company discontinued operations of Marketplace during the third quarter of 2024.

Transaction Price Considerations

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DraftKings offers loyalty programs, free plays, deposit bonuses, discounts, rebates and other rewards and incentives to its customers.

Revenue for Sportsbook, iGaming and DFS is collected prior to the contest or event and is fixed once the outcome is known.

Revenue for Sportsbook, iGaming, DFS and digital lottery courier is collected prior to the contest or event and is fixed once the outcome is known.

Prizes paid and payouts made to users are recognized when awarded to the player.

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Standalone selling prices are estimated based on observable data of the Company’s sales of such products and services to similar customers and in similar circumstances on a standalone basis.

For Online Gaming, which includes Sportsbook, iGaming and DFS, the Company allocates a portion of the transaction price to certain customer incentives that create material future customer rights.

For Sportsbook, iGaming, DFS and digital lottery courier, the Company allocates a portion of the transaction price to certain customer incentives that create material future customer rights.

In addition, in the event of a multi-stage contest, the Company will allocate transaction price ratably from contest start to the contest’s final stage.

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The Company maintains a defined contribution plan, which covers a majority of employees.

The plan allows for employee salary deferrals, which are matched at our discretion.

The plan allows for employee salary deferrals, which are matched at the Company’s discretion.

The Company contributions to these plans were $ 13.0 million, $ 11.6 million and $ 9.3 million in 2024, 2023 and 2022, respectively.

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Since the Company had net losses for all the periods presented, basic and diluted loss per share are the same, and additional potential common shares have been excluded, as their effect would be anti-dilutive.

Recently Adopted Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

The main provisions of ASU 2023-07 requires (i) enhanced disclosures about significant segment expenses, (ii) extension of certain annual disclosures to interim periods and (iii) certain qualitative information on the chief operating decision maker.

We adopted the annual reporting requirement under ASU 2023-07 on January 1, 2024 and will implement the interim disclosure requirements in fiscal year 2025.

The adoption did not have a material impact on our consolidated financial statements.

See “Note 13 – Segment Information” for additional information.

Recently Issued Accounting Pronouncements Not Yet Adopted

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”), which clarifies the guidance in Accounting Standards Codification Topic 820, Fair Value Measurement (“Topic 820”), when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security and introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820.

ASU 2022-03 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and early adoption is permitted.

While the Company is continuing to assess the potential impacts of ASU 2022-03, it does not expect ASU 2022-03 to have a material effect on the Company’s consolidated financial condition, results of operations or cash flows.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , to improve reportable segment disclosures.

The guidance expands the disclosures required for reportable segments in our annual and interim consolidated financial statements, primarily through enhanced disclosures about significant segment expenses.

The standard will be effective for us beginning with our annual reporting for fiscal year 2024 and interim periods thereafter, with early adoption permitted.

We are currently evaluating the impact of this standard on our segment disclosures.

In December 2023, the FASB issued ASU 2023-08, Accounting for and Disclosure of Crypto Assets (Topic 820) , a new standard designed to enhance decision-useful information about such assets and to better reflect the underlying economics of cryptocurrency transactions.

The standard will be effective for us beginning with our annual reporting for fiscal year 2025 and interim periods thereafter, with early adoption permitted.

In December 2023, the FASB issued ASU 2023-08, Accounting for and Disclosure of Crypto Assets (Topic 820) .

ASU 2023-08 addresses the accounting and disclosure requirements for certain crypto assets.

The new guidance requires entities to subsequently measure certain crypto assets at fair value, with changes in fair value recorded in net income in each reporting period.

The guidance also requires to provide additional disclosures about the holdings of certain crypto assets.

ASU 2023-08 is effective for public business entities for annual periods beginning after December 15, 2024, with early adoption permitted.

We are currently evaluating the impact of this standard on our digital assets’ accounting and disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes—Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”).

Improvements to Income Tax Disclosures .

ASU 2023-09 modifies the rules on income tax disclosures to enhance the transparency and decision-usefulness of income tax disclosures, particularly in the rate reconciliation table and disclosures about income taxes paid.

The amendments are intended to address investors’ requests for income tax disclosures that provide more information to help them better understand an entity’s exposure to potential changes in tax laws and the ensuing risks and opportunities and to assess income tax information that affects cash flow forecasts and capital allocation decisions.

The guidance also eliminates certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities.

ASU 2023-09 is effective for public business entities for annual periods beginning after December 15, 2024.

ASU 2023-09 is effective for public business entities for annual periods beginning after December 15, 2024, with early adoption permitted.

All entities are required to apply the guidance prospectively but have the option to apply it retrospectively.

Early adoption is permitted.

The Company is continuing to assess the timing of adoption and the potential impacts of ASC 2023-09.

We are currently evaluating the impact of this standard on our income tax disclosure.

In November 2024, the FASB issued ASU 2024-03, Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses , which requires disaggregated disclosure of income statement expenses.

ASU 2024-03 does not change the expense captions an entity presents on the face of the income statement;

rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements.

ASU 2024-03 is effective for public business entities for annual periods beginning after December 15, 2026, with early adoption permitted.

We are currently evaluating the impact of this standard on our disclosure of income statement expenses.

Business Combinations

2024 Business Combinations

Acquisition of Jackpocket Inc.

( “ Jackpocket ” )

On February 11, 2024, the Company entered into a definitive agreement (the “Jackpocket Merger Agreement”) to acquire Jackpocket, which is a digital lottery courier app in the United States (the “Jackpocket Transaction”).

On May 22, 2024 (the “Jackpocket Closing Date”), DraftKings consummated the Jackpocket Transaction, and, under the terms of the Jackpocket Merger Agreement and subject to certain exclusions contained therein, Jackpocket stockholders received approximately $ 452.3 million of cash consideration and approximately $ 320.8 million of equity consideration.

The acquisition of Jackpocket allows DraftKings to participate in the U.S.

digital lottery courier product offering with expected ancillary benefits to its Sportsbook and iGaming product offerings by enhancing customer lifetime value and customer acquisition capabilities.

Operating results for Jackpocket on and after the Jackpocket Closing Date are included in the Company’s consolidated statements of operations for the year ended December 31, 2024.

Because the Company is integrating Jackpocket ’ s operations into its consolidated operating activities, the amount of revenue and earnings attributable to the Jackpocket business from the Jackpocket Closing Date through December 31, 2024, which is included within revenue and loss attributable to common stockholders in the Company’s consolidated statements of operations, is impracticable to determine.

Preliminary Purchase Price Accounting for the Jackpocket Transaction

On the Jackpocket Closing Date, the Company acquired 100 % of the equity interests of Jackpocket pursuant to the Jackpocket Merger Agreement.

The following is a summary of the consideration issued or paid on the Jackpocket Closing Date:

Cash consideration $ 452,322

Equity consideration (1)

Total consideration $ 773,105

(1) Includes the issuance of approximately 7.5 million shares of DraftKings Inc.’s Class A common stock issued at $ 41.90 per share and 6.2 million of options exercisable for shares of DraftKings Inc.

’ s Class A common stock, which were issued to certain Jackpocket employee option holders in exchange for their Jackpocket options.

The purchase price allocation for Jackpocket set forth herein is preliminary and subject to change within the measurement period, which will not extend beyond one year from the Jackpocket Closing Date.

Measurement period adjustments will be recognized in the reporting period in which the adjustment amounts are determined and may include adjustments pertaining to tax liabilities assumed, including the calculation of deferred tax assets and liabilities, which remain preliminary as of December 31, 2024.

Any such adjustments may be material.

The following table summarizes the preliminary fair value of the assets acquired and liabilities assumed in connection with the consummation of the Jackpocket Transaction on the Jackpocket Closing Date.

The values set forth below are preliminary, pending finalization of valuation analyses:

Cash and cash equivalents $ 45,999

Cash reserved for users 23,349

Receivables reserved for users 9,092

Prepaid expenses and other current assets 4,151

Property and equipment 1,523

Intangible assets 269,736

Operating lease right-of-use assets 2,579

Deposits and other non-current assets 136

Total identifiable assets acquired 356,565

Liabilities assumed:

Accounts payable and accrued expenses 33,961

Liabilities to users 16,877

Operating lease liabilities 2,580

Other long-term liabilities 80,463

Total liabilities assumed 133,881

Net assets acquired (a) 222,684

Purchase consideration (b) 773,105

Goodwill (b) – (a) $ 550,421

Goodwill represents the excess of the gross consideration transferred over the difference between the fair value of the underlying net assets acquired and the underlying liabilities assumed.

Qualitative factors that contribute to the recognition of goodwill include certain intangible assets that are not recognized as separate identifiable intangible assets apart from goodwill.

Intangible assets not recognized apart from goodwill consist primarily of benefits from securing buyer-specific synergies that increase revenue and profits and are not otherwise available to a market participant, as well as acquiring a talented workforce and cost savings opportunities.

Goodwill recognized is not deductible for tax purposes.

Goodwill associated with the Jackpocket Transaction is assigned as of the Jackpocket Closing Date to the Company’s consolidated reporting unit.

As Jackpocket ’ s financial results prior to the acquisition are not material to the Company’s consolidated financial statements, the Company has elected to not include pro forma results.

Intangible Assets

Fair Value Weighted-

Customer Relationships $ 174,000 8.0 years

Developed Technology 67,000 5.0 years

Trade Name 27,000 7.0 years

Market Access 1,736 2.9 years

Total $ 269,736

Intangible assets consist of customer relationships, developed technology, trade name and market access.

We used variations of income approaches with estimates and assumptions developed by us to determine the fair values of customer relationships, developed technology, and trade name.

We valued customer relationships by using the multi-period excess earnings method which requires the use of significant estimates and assumptions, including revenue growth rates, attrition rates, operating margin and discount rates.

For developed technology and trade name, we used the relief from royalty method including the use of significant estimates and assumptions including royalty rates and discount rates.

For market access, cost approximated fair value.

We amortize definite-lived assets based on the pattern over which we expect to receive the economic benefit from these assets.

Transaction Costs

For each of the years ended December 31, 2024 and 2023, the Company incurred $ 11.3 million and $ 1.5 million in advisory, legal, accounting and management fees in connection with the Jackpocket Transaction, respectively, which are included in general and administrative expenses on the Company’s consolidated statements of operations.

Acquisition of Simplebet, Inc.

(“Simplebet”)

On August 28, 2024, the Company entered into a definitive agreement (the “Simplebet Merger Agreement”) to acquire Simplebet, which is a leading sports betting provider of in-play micromarket content and pricing (the “Simplebet Transaction”).

On December 3, 2024 (the “Simplebet Closing Date”), DraftKings consummated the Simplebet Transaction, and, under the terms of the Simplebet Merger Agreement and subject to certain exclusions contained therein, Simplebet stockholders received approximately $ 36.0 million of cash consideration and approximately $ 45.1 million of equity consideration.

The present value of the contingent consideration of $ 53.5 million at the acquisition date, which is payable upon, and subject to, the achievement of certain performance targets, is included in other long term liabilities on the consolidated balance sheet.

Operating results for Simplebet on and after the Simplebet Closing Date are included in the Company’s consolidated statements of operations for the year ended December 31, 2024.

Because the Company is integrating Simplebet’s operations into its consolidated operating activities, the amount of revenue and earnings attributable to the Simplebet business from the Simplebet Closing Date through December 31, 2024, which is included within revenue and loss attributable to common stockholders in the Company’s consolidated statements of operations, is impracticable to determine.

Preliminary Purchase Price Accounting for the Simplebet Transaction

On the Simplebet Closing Date, the Company acquired 100 % of the equity interests of Simplebet pursuant to the Simplebet Merger Agreement.

The following is a summary of the consideration issued or paid on the Simplebet Closing Date:

Cash consideration $ 35,965

Equity consideration (1)

Contingent consideration (2)

Total consideration $ 134,645

(1) Includes the issuance of approximately 1.0 million shares of DraftKings Inc.’s Class A common stock issued at $ 43.97 per share.

(2) Contingent consideration of up to 3.5 million shares of DraftKings Inc.’s Class A common stock may be payable over the next two years , subject to the achievement of certain future performance targets for the Company as a whole.

The Company recorded a fair value estimate of the contingent consideration, as disclosed in “Note 8 – Fair Value Measurement”.

The purchase price allocation for Simplebet set forth herein is preliminary and subject to change within the measurement period, which will not extend beyond one year from the Simplebet Closing Date.

Measurement period adjustments will be recognized in the reporting period in which the adjustment amounts are determined and may include adjustments pertaining to intangible assets acquired and tax liabilities assumed, including the calculation of deferred tax assets and liabilities.

Any such adjustments may be material.

The following table summarizes the preliminary fair value of the assets acquired and liabilities assumed in connection with the consummation of the Simplebet Transaction on the Simplebet Closing Date.

The values set forth below are preliminary, pending finalization of valuation analyses:

Cash and cash equivalents $ 5,002

Accounts receivable 931

Prepaid expenses and other current assets 282

Operating lease right-of-use assets 144

Property and equipment 32

Intangible assets 62,120

Total identifiable assets acquired 68,511

Liabilities assumed:

Accounts payable and accrued expenses 5,374

Operating lease liabilities 144

Other long-term liabilities 11,500

Total liabilities assumed 17,018

Net assets acquired (a) 51,493

Estimated purchase consideration (b) 134,645

Estimated goodwill (b) - (a) $ 83,152

Goodwill represents the excess of the gross consideration transferred over the difference between the fair value of the underlying net assets acquired and the underlying liabilities assumed.

Qualitative factors that contribute to the recognition of goodwill include certain intangible assets that are not recognized as separate identifiable intangible assets apart from goodwill.

Goodwill recognized is not deductible for tax purposes.

Goodwill associated with the Simplebet Transaction is assigned as of the Simplebet Closing Date to the Company’s consolidated reporting unit.

As Simplebet’s financial results are not material to the Company’s consolidated financial statements, the Company has elected to not include pro forma results.

The Company recorded intangible assets related to developed technology of $ 62.1 million that will be amortized over six years .

We valued developed technology by using the multi-period excess earnings method.

The process for estimating the fair values of identifiable intangible assets requires the use of significant estimates and assumptions, including revenue growth rates, and discount rates.

We amortize definite-lived assets based on the pattern over which we expect to receive the economic benefit from these assets.

Transaction Costs

For the year ended December 31, 2024, the Company incurred $ 4.5 million in advisory, legal, accounting and management fees in connection with the Simplebet Transaction, which are included in general and administrative expenses on the Company’s consolidated statements of operations.

Other 2024 Acquisitions

During the year ended December 31, 2024, the Company acquired 100 % of the equity interest of Sports IQ Analytics Inc.

(“SIQ”) and Dijon Systems Limited (“Dijon”).

SIQ and Dijon were acquired for aggregate cash payments of $ 28.2 million and aggregate equity consideration of $ 10.8 million on the respective closing dates of such acquisitions.

In addition, the Company is subject to contingent consideration payments of up to $ 33.3 million for both of their acquisitions, subject to the achievement of certain performance targets, with a preliminary fair value estimate of $ 24.4 million included in other current liabilities and other long term liabilities on the consolidated balance sheet.

The Company recorded goodwill of $ 35.2 million, of which none will be deductible for tax purposes.

In addition, the Company recorded intangible assets of $ 34.9 million that will be amortized over seven years as well as deferred tax liability of $ 7.7 million, in relation to these acquisitions.

For the year ended December 31, 2024, the Company incurred $ 1.7 million in advisory, legal, accounting and management fees in connection with these acquisitions, which are included in general and administrative expenses on the Company’s consolidated statements of operations.

As financial results of SIQ and Dijon are not material to the Company’s consolidated financial statements, the Company has elected to not include pro forma results.

2022 Business Combinations

Acquisition of Golden Nugget Online Gaming, Inc.

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Operating results for GNOG on and after the GNOG Closing Date are included in the Company’s consolidated statements of operations for the years ended December 31, 2024, 2023 and 2022.

Because the Company is integrating GNOG’s operations into its consolidated operating activities, the amount of revenue and earnings attributable to the GNOG business for 2022, which is included within revenue and net loss attributable to common stockholders in the Company’s consolidated statements of operations , was impracticable to determine.

Because the Company was integrating GNOG’s operations into its consolidated operating activities, the amount of revenue and earnings attributable to the GNOG business for 2022, which is included within revenue and net loss attributable to common stockholders in the Company’s consolidated statements of operations , was impracticable to determine.

Purchase Price Accounting for the GNOG Transaction

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Transaction Costs

For the year ended December 31, 2022 and 2021, the Company incurred $ 14.9 million and $ 9.2 million, respectively, in advisory, legal, accounting and management fees in connection with the GNOG Transaction, which are included in general and administrative expenses on the Company’s consolidated statements of operations.

For the year ended December 31, 2022, the Company incurred $ 14.9 million in advisory, legal, accounting and management fees in connection with the GNOG Transaction, which are included in general and administrative expenses on the Company’s consolidated statements of operations.

Unaudited Pro-Forma Information

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Year Ended December 31, 2022

2022 Pro Forma 2021 Pro Forma

Revenue $ 2,284,596

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The pro forma financial information includes adjustments primarily related to purchase accounting adjustments.

Transaction costs and other non-recurring charges incurred are included in the earliest period presented.

Vegas Sports Information Network, Inc.

On March 26, 2021, the Company acquired 100 % of the equity of Vegas Sports Information Network, Inc.

(“VSiN” and such acquisition, the “VSiN Acquisition”) for $ 40.6 million of cash and approximately $ 29.4 million of the Company’s Class A common stock.

The acquired assets and assumed liabilities of VSiN were recorded at their estimated fair values, including $ 21.8 million of intangible assets.

Goodwill of $ 47.2 million represents the excess of the gross considerations transferred over the fair value of the underlying net assets acquired and liabilities assumed.

Goodwill associated with the VSiN Acquisition is assigned as of the acquisition date to the Company’s Media reporting unit.

The purchase price allocation for the VSiN Acquisition was finalized as of December 31, 2021.

Goodwill recognized is no t deductible for tax purposes.

As VSiN’s financial results are not material to the Company’s consolidated financial statements, the Company has elected to not include pro forma results.

Blue Ribbon Software Ltd.

On April 1, 2021, the Company acquired 100 % of the equity of Blue Ribbon Software Ltd.

(“Blue Ribbon”) for $ 17.8 million of cash and approximately $ 3.8 million of the Company’s Class A common stock (the “Blue Ribbon Acquisition”).

The acquired assets and assumed liabilities of Blue Ribbon were recorded at their estimated fair values.

The purchase price allocation for the Blue Ribbon Acquisition was finalized as of December 31, 2021.

Property and Equipment

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During the years ended December 31, 2024, 2023, and 2022 the Company recorded depreciation expense on property and equipment of $ 21.1 million , $ 20.4 million, and $ 18.7 million, respectively.

The value of property and equipment, net in foreign countries is $ 4.0 million.

The value of property and equipment, net in foreign countries is $ 2.9 million and $ 4.0 million as of December 31, 2024 and 2023, respectively.

No other country or region represents greater than 10% of our total property and equipment, net as of the dates presented, other than the United States.

Intangible Assets and Goodwill

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Internally developed software 2.3 years 333,437 ( 166,456 ) 166,981

Gaming licenses 10.6 years 218,760 ( 47,941 ) 170,819

Gaming market access and licenses 8.4 years 221,479 ( 68,402 ) 153,077

Customer relationships 6.1 years 442,528 ( 192,055 ) 250,473

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Amortization Net

Amortized intangible assets:

Developed technology 4.4 years $ 422,900 $ ( 193,247 ) $ 229,653

Internally developed software 2.3 years 236,644 ( 108,169 ) 128,475

Gaming licenses 11.0 years 206,655 ( 29,487 ) 177,168

Gaming market access and licenses 10.6 years 218,760 ( 47,941 ) 170,819

Customer relationships 4.1 years 269,728 ( 127,862 ) 141,866

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Indefinite-lived intangible assets:

Digital assets, net of impairment Indefinite-lived 2,697 — 2,697

Digital assets, net of impairment Indefinite-lived 2,884 N/A 2,884

Intangible assets, net $ 1,188,590 $ ( 497,970 ) $ 690,620

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2025 $ 237,285

There were no changes in the carrying amount of goodwill for the year ended December 31, 2023.

As of December 31, 2023, the Company had no accumulated goodwill impairment losses.

The changes in the carrying value of goodwill were as follows:

Balance as of December 31, 2022 $ 886,373

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Balance as of December 31, 2023 $ 886,373

Changes in Goodwill —

Goodwill resulting from acquisitions 668,743

Balance as of December 31, 2024 $ 1,555,116

No impairment of goodwill was recorded in the years ended December 31, 2023, 2022 and 2021.

As of December 31, 2023, the Company had no accumulated goodwill impairment losses.

Accounts Payable and Accrued Expenses

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Revolving Line of Credit

On December 20, 2022, the Company entered into a loan and security agreement with Pacific Western Bank and Citizens Bank, as lenders (as amended, the “Credit Agreement”), which provides the Company with a revolving line of credit of up to $ 125.0 million (the “Revolving Line of Credit”).

The Credit Agreement has a maturity date of December 20, 2024 and replaced the Company’s amended and restated loan and security agreement entered into with Pacific Western Bank in October 2016 (the “Prior Credit Agreement”), which provided a revolving line of credit of up to $ 60.0 million and was terminated in connection with the Company’s entry into the Credit Agreement.

Borrowings under the Credit Agreement bear interest at a variable annual rate equal to the greater of (i) 1.00 % above the prime rate then in effect and (ii) 5.00 %, and the Credit Agreement requires monthly, interest-only payments on any outstanding borrowings.

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 December 31, 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 December 31, 2023 totaled $ 122.7 million.

The Company is also subject to certain affirmative and negative covenants, including the restriction of dividends, under the Credit Agreement which it is in compliance with as of December 31, 2023.

One such covenant involves maintaining compensating cash balances.

The compensating balances may be withdrawn but the availability of the line of credit is dependent upon maintenance of such compensating balances.

The performance of the Company’s obligations under the Credit Agreement are secured by a first-priority security interest on substantially all of its assets.

On December 20, 2022, the Company entered into a loan and security agreement with Pacific Western Bank and Citizens Bank, as lenders (as amended, the “Old Credit Agreement”), which provides the Company with a revolving line of credit of up to $ 125.0 million (the “Old Revolving Line of Credit”).

The Old Credit Agreement maturity date was extended from December 20, 2024 to December 31, 2025, effective July 31, 2024.

On November 7, 2024, the Company entered into a credit agreement (the “New Credit Agreement”) with various financial institutions, as lenders, and Morgan Stanley Senior Funding, Inc., as administrative agent and collateral agent, providing for a senior secured revolving credit facility of up to $ 500.0 million (the “New Revolving Credit Facility”).

The New Revolving Credit Facility has a maturity date of November 7, 2029.

In conjunction with the New Credit Agreement and New Revolving Credit Facility, the Old Credit Agreement and Old Revolving Line of Credit were terminated.

Revolving loans under the New Revolving Credit Facility bear interest at the Company’s election at either (i) Term SOFR (as defined in the New Credit Agreement), plus an applicable margin ranging from 1.75 % to 2.25 % depending on the Company’s Net First Lien Leverage Ratio (as defined in the New Credit Agreement) or (ii) a base rate that is equal to the greatest of (a) the federal funds rate plus 0.50 %, (b) the prime rate and (c) Term SOFR for a one month interest period plus 1.00 %, in each case plus an additional applicable margin ranging from 0.75 % to 1.25 % depending on the Company’s Net First Lien Leverage Ratio.

In addition, the Company is required to pay a commitment fee quarterly in arrear ranging from 0.25 % to 0.375 % per annum of the unused portion of the New Revolving Credit Facility depending on the Company’s Net First Lien Leverage Ratio.

As of December 31, 2024, the New Credit Agreement provided a revolving line of credit of up to $ 500.0 million, and there was no principal outstanding under the New Credit Agreement.

As of December 31, 2024, $ 10.0 million in letters of credit were issued under the New Credit Agreement, with $ 490.0 million available for borrowing.

The performance of the Company’s obligations under the New Credit Agreement is secured by a first-priority security interest on substantially all of its assets.

The New Credit Agreement contains customary representations and warranties and affirmative and negative covenants, including dividend restrictions and a financial covenant that the Company is required to maintain a Net First Lien Leverage Ratio not to exceed 4.50 :1.00, which is tested only if the aggregate amount of (i) revolving loans outstanding and (ii) letters of credit outstanding under the New Revolving Credit Facility in excess of a specified threshold (unless cash collateralized) is in excess of 40 % of the total amount under the New Revolving Credit Facility.

Convertible Notes and Capped Call

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Class A common stock.

The Convertible Notes are convertible at an initial conversion rate of 10.543 shares of DraftKings Inc.’s Class A common stock per $1,000 principal amount of Convertible Notes, which is equivalent to an initial conversion price of approximately $ 94.85 per share of DraftKings Inc.’s Class A common stock.

The Convertible Notes are convertible at an initial conversion rate of 10.543 shares of DraftKings Inc.’s Class A common stock per $1,000 principal amount of Convertible Notes, which is equivalent to an initial conversion price of $ 94.85 per share of DraftKings Inc.’s Class A common stock.

The conversion rate is subject to adjustment upon the occurrence of certain specified events and includes a make-whole adjustment upon early conversion in connection with a make-whole fundamental change (as defined in the indenture governing the Convertible Notes).

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The Capped Call Transactions are expected generally to reduce potential dilution to DraftKings Inc.’s Class A common stock upon any conversion of Convertible Notes.

As the transaction qualifies 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 the transaction qualifies 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 December 31, 2024, the Company’s convertible debt balance was $ 1,256.4 million, net of unamortized debt issuance costs of $ 8.6 million.

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Effective as of the consummation of the GNOG Transaction, each of the outstanding GNOG Private Warrants became exercisable, at a price of $ 31.50 , 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 December 31, 2024 and 2023, there were 3.0 million and 5.9 million GNOG Private Warrants outstanding, respectively.

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

As of December 31, 2023 and 2022, there were 5.9 million GNOG Private Warrants outstanding.

As of December 31, 2023, the fair value of the Company’s warrant liability was $ 63.6 million.

Due to fair value changes throughout 2023, the Company recorded a loss on remeasurement of warrant liabilities of $ 57.5 million and throughout 2022 and 2021, the Company recorded a gain on remeasurement of warrant liabilities of $ 29.4 million and $ 30.1 million, respectively.

As of December 31, 2024, and 2023 the fair value of the Company’s warrant liability was $ 22.0 million and $ 63.6 million, respectively.

Due to fair value changes the Company recorded a loss on remeasurement of warrant liabilities of $ 4.9 million, and $ 57.5 million, in 2024 and 2023, respectively, and a gain on remeasurement of warrant liabilities of $ 29.4 million in 2022.

In 2024, 1.0 million Private Warrants and 2.9 million GNOG Private Warrants were exercised resulting in a reclassification to additional paid-in-capital in the amount of $ 32.8 million and $ 13.7 million, respectively.

These exercises resulted in the issuance of approximately 1.0 million shares of DraftKings Inc.

Class A common stock as all were exercised on a cashless basis.

In 2023, 0.2 million Private Warrants were exercised resulting in a reclassification to additional paid-in-capital in the amount of $ 4.6 million, and no GNOG Private Warrants were exercised.

In 2022, a de minimis number of Private Warrants and no GNOG Private Warrants were exercised.

In 2021, 0.3 million Private Warrants were exercised, resulting in a reclassification to additional paid-in-capital in the amount of $ 9.2 million.

See “Note 8 – Fair Value Measurements” and “Note 14 – Loss Per Share” for further information on the Company’s warrant liabilities.

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Level 1 Level 2 Level 3 Total

Cash equivalents:

Money market funds $ 250,055 (1)

$ — $ — $ 250,055

Other current assets:

Digital assets held for users — 46,624 (2)

Other non-current assets:

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Other current liabilities $ — $ — $ 3,300 (6)

Digital assets held for users $ — $ 46,624 (2)

Warrant liabilities — 22,033 (5)

Other long-term liabilities — — 74,665 (6)

Total $ — $ 22,033 $ 77,965 $ 99,998

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(2) 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 these digital assets to fair value using latest transaction price for similar transactions.

(3) Represents the Company’s marketable equity securities, which are classified as Level 1 because the Company measures these assets to fair value using quoted market prices.

(3) Represents the Company’s non-marketable equity securities, which are classified as Level 2 because the Company measures these assets to fair value using observable inputs for similar investments of the same issuer.

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

For the year ended December 31, 2023, the Company sold Level 3 derivative instruments with a fair value at December 31, 2022 of $ 6.3 million for proceeds of $ 5.2 million and recorded loss of $ 0.1 million related to this sale.

There were no new Level 3 derivative instruments purchased by or issued to the Company for the year ended December 31, 2023.

During 2022, the Company did not purchase or issue a significant amount of new derivative instruments.

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

There were no new Level 3 derivative instruments purchased by or issued to the Company for the years ended December 31, 2024 and 2023.

The key inputs to the valuations are underlying stock price, volatility and risk free rate.

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

Changes to fair value of these instruments are recorded in Other (loss) income, net on the consolidated statements of operations and Loss (gain) on marketable equity securities and other financial assets, net in the consolidated statement of cash flows.

December 31, 2023 December 31, 2022

Range (Weighted Average) Range (Weighted Average)

Significant Unobservable Input of Level 3 Investments (amounts in dollars) (amounts in dollars)

Underlying stock price of Level 3 investments $ 12.79 - $ 19.80 ($ 19.41 )

$ 7.30 - $ 19.80 ($ 16.53 )

Volatility of Level 3 investments 75.0 % - 80.0 % ( 79.7 %)

56.0 % - 80.0 % ( 74.1 %)

Risk-free rate of Level 3 investments 1.3 % - 4.2 % ( 4.0 %)

1.3 % - 4.3 % ( 4.1 %)

Changes to fair value of these instruments are recorded in Other income, net on the consolidated statements of operations and Loss on marketable equity securities and other financial assets, net in the consolidated statement of cash flows.

(5) The Company measures its Private Warrants and the GNOG Private Warrants to fair value using a binomial lattice model or a Black-Scholes model, where appropriate, with the significant assumptions being observable inputs and, accordingly, classifies these liabilities as Level 2.

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See “Note 7 – Current and Long-term Liabilities” and “Note 14 – Loss Per Share” for further information on the Company’s warrant liabilities.

During 2022, the Company recorded an unrealized gain of $ 19.9 million in the aggregate for its Level 3 financial assets.

The Company did not record any unrealized gains or losses for its Level 3 financial assets during 2023 or 2021.

(6) Represents the contingent consideration issuable to former SIQ, Dijon and Simplebet securityholders in connection with the SIQ Transaction, Dijon Transaction and Simplebet Transaction upon the achievement of certain performance targets.

The fair value of contingent consideration was generally calculated using customary valuation models based on probability-weighted outcomes of meeting certain future performance targets and forecasted results.

The Company classified the contingent consideration liabilities as a Level 3 fair value measurement due to the lack of observable inputs used in the model.

The key inputs to the valuations are the projections of future financial results in relation to the business, revenue risk premium, revenue volatility, and operational leverage ratio as well as management judgment regarding the probability of achieving a future performance target.

The table below includes a range and an average weighted by relative fair value of the significant unobservable inputs used to measure contingent consideration at fair value.

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

Changes to fair value of these instruments are recorded in Other income, net on the consolidated statements of operations.

December 31, 2024

Significant Unobservable Input of Level 3 Investments Range (Weighted Average)

Revenue volatility 17.3 % - 17.7 % ( 17.6 %)

Equity volatility 53.4 % - 60.0 % ( 55.3 %)

Operational leverage ratio 65.0 % - 70.0 % ( 66.4 %)

During 2024, the Company recorded an unrealized loss of $ 12.9 million in the aggregate for its Level 3 financial assets.

The Company did not record any unrealized gains or losses for its Level 3 financial assets dur ing 2023, and recorded an unrealized gain of $ 19.9 million in the aggregate for its Level 3 financial assets during 2022.

Revenue Recognition

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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, often within the following year.

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

Revenue Disaggregation

We disaggregate revenue from contracts with customers by product vertical and geography, as we believe it best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

Disaggregation of revenue for years ended December 31, 2024, 2023 and 2022 are as follows:

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2024 2023 2022

Online gaming $ 3,557,191 $ 2,106,708 $ 1,145,539

Gaming software 29,980 43,000 97,415

Sportsbook $ 2,902,857 $ 2,106,403 $ 1,032,785

iGaming 1,507,808 1,216,749 821,847

Other 357,034 342,241 385,829

Total Revenue $ 4,767,699 $ 3,665,393 $ 2,240,461

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

Other revenue primarily includes media, retail sportsbooks 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 $ 47.5 million, respectively, for the year ended December 31, 2023, $ 45.8 million and $ 51.1 million, respectively, for the year ended December 31, 2022, and $ 44.5 million and $ 45.8 million, respectively, for the year ended December 31, 2021.

Sportsbook revenue includes Online Sportsbook and Retail Sportsbook.

Other revenue primarily includes DFS, digital lottery courier, gaming software, media and advertising revenue and Marketplace.

The following table presents the Company’s revenue by geographic region for the periods indicated:

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International (1)

118,563 69,771 43,658

Total Revenue $ 4,767,699 $ 3,665,393 $ 2,240,461

(1) No other country or region represents greater than 10% of our total revenue as of the dates presented, other than the United States as presented above.

Stockholders’ Equity (Deficit)

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Holders of Class A common stock are not entitled to cumulate their votes in the election of directors.

Holders of Class A common stock will share ratably (based on the number of shares of Class A common stock held) if and when any dividend is declared by the Board out of funds legally available therefor, subject to restrictions, whether statutory or contractual (including with respect to any outstanding indebtedness), on the declaration and payment of dividends and to any restrictions on the payment of dividends imposed by the terms of any outstanding preferred stock or any class or series of stock having a preference over, or the right to participate with, the Class A common stock with respect to the payment of dividends.

Holders of Class A common stock will share ratably (based on the number of shares of Class A common stock held) if and when any dividend is declared by the Board of Directors out of funds legally available therefor, subject to restrictions, whether statutory or contractual (including with respect to any outstanding indebtedness), on the declaration and payment of dividends and to any restrictions on the payment of dividends imposed by the terms of any outstanding preferred stock or any class or series of stock having a preference over, or the right to participate with, the Class A common stock with respect to the payment of dividends.

On the liquidation, dissolution, distribution of assets or winding up of DraftKings, each holder of Class A common stock will be entitled, pro rata on a per share basis, to all assets of DraftKings of whatever kind available for distribution to the holders of common stock, subject to the designations, preferences, limitations, restrictions and relative rights of any other class or series of preferred stock of DraftKings then outstanding.

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Holders of Class B common stock are not entitled to cumulate their votes in the election of directors.

Holders of Class B common stock will not participate in any dividend declared by the Board.

Holders of Class B common stock will not participate in any dividend declared by the Board of Directors.

On the liquidation, dissolution, distribution of assets or winding up of DraftKings, holders of Class B common stock will not be entitled to receive any distribution of DraftKings assets of whatever kind available until distribution has first been made to all holders of Class A common stock.

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Preferred Stock

The Company’s amended and restated articles of incorporation provide that its Board has the authority, without action by the stockholders, to designate and issue shares of preferred stock in one or more classes or series, and the number of shares

constituting any such class or series, and to fix the voting powers, designations, preferences, limitations, restrictions and relative rights of each class or series of preferred stock, including, without limitation, dividend rights, dividend rates, conversion rights, exchange rights, voting rights, rights and terms of redemption, dissolution preferences, and treatment in the case of a merger, business combination transaction, or sale of its assets, which rights may be greater than the rights of the holders of the common stock.

The Company’s amended and restated articles of incorporation provide that its Board of Directors has the authority, without action by the stockholders, to designate and issue shares of preferred stock in one or more classes or series, and the number of shares constituting any such class or series, and to fix the voting powers, designations, preferences, limitations, restrictions and relative rights of each class or series of preferred stock, including, without limitation, dividend rights, dividend rates, conversion rights, exchange rights, voting rights, rights and terms of redemption, dissolution preferences, and treatment in the case of a merger, business combination transaction, or sale of its assets, which rights may be greater than the rights of the holders of the common stock.

As of December 31, 2024, the Company had 300.0 million shares authorized of preferred stock, $ 0.0001 par value, of which none were issued and outstanding as of December 31, 2024 or December 31, 2023.

Share Repurchase Program

On July 30, 2024, the Company’s Board of Directors authorized the repurchase of an aggregate of up to $ 1.0 billion of DraftKings Inc.’s Class A common stock (the “Stock Repurchase Program”).

DraftKings may make repurchases of its Class A common stock through open market purchases, privately negotiated transactions or other transactions in accordance with applicable securities laws, subject to market conditions and other factors.

The Company’s Stock Repurchase Program does not

require it to acquire any specific number or amount of Class A common stock and may be terminated at any time.

The Company may enter into Rule 10b5-1 plans from time to time to facilitate repurchases of its Class A common stock in connection with its Stock Repurchase Program.

The Company repurchased 1.1 million shares for $ 48.1 million during the year ended December 31, 2024 under the Stock Repurchase Program.

The purchases of the shares occurred in the month of December.

Stock-Based Compensation

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There are no securities remaining available for future issuance under the 2012 Plan as this plan has expired pursuant to the terms.

The Company issued time-based and performance-based vesting awards under the 2020 Plan.

As of December 31, 2023, a share reserve established that the aggregate number of shares may not exceed 900.0 million shares under the Plans.

The Company issues time-based and performance-based vesting awards under the 2020 Plan.

Also in 2020, the Company’s Board of Directors approved the Employee Stock Purchase Plan, as amended from time to time, (as amended, the “ESPP”).

The ESPP permits eligible employees to purchase a number of shares of the Company’s Class A common stock at a price per share that is 85 % of the lesser of the fair market value of the shares on the first or last day of the offering period, during offerings periods each year.

Employees started contributing to the ESPP in 2024 and no shares have been issued under the plan as of December 31, 2024.

As of December 31, 2024, a share reserve established that the aggregate number of shares may not exceed 133.3 million shares under the 2020 Plan and the ESPP.

The Company has historically issued three types of stock-based compensation:

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LTIP awards are performance-based equity awards that are used to establish longer-term performance objectives and incentivize management to meet those objectives.

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

PSP awards are performance-based equity awards which establish performance objectives related to a particular fiscal year.

As applicable, certain stock-based compensation awards expire seven to ten years after the grant date.

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For awards with only service-based vesting conditions, the Company recognizes compensation cost using the straight-line method.

Expected volatility is based on an average volatility for a representative sample of

comparable public companies, including the Company.

Expected volatility is based on an average volatility for a representative sample of comparable public companies, including the Company.

Stock options are generally granted with an exercise price equal to the fair value of the common stock at the grant date with a 10 -year contractual term.

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2024 2023 2022

Risk free interest rate 4.1 % 3.1 % 1.1 %

Expected term (in years) 5.9 5.6 5.8

Expected volatility 55.7 % 53.0 % 43.0 %

Expected dividend yield 0.0 % 0.0 % 0.0 %

Weighted average risk free interest rate 4.6 % 4.1 % 3.1 %

Weighted average expected term (in years) 3.6 5.9 5.6

Weighted average expected volatility 45.1 % 55.7 % 53.0 %

Weighted average expected dividend yield 0.0 % 0.0 % 0.0 %

The following table shows stock award activity for the years ended December 31, 2024 and 2023:

Time-based PSP LTIP Total Weighted

Options RSUs Total Weighted

Options Weighted

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Remaining Term

(Years) Aggregate Intrinsic

Value of Options

Options RSUs Options RSUs Options RSUs

(Years) Aggregate

Time Based PSP LTIP

Outstanding at December 31, 2022 25,684 15,273 13,119 13,864 67,940 $ 6.17 $ 29.64 5.49 $ 192,062

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Exercised options / vested RSUs ( 3,944 ) ( 7,211 ) ( 1,715 ) ( 12,310 ) ( 25,180 ) 4.16 42.29 — —

Change in awards due to performance-based multiplier — — — 1,806 — — 1,806 — 33.69 — —

Change in awards due to

performance-based multiplier — — 1,141 — 1,141 — 60.25 — —

Forfeited ( 285 ) ( 1,810 ) ( 976 ) ( 508 ) ( 3,579 ) 4.39 21.18 — —

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Exercised options / vested RSUs ( 2,227 ) ( 7,841 ) — ( 261 ) ( 10,329 ) 4.17 26.11 — —

Change in awards due to performance-based multiplier — — — 1,141 — — 1,141 — 60.25 — —

Change in awards due to

performance-based multiplier — — — — — — — — —

Forfeited ( 14 ) ( 1,576 ) ( 752 ) ( 135 ) ( 2,477 ) 16.99 23.34 — —

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Options RSUs Total (3)

Options RSUs Total Options RSUs Total

Options RSUs Total (3)

Options RSUs Total

Time Based (1)

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(2) PSP and LTIP awards vest based on defined performance criteria and are expensed based on the probability of achieving such criteria.

(3) Total expenses includes $ 20.2 million of liability-classified awards recorded within accounts payable and accrued liabilities in the consolidated balance sheet as of December 31, 2023.

(3) Total expenses includes $ 17.3 million and $ 20.2 million of liability-classified awards recorded within accounts payable and accrued liabilities in the consolidated balance sheet as of December 31, 2024 and 2023, respectively.

During the year ended December 31, 2024, we capitalized stock-based compensation primarily associated with the development of software for internal-use of $ 17.8 million.

The weighted-average grant-date fair values of options granted during the years ended December 31, 2024, 2023 and 2022 were $ 22.86 , $ 8.59 and $ 7.46 per share, respectively.

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The total grant date fair value of stock options that vested during the years ended December 31, 2024, 2023 and 2022 were $ 13.4 million, $ 11.1 million and $ 15.3 million, respectively.

The total grant date fair value of RSUs that vested during the years ended December 31, 2024, 2023 and 2022 were $ 212.7 million, $ 893.2 million and $ 511.4 million, respectively.

Loss before income tax (benefit) provision for the years ended December 31, 2024, 2023 and 2022 consists of the following:

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Foreign 485 3,001 ( 3,372 )

Total deferred (benefit) provision 5,849 ( 73,407 ) ( 15,509 )

Total deferred provision ( 92,733 ) 5,849 ( 73,407 )

Total income tax (benefit) provision $ ( 86,341 ) $ 10,170 $ ( 67,866 )

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Benefit for income taxes at 21% rate $ ( 124,563 ) $ ( 166,217 ) $ ( 303,028 )

Prior year provision true-ups 1,321 938 ( 16,878 )

State taxes, net of federal benefit ( 9,752 ) ( 40,385 ) ( 17,265 )

Internal restructurings — — ( 167,692 )

Stock-based compensation (benefit) expense ( 882 ) 26,155 28,015

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Non-deductible executive compensation 18,275 30,106 54,925

(Gain) loss on remeasurement of warrant liabilities 12,084 ( 6,173 ) ( 6,301 )

Loss (gain) on remeasurement of warrant liabilities 1,270 12,084 ( 6,173 )

Foreign rate differential 1,003 3,348 1,802

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Other ( 771 ) 9,134 2,645

Total income tax provision (benefit) $ 10,170 $ ( 67,866 ) $ 8,269

Total income tax (benefit) provision $ ( 86,341 ) $ 10,170 $ ( 67,866 )

Significant components of the Company’s deferred tax assets (liabilities) as of December 31, 2024 and 2023 are as follows:

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Fixed assets ( 108 ) ( 162 )

Intangible assets ( 6,532 ) —

Operating lease ( 21,472 ) ( 25,528 )

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Gross deferred tax liabilities ( 32,153 ) ( 38,023 )

Total net deferred tax (liabilities) assets $ ( 4,595 ) $ 1,441

Total net deferred tax liabilities $ ( 6,968 ) $ ( 4,595 )

In assessing whether it is more likely than not that deferred tax assets will be realized, the Company considers all available evidence, both positive and negative, including its recent cumulative earnings or loss, experience and expectations of future available taxable income of the appropriate source and character by taxing jurisdiction, tax attribute carryback and carryforward periods available for tax purposes, and prudent and feasible tax planning strategies.

The Company records its deferred tax assets of $ 7.8 million and $ 10.7 million for 2023 and 2022, respectively, in deposits and other non-current assets and its deferred tax liabilities of $ 12.4 million and $ 9.3 million for 2023 and 2022, respectively, in other long-term liabilities in the consolidated balance sheets.

The Company records its deferred tax assets of $ 6.8 million and $ 7.8 million for 2024 and 2023, respectively, in deposits and other non-current assets in the consolidated balance sheet and its deferred tax liabilities of $ 13.8 million and $ 12.4 million for 2024 and 2023, respectively, in other long-term liabilities in the consolidated balance sheets.

The Company has provided a valuation allowance for the U.S.

deferred tax assets as of December 31, 2023.

For the year ended December 31, 2023, the U.S.

valuation allowance increased by $ 130.8 million primarily due to the current year operating losses.

deferred tax assets as of December 31, 2024 and 2023.

For the years ended December 31, 2024, and 2023, the U.S.

valuation allowance increased by $ 94.8 million (of which $ 76.5 million was established through goodwill and $ 18.3 million was established through the consolidated statement of operations), and $ 130.8 million, respectively primarily due to the operating losses.

As of December 31, 2024, the Company had U.S.

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Of the state NOL carryforward, $ 4.0 billion expires at various dates beginning in 2025 through 2044 and $ 0.3 billion does not expire.

Utilization of the NOL carryforwards may be subject to limitation under Section 382 of the Internal Revenue Code of 1986 based on ownership changes that have occurred previously or that could occur in the future.

Utilization of the NOL carryforwards may be subject to limitation under Section 382 of the Internal Revenue Code of 1986 based on ownership changes that could occur in the future.

These ownership changes may limit the amount of NOL and tax credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively.

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If such amounts prove to be less than an ultimate assessment, a future charge to expense would be recorded in the period in which the assessment is determined.

Segment Information

The Company has one consolidated reportable segment.

This segment provides users with Sportsbook, iGaming, DFS and digital lottery courier product offerings, media, and other online product offerings as well as the design, development and licensing of sports betting and casino gaming software for its Sportsbook and iGaming product offerings.

The Company drives revenue primarily in North America and manages the business activities on a consolidated basis.

The determination of reportable operating segments is based on the Chief Operating Decision Maker’s (“CODM’s”) use of financial information provided for the purposes of assessing performance and making operating decisions.

The Company's CODM is its Co-founder and Chief Executive Officer.

The CODM uses net income (loss) to allocate resources and assess the performance of the Company by comparing actual results to historical results and previously forecasted financial information and the allocation of budget between cost of revenues, sales and marketing, product and technology, and general and administrative expenses.

The measure of segment assets is reported on the consolidated balance sheet as total consolidated assets.

The accounting policies of the Company’s consolidated segment are the same as those described in “Note 2 – Summary of Significant Accounting Polices and Practices.” Any intercompany revenues or expenses are eliminated in consolidation.

The following table presents revenue, significant expenses, and net income (loss) for our consolidated segment:

Year Ended December 31,

2024 2023 2022

Total revenue $ 4,767,699 $ 3,665,393 $ 2,240,461

Gaming tax 1,658,114 1,235,272 716,451

Other adjusted cost of revenue (1)

1,061,992 872,178 612,331

Total Adjusted Cost of Revenue 2,720,106 2,107,450 1,328,782

Adjusted sales and marketing expenses (2)

1,224,561 1,161,318 1,129,707

Adjusted product and technology expenses (2)

292,991 240,422 214,824

Adjusted general and administrative expenses (2)

348,734 307,238 288,929

Depreciation and amortization 270,854 201,920 169,252

Interest income ( 47,259 ) ( 58,418 ) ( 21,353 )

Interest expense 2,959 2,679 2,651

Stock-based compensation 381,367 398,463 578,799

Transaction-related costs (3)

26,386 3,060 17,315

Litigation, settlement and related costs (4)

81,246 34,500 7,010

Advocacy and other related legal expenses (5)

16,049 — 16,558

Loss (gain) on remeasurement of warrant liabilities 4,945 57,543 ( 29,396 )

Loss on equity method investment 468 719 2,895

Income tax (benefit) provision ( 86,341 ) 10,170 ( 67,866 )

Other expenses (6)

37,917 471 ( 19,659 )

Consolidated net income (loss) $ ( 507,285 ) $ ( 802,142 ) $ ( 1,377,987 )

(1) Other adjusted cost of revenue includes all cost of revenue, other than gaming tax, presented in the statement of operations, adjusted for the impact of depreciation and amortization and stock-based compensation.

(2) These items represent the respective line items in the statement of operations, adjusted for the impact of depreciation and amortization;

stock-based compensation;

transaction-related costs;

litigation, settlement and related costs;

advocacy and other related legal expenses;

and other expenses, as further described below.

(3) Includes capital markets advisory, consulting, accounting and legal expenses related to evaluation, negotiation and integration costs incurred in connection with transactions under consideration, pending, or completed transactions and offerings, including costs relating to our completed acquisitions of Jackpocket, SIQ, Dijon and Simplebet.

(4) Primarily includes certain external legal costs related to litigation and litigation settlement costs deemed unrelated to our core business operations.

(5) Reflects certain costs relating to advocacy efforts and other legal expenses in jurisdictions where we do not operate certain product offerings and are actively seeking licensure, or similar approval, for those product offerings.

This adjustment excludes (i) costs relating to advocacy efforts and other legal expenses in jurisdictions where we do not operate that are incurred in the ordinary course of business and (ii) costs relating to advocacy efforts and other legal expenses incurred in jurisdictions where related legislation has been passed and we currently operate.

(6) Other expenses are defined other certain costs that were not included in the above categories including any gain or loss on the disposal of a business and termination expenses.

Loss Per Share

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Basic and diluted weighted-average common shares outstanding 481,954 462,599 436,513

Loss per share attributable to common stockholders (in dollars):

Loss per share attributable to common stockholders:

Basic and diluted $ ( 1.05 ) $ ( 1.73 ) $ ( 3.16 )

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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.

During 2023, 2022 and 2021, the Company incurred $ 0.0 million , $ 8.5 million , $ 2.5 million, respectively, of professional fees in connection with certain business combination transactions and offerings undertaken by the Company, which are recorded within general and administrative expenses on the consolidated statement of operations.

During 2022, when Raine was a related party, the Company incurred $ 8.5 million of professional fees in connection with certain business combination transactions and offerings undertaken by the Company, which are recorded within general and administrative expenses on the consolidated statement of operations.

Receivables from Equity Method Investments

The Company provides office space and general operational support to DKFS, LLC, an equity-method affiliate.

The Company has committed to invest up to $ 17.5 million into DBDK Venture Fund I, LP and $ 21.0 million in DBDK Fund II, L.P.

Both funds are Delaware limited partnerships and are both managed by Drive by DraftKings, LLC (“DBDK”) .

As of December 31, 2024, the Company had invested a total of $ 11.0 million and $ 0.0 million of the total commitment in DBDK Venture Fund I, L.P.

and DBDK Fund II, L.P., respectively.

The Company also provides office space and general operational support to DBDK, which is partially owned by DKFS, LLC, an equity-method affiliate in which the Company has a 49.9 % membership interest, in exchange for services-in-kind.

The operational support is primarily general and administrative services.

As of December 31, 2023, and 2022, the Company had $ 0.0 million and $ 0.2 million, respectively, of receivables from the entity related to those services and expenses to be reimbursed to the Company.

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 December 31, 2023, the Company had invested a total of $ 7.6 million of the total commitment.

Transactions with a Former Director and their Immediate Family Members

During 2023, 2022 and 2021, the Company had $ 1.4 million, $ 2.3 million, and $ 4.5 million, respectively, in sales to entities related to an immediate family member of a former director.

The Company had an associated accounts receivable balance of $ 0.0 million and $ 0.2 million as of December 31, 2023 and December 31, 2022, respectively, included in accounts receivable in its consolidated balance sheets.

The Company previously had sales to entities related to an immediate family member of a former director who ceased being a director in May 2023.

During 2023 and 2022, the Company had $ 1.4 million and $ 2.3 million, respectively, in sales to those entities.

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

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

During 2023 and 2022, the Company incurred no expenses and $ 0.7 million of expense, respectively, for use of the aircraft under these chartering services, which was superseded by the lease referred to below.

During 2024 and 2023, the Company incurred no expenses and during 2022, the Company incurred $ 0.7 million of expense, for use of the aircraft under these chartering services, which was superseded by the lease referred to below.

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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The Company covered all operating, maintenance and other expenses associated with the aircraft.

The Original Aircraft Lease expired in accordance with its terms on March 30, 2023, and DraftKings entered into a new one-year lease of such aircraft from an entity controlled by Mr.

The Original Aircraft Lease expired in accordance with its terms on March 30, 2023, and on each of March 30, 2024 and 2023 DraftKings entered into a new one-year lease of such aircraft from an entity controlled by Mr.

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

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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 2023 and 2022, the Company incurred $ 0.6 million and $ 0.4 million of expense, respectively, under the aircraft lease.

During 2024, 2023 and 2022, the Company incurred $ 0.6 million, $ 0.6 million and $ 0.4 million of expense, respectively, under the Aircraft Lease as well as $ 0.9 million during 2024 for upgrades related to the aircraft.

Leases, Commitments and Contingencies

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Right-of-use assets obtained in exchange for new operating lease liabilities $ 4,417 $ 21,917

The weighted-average remaining lease term and weighted-average discount rate for the Company’s operating leases were 7.3 years and 6.5 % as of December 31, 2023.

The weighted-average remaining lease term and weighted-average discount rate were as follows:

December 31, 2024 December 31, 2023

Weighted-average remaining lease term (in years) 6.4 7.3

Weighted-average discount rate 6.5 % 6.5 %

The Company calculated the weighted-average discount rates 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.

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Contingencies

From time to time, and in the ordinary course of business, the Company may be subject to certain claims, charges and litigation concerning matters arising in connection with the conduct of the Company’s business activities.

Interactive Games LLC

On June 14, 2019, Interactive Games LLC filed suit against the Company in the U.S.

District Court for the District of Delaware, alleging that our Daily Fantasy Sports product offering infringes two patents and the Company’s Sportsbook product offering infringes two different patents.

The Company intends to vigorously defend this case.

In the event that a court ultimately determines that the Company is infringing the asserted patents, it may be subject to substantial damages, which may include treble damages and/or an injunction that could require the Company to modify certain features that we currently offer.

The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.

The Company also cannot provide an estimate of the possible loss or range of loss.

Any adverse outcome in these matters could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.

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 our operating results for such period.

On July 7, 2021, Winview Inc., a Delaware corporation, filed suit against the Company in the U.S.

District Court for the District of New Jersey, which was subsequently amended on July 28, 2021, alleging that our Sportsbook product offering infringes two patents, our Daily Fantasy Sports product offering infringes one patent, and that our Sportsbook product offering and Daily Fantasy Sports product offering infringe another patent.

On November 15, 2021, Winview Inc.

filed a second amended complaint (the “SAC”), adding as defendants DK Crown Holdings Inc.

(“DK DE”) and Crown Gaming Inc., a Delaware corporation, which are wholly-owned subsidiaries of the Company.

The SAC largely repeats the allegations of the first amended complaint.

The Company intends to vigorously defend this case.

The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.

The Company also cannot provide an estimate of the possible loss or range of loss.

Any adverse outcome in these matters could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.

Securities Matters Arising From the Hindenburg Report 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 concerning SBTech that were contained in a report published about the Company on June 15, 2021 by Hindenburg Research, 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.

The Company cannot predict with any degree of certainty the outcome of the SEC matter or determine the extent of any potential liabilities.

The Company also cannot provide an estimate of the possible loss or range of loss.

Any adverse outcome in the SEC matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.

Despite the potential for significant damages, the Company does not believe, based on currently available information, that the outcome of the SEC matter 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.

Matters Related to the GNOG Transaction

On August 12, 2022, a putative class action was filed in Nevada state District Court in Clark County against Golden Nugget Online Gaming, Inc.

(“GNOG Inc.”), the Company and one of its officers and two affiliates, as well as former officers or directors and the former controlling stockholder of GNOG Inc.

and Jefferies LLC.

The lawsuit asserts claims on behalf of a putative class of former minority stockholders of GNOG Inc.

alleging that certain former officers and directors of GNOG Inc.

and its former controlling stockholder (Tilman Fertitta and/or Fertitta Entertainment, Inc.) breached their fiduciary duties to minority stockholders of GNOG Inc.

in connection with the GNOG Transaction, and the other defendants aided and abetted the alleged breaches of fiduciary duty.

On September 9, 2022, two similar putative class actions were filed in the Delaware Court of Chancery against former directors of GNOG Inc.

and its former controlling stockholder, one of which also names the Company and Jefferies Financial Group, Inc.

as defendants.

These pending actions in Delaware assert substantially similar claims on behalf of a putative class of former minority stockholders of GNOG Inc.

alleging that certain former officers and directors of GNOG Inc.

and its former controlling stockholder (Tilman Fertitta) breached their fiduciary duties to minority stockholders of GNOG Inc.

in connection with the GNOG Transaction, and one of the actions also alleges that the Company aided and abetted the alleged breaches of fiduciary duty.

On October 12, 2022, the Delaware Court of Chancery consolidated these two actions under the caption In re Golden Nugget Online Gaming, Inc.

Stockholders Litigation .

At a mediation held on January 24, 2024, the parties reached an agreement in principle to settle the Delaware action, subject to negotiation and execution of mutually agreeable definitive documentation and the performance and satisfaction of terms and conditions set forth thereof.

The estimated loss was accrued as of December 31, 2023 in the accounts payable and accrued expenses line-item on the consolidated balance sheet.

The Company intends to vigorously defend the Nevada action.

The Company cannot predict with any degree of certainty the outcome of the Nevada action or determine the extent of any potential liabilities.

The Company also cannot provide an estimate of the possible loss or range of loss of the Nevada action.

Any adverse outcome in the Nevada action could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.

Despite the potential for significant damages, the Company does not believe, based on currently available information, that the outcome of the Nevada action 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.

We are involved in a number of legal proceedings (including those described below) concerning matters arising in connection with the conduct of our business activities.

These proceedings are at varying stages, and many of these proceedings seek an indeterminate amount of damages.

We regularly evaluate the status of the legal proceedings in which we are involved to assess whether a loss is probable or there is a reasonable possibility that a loss or an additional loss may have been incurred and to determine if accruals are appropriate.

If accruals are not appropriate, we further evaluate each legal proceeding to assess whether an estimate of the possible loss or range of possible loss can be made.

For certain cases described on the following pages, management is unable to provide a meaningful estimate of the possible loss or range of possible loss because, among other reasons, (i) the proceedings are in various stages;

(ii) damages have not been sought;

(iii) damages are unsupported and/or exaggerated;

(iv) there is uncertainty as to the outcome of pending appeals or motions;

(v) there are significant factual issues to be resolved;

and/or (vi) there are novel legal issues or unsettled legal theories to be presented or a large number of parties involved.

Unless otherwise indicated, for each of the matters described below, management does not believe that, despite the potential for significant damages, and based on currently available information, the outcome of any specific matter will have a material adverse effect on our financial condition, though an outcome of a specific matter could be material to our operating results for any particular period, depending, in part, upon the operating results for such period.

Attorney General of Texas

On January 19, 2016, the Texas Attorney General issued an opinion letter that “odds are favorable that a court would conclude that participation in paid daily fantasy sports leagues constitutes illegal gambling” under Texas law.

In response to the opinion letter, we sued the Texas Attorney General on March 4, 2016 in Dallas County, Texas.

The lawsuit makes five claims:

(1) a claim for a declaratory judgment that daily fantasy sports contests do not violate Texas law;

(2) a claim of denial of due process under the Fifth and Fourteenth Amendments to the U.S.

Constitution;

(3) a claim of denial of due course of law under Article I of the Texas Constitution;

(4) a claim of denial of equal protection under the Fourteenth Amendment to the U.S.

Constitution;

and (5) a claim of denial of equal rights under Article I of the Texas Constitution.

We are also seeking reimbursement of our costs and attorneys’ fees.

On April 16, 2018, the parties filed a notice of agreed non-suit without prejudice, and we re-filed our lawsuit against the Texas Attorney General in Travis County.

On April 17, 2018, the Dallas County court granted the parties’ agreed non-suit without prejudice, thereby dismissing the Dallas County lawsuit without prejudice.

FanDuel filed a petition in intervention on August 24, 2018, seeking essentially the same relief as the Company seeks.

The parties filed an agreed motion to extend the scheduling order seeking, among other things, to change the non-jury trial date to January 27, 2026.

We intend to vigorously pursue our claims.

In the event a court ultimately determines that daily fantasy sports contests violate Texas law, that determination could cause financial harm to us and loss of business in Texas.

We cannot predict with any degree of certainty the outcome of these matters or determine the extent of any potential liabilities.

On July 7, 2021, Winview Inc., a Delaware corporation (“Winview”) filed suit against the Company in the U.S.

District Court for the District of New Jersey.

In the complaint, Winview alleges that the Company infringes two patents:

9,878,243 (“the ’243 Patent”), entitled “Methodology for Equalizing Systemic Latencies in Television Reception in Connection with Games of Skill Played in Connection with Live Television Programming”, and U.S.

10,721,543 (“the ’543 Patent”), entitled “Method of and System for Managing Client Resources and Assets for Activities on Computing Devices”.

The allegations based on the ’243 Patent are directed to Sportsbook, and the allegations based on the ‘543 Patent are directed to both Sportsbook and DFS.

On July 28, 2021, Winview filed an amended complaint, in which it alleges that the Company infringes two additional patents:

9,993,730 (“the ’730 Patent”), entitled “Methodology for Equalizing Systemic Latencies in Television Reception in Connection with Games of Skill Played in Connection with Live Television Programming”, and U.S.

10,806,988 (“the ’988 Patent”), entitled “Method Of and System For Conducting Multiple Contests of Skill with a Single Performance”.

The allegations based on the ’730 Patent are directed at Sportsbook, and the allegations based on the ’988 Patent are directed at DFS.

On November 15, 2021, Winview filed a second amended complaint (the “SAC”), adding as defendants DK Crown Holdings Inc.

and Crown Gaming Inc., a Delaware corporation, which are wholly-owned subsidiaries of the Company.

The SAC, among other allegations, repeats the allegations of the first amended complaint that the defendants infringe the ’243 Patent, the ’543 Patent, the ’730 Patent, and the ’988 Patent.

On December 15, 2021, the Company filed its motion to dismiss the SAC, arguing that Winview failed to state a claim for direct infringement of the ’543 Patent and the ’730 Patent, and for willful, induced, and contributory infringement for all four asserted patents.

On August 3, 2022, we filed a petition for inter partes review with the PTAB challenging the validity of the ‘243 Patent.

On July 25, 2022, FanDuel filed petitions for inter partes review with the PTAB challenging the validity of the '543 and '730 Patents.

On September 20, 2022, the court entered an order staying the pending motion to dismiss and staying all discovery pending final resolution of the petition for inter partes review through a final written decision.

On February 15, 2023, the District Court administratively terminated the lawsuit pending the PTAB’s final written decision.

On January 29, 2024, the PTAB issued final written decisions in the IPRs, finding unpatentable all challenged claims of the ’243, ’543, and ’730 Patents.

On February 16, 2024, the parties jointly requested that the case remain administratively terminated.

On February 20, 2024, the court granted the request.

On March 29, 2024, Winview filed a notice of appeal in the United States Court of Appeals for the Federal Circuit, challenging the PTAB’s final written decisions in the IPRs.

On April 11, 2024, the parties jointly requested that the district court litigation remain administratively terminated until at least the Federal Circuit issues its mandate regarding Winview’s appeals.

On April 15, 2024, the district court ordered the case to remain administratively terminated.

On June 26, 2024, Winview and DraftKings filed a joint stipulation of voluntary dismissal of Winview’s appeal.

On June 28, 2024, the United States Court of Appeals for the Federal Circuit ordered Winview’s appeal dismissed.

On December 17, 2024, the court dismissed all of Winview’s claims with respect to U.S.

9,878,243 and 9,930,730.

On January 6, 2025, Defendants filed a motion to dismiss Winview’s direct infringement claims for U.S.

10,721,543 as well as Winview’s claim for willful, induced, and contributory infringement for the two remaining patents-in-suit.

The case remains stayed and administratively terminated pending the outcome of the motion to dismiss.

We intend to vigorously defend this case.

In the event that a court ultimately determines that we are infringing the asserted patents, we may be subject to substantial damages, which may include treble damages and/or an injunction that could require us to modify certain features that we currently offer.

We cannot predict with any degree of certainty the outcome of this matter or determine the extent of any potential liabilities.

We also cannot provide an estimate of the possible loss or range of loss.

Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.

AG 18, LLC d/b/a Arrow Gaming

1 unchanged sentence

On October 12, 2021, Arrow Gaming filed an amended complaint to add one additional patent.

On December 20, 2021, Arrow Gaming filed a second amended complaint adding new allegations with respect to alleged willful infringement.

The Company intends to vigorously defend this case.

The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.

The Company also cannot provide an estimate of the possible loss or range of loss.

Any adverse outcome in these matters could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.

On November 22, 2021, Beteiro, LLC filed a complaint against the Company in the United States District Court for the District of New Jersey alleging that the Company’s Sportsbook and Casino product offerings infringe four patents.

The Company intends to vigorously defend this case.

The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.

The Company also cannot provide an estimate of the possible loss or range of loss.

Any adverse outcome in these matters could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.

The following U.S.

Patents are asserted against one or both of the Company’s DFS and Casino product offerings in the amended complaint:

9,613,498, entitled “Systems and Methods For Peer-to-Peer Gaming”;

9,978,205, entitled “Location Based Restrictions on Networked Gaming”;

10,497,220 entitled “Location Based Restrictions on Networked Gaming”;

10,614,657 entitled “Location Based Restrictions on Networked Gaming”;

11,024,131 entitled “Location Based Restrictions on Networked Gaming” (collectively, the “Arrow Gaming Patents”).

On November 10, 2021, we answered the complaint and filed counterclaims (the “Counterclaims”).

In the Counterclaims we seek, among other things, a declaratory judgment that the Arrow Gaming Patents are invalid.

On December 1, 2021, Arrow

Gaming answered our Counterclaims.

On December 20, 2021, Arrow Gaming filed a second amended complaint adding new allegations with respect to the alleged willful infringement.

On January 21, 2022, the Company filed a motion to dismiss plaintiff’s second amended complaint.

On October 21, 2022, the Company filed a renewed motion to dismiss plaintiff’s complaint.

On November 4, 2022, the Company filed a motion to stay the case pending resolution of the below-referenced petitions for inter partes review.

Between August 22, 2022 and August 30, 2022, the Company filed petitions for inter partes review (“IPRs”) with the PTAB challenging the validity of each of the Arrow Gaming Patents.

On March 14, 2023, the PTAB granted institution of all IPRs.

On March 12 and 13, 2024, the PTAB issued final written decisions in all pending IPRs finding all claims that were asserted in the litigation unpatentable.

Only two claims were not found unpatentable:

claim 18 of the ’205 Patent and claim 11 of the ’657 Patent.

Neither of these claims were asserted in the litigation brought by Arrow Gaming.

On May 14, 2024, Arrow Gaming filed a Notice of Appeal of the IPR directed to the ’498 Patent.

That appeal remains pending.

On July 10, 2024, DraftKings filed a Notice of Appeal of the IPR directed to the ’205 Patent challenging the PTAB’s final written decision as to claim 18 of the ’205 Patent.

That appeal remains pending.

On April 3, 2023, the District Court administratively terminated the lawsuit pending the PTAB’s final written decisions.

The parties have agreed to maintain the stay pending any appeals of the PTAB’s final written decisions in the IPRs.

We intend to vigorously defend this case.

We cannot predict with any degree of certainty the outcome of this matter or determine the extent of any potential liabilities.

We also cannot provide an estimate of the possible loss or range of loss.

Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.

Diogenes Ltd.

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& Colossus (IOM) Ltd.

(“Colossus”), filed a complaint against the Company in the United States District Court for the District of Delaware alleging that the Company’s Sportsbook product offering infringes seven patents.

Colossus amended its complaint on February 7, 2022 to, among other things, add one additional patent.

The Company intends to vigorously defend this case.

The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.

The Company also cannot provide an estimate of the possible loss or range of loss.

Any adverse outcome in these matters could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.

The following U.S.

Patents, each entitled “Wagering apparatus, methods and systems”, are asserted against the Company’s Sportsbook product offering in the complaint:

8,721,439 (“the ’439 patent”);

9,117,341 (“the ’341 patent”);

9,275,516 (“the ’516 patent”);

9,424,716 (“the ’716 patent”);

9,704,338 (“the ’338 patent”);

10,970,969 (“the ’969 patent”);

10,997,822 (“the ’822 patent”).

On January 24, 2022, the Company filed its motion to dismiss the original complaint.

On February 7, 2022, Colossus filed an amended complaint (the “Amended Complaint”) to, among other things, assert one additional patent against the Company, U.S.

11,200,779 (“the ’779 patent”).

The patents asserted by Colossus are collectively referred to as the “Colossus Patents.”

The Company filed its motion to dismiss the Amended Complaint on February 22, 2022.

On July 18, 2022, Magistrate Judge Burke issued a report and recommendation (the “Report and Recommendation”) that the motion to dismiss be granted-in-part and denied-in-part.

On August 26, 2022, District Court Judge Noreika adopted the Report and Recommendation of Magistrate Judge Burke regarding the motion to dismiss.

On December 27, 2022, the Company filed an Answer to the Amended Complaint, including certain affirmative defenses.

On January 17, 2023, Colossus filed a motion to strike the affirmative defense of unenforceability from the Company’s Answer.

On February 7, 2023, the Company filed an Amended Answer and Counterclaims to the Amended Complaint., and also filed a response to Colossus’ motion to strike.

On February 28, 2023, Colossus filed another motion to strike DraftKings’ inequitable conduct affirmative defense and counterclaim.

Magistrate Judge Burke held a hearing on Colossus’ motion on June 6, 2023 and subsequently issued a report and recommendation (the “Second Report and Recommendation”) that the motion be denied in part and granted in part.

On August 2, 2023, Judge Noreika overruled Colossus’ objections and adopted the Second Report and Recommendation.

Between November 29, 2022, and February 7, 2023, the Company filed petitions for inter partes review with the PTAB challenging the validity of the Colossus Patents.

The PTAB granted institution of IPRs for each of the ’341 patent, ’969 patent, and the ’822 patent.

The PTAB denied institution of IPR for each of the ’516 patent, ’716 patent, ’338 patent and the ’779 patent.

On September 11, 2023, the Company filed a request for Director Review of the PTAB’s decision not to institute review in the IPR for the ’779 patent.

On November 7, 2023, the Director of the U.S.

Patent and Trademark Office delegated Director Review of the PTAB’s institution decision in the IPR for the ’779 Patent to the Delegated Review Panel (“DRP”) to determine whether to grant rehearing.

On February 21, 2024, the DRP issued a decision vacating the PTAB’s denial of institution of the IPR directed to the ’779 Patent and instructing the PTAB to reconsider institution.

On May 15, 2024, the PTAB instituted the IPR directed to the ‘779 Patent.

Colossus filed its Patent Owner Response on August 9, 2024.

The Company filed its reply on November 8, 2024.

Colossus’ filed its sur-reply on December 20, 2024.

Oral argument is schedule for February 20, 2025.

On March 15, 2024, the parties entered into a partial settlement agreement, in which the parties agreed to, among other things:

(1) dismissal with prejudice of the claims relating to the ’439 patent;

and the ’822 patent;

and (2) DraftKings’ withdrawal of its IPRs with respect to the ’341 Patent, the ’969 Patent, and the ’822 Patent.

The dismissal and withdrawal both occurred on March 18, 2024.

Only the ‘779 Patent remains pending in the district court litigation.

The parties have stipulated to a stay of the district court litigation pending resolution of the IPR directed to the ‘779 Patent.

We intend to vigorously defend this case.

We cannot predict with any degree of certainty the outcome of this matter or determine the extent of any potential liabilities.

We also cannot provide an estimate of the possible loss or range of loss.

Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.

Nelson Steiner filed suit against the Company and FanDuel Inc.

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The Company intends to vigorously defend this suit.

Any adverse outcome in this matter could be subject the Company to substantial damages and it could be restricted from offering DFS contests in Florida.

Any adverse outcome in this matter could subject the Company to substantial damages and it could be restricted from offering DFS contests in Florida.

The Company cannot provide any assurance as to the outcome of this matter.

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Any adverse outcome in these matters could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.

Despite the potential for significant damages, the Company does not believe, based on currently available information, that the outcome of this matter will have a material adverse effect on 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.

On January 9, 2023, Simpson G.

Turley, individually and on behalf of all others similarly situated, filed a purported class action against the Company in the United States District Court for the District of Massachusetts.

Plaintiff alleges, among other things, that he was a contestant in the Company’s daily fantasy showdown contest for the January 2, 2023, NFL game between the Cincinnati Bengals and the Buffalo Bills (the “Bengals-Bills Game”).

The Bengals-Bills Game was postponed and

eventually cancelled due to Damar Hamlin collapsing during the game.

Plaintiff alleges that he was winning prizes in multiple showdown contests at the point in time that the Bengals-Bills Game was cancelled (with 5:58 remaining in the first quarter).

Plaintiff alleges that, instead of paying out the prize money, the Company refunded entry fees to contestants that entered showdown or flash draft fantasy contests.

On May 8, 2023, plaintiff Turley and a new plaintiff (Erik Ramos) filed a First Amended Class Action Complaint.

The plaintiffs assert claims for breach of contract, unfair and deceptive acts and practices, false advertising, and unjust enrichment.

Among other things, plaintiffs seek statutory damages, monetary damages, punitive damages, attorney fees and interest.

The Company intends to vigorously defend this case.

Any adverse outcome in this matter could subject the Company to substantial damages and/or require alterations to the Company’s business.

The Company cannot provide any assurance as to the outcome of this matter.

The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.

The Company also cannot provide an estimate of the possible loss or range of loss.

Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.

Securities Matters Related to DraftKings Marketplace

On March 9, 2023, a putative class action was filed in Massachusetts federal court by alleged purchasers of non-fungible tokens (“NFTs”) on the DraftKings Marketplace (“DK Marketplace”).

The complaint asserts claims for violations of federal and state securities laws against the Company and three of its officers on the grounds that, among other things, the NFTs that are sold and traded on the DK Marketplace allegedly constitute securities that were not registered with the SEC in accordance with federal and Massachusetts law, and that the DK Marketplace is a securities exchange that is not registered in accordance with federal and Massachusetts law.

Based on these allegations, plaintiff brings claims seeking rescissory damages and other relief on behalf of himself and a putative class of persons who purchased NFTs on the DK Marketplace between August 11, 2021 and the present.

The Company intends to vigorously defend this matter.

On July 17, 2023, the Company received a subpoena from the Securities Division of the Office of the Secretary of the Commonwealth of Massachusetts seeking documents and requesting answers to interrogatories concerning, among other things, DK Marketplace and NFTs that are sold on DK Marketplace, and related matters.

Securities Matters Arising From Marketplace and Related Matters

On March 9, 2023, a putative class action was filed in Massachusetts federal court by an alleged purchaser of non-fungible tokens (“NFTs”) on the Marketplace.

The complaint asserts claims for violations of federal and state securities laws against the Company and three of its officers on the grounds that, among other things, the NFTs that are sold and traded on Marketplace allegedly constitute securities that were not registered with the SEC in accordance with federal and Massachusetts law, and that Marketplace is a securities exchange that is not registered in accordance with federal and Massachusetts law.

Based on these allegations, the plaintiff brings claims seeking rescissory damages and other relief on behalf of himself and a putative class of persons who purchased NFTs on Marketplace between August 11, 2021 and the present.

On September 25, 2023, defendants

filed a motion seeking dismissal of this action.

On July 2, 2024, the district court denied the motion to dismiss.

We intend to vigorously defend this case.

Beginning in July 2023, the Company received subpoenas from the Securities Division of the Office of the Secretary of the Commonwealth of Massachusetts seeking information concerning, among other things, Marketplace and NFTs that were sold on Marketplace, and related matters, and from the United States Securities and Exchange Commission seeking documents concerning, among other things, the blockchain on which NFTs that were sold on Marketplace were minted and digital assets and validator nodes associated with that blockchain, and related matters.

We intend to comply with these requests.

The Company cannot predict with any degree of certainty the outcome of these matters or determine the extent of any potential liability or damages.

Any adverse outcome in the subpoena matters could subject the Company to substantial damages and/or require alterations to the Company’s business.

The Company cannot provide any assurance as to the outcome of the subpoena matters.

The Company cannot predict with any degree of certainty the outcome of the subpoena matters or determine the extent of any potential liability or damages.

The Company also cannot provide an estimate of the possible loss or range of loss.

Any adverse outcome in these matters could expose the Company to substantial damages, penalties and/or require alterations to the Company’s business that may have a material adverse impact on the Company’s operations and cash flows.

Despite the potential for significant damages, the Company does not believe, based on currently available information, that the outcome of these matters will have a material adverse effect on 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.

Shareholder Derivative Litigation Related to DraftKings Marketplace

On May 31, 2023, a putative shareholder derivative action was filed in Nevada state court by an alleged shareholder of the Company.

The action asserts claims on behalf of the Company against certain senior officers and members of the Board of Directors of the Company for breach of fiduciary duty and unjust enrichment based primarily on allegations that the defendants caused or allowed the Company to disseminate misleading and inaccurate information to its shareholders in connection with NFTs that are sold and traded on the DK Marketplace.

The action also alleges that certain individuals are liable for trading in Company stock at artificially inflated prices.

The action seeks unspecified compensatory damages, changes to corporate governance and internal procedures, restitution, disgorgement, costs and attorney’s fees, and other unspecified relief.

Any adverse outcome in the subpoena matters could expose the Company to substantial damages, penalties and/or require alterations to the Company that may have a material adverse impact on the Company’s operations and cash flows.

Shareholder Derivative Litigation Related to Marketplace

On May 31, 2023, the first of three substantially similar, putative shareholder derivative actions was filed in Nevada state court by an alleged shareholder of the Company.

On October 29, 2024, the court entered a stipulated order consolidating the three actions under the caption In re DraftKings Inc.

Stockholder Derivative Litigation and appointed lead counsel.

On December 23, 2024, the plaintiffs filed a consolidated amended complaint.

The complaint purports to assert claims on behalf of the Company against certain senior officers and members of the Board of Directors of the Company for breach of fiduciary duty, aiding-and-abetting breach of fiduciary duty, unjust enrichment, and corporate waste based primarily on allegations that the defendants caused or allowed the Company to sell NFTs in violation of applicable law and/or operate the Company as an unregistered broker-dealer or securities exchange in violation of applicable law.

The complaint also alleges that certain individuals are liable for trading in Company stock at artificially inflated prices.

The actions seek unspecified compensatory damages, changes to corporate governance and internal procedures, restitution, disgorgement, costs and attorney’s fees, and other unspecified relief.

The defendants have not yet answered or otherwise responded to the complaint.

The Company cannot predict with any degree of certainty the outcome of this matter or determine the extent of any potential liabilities.

The Company also cannot provide an estimate of the possible loss or range of loss.

Because this action

alleges claims on behalf of the Company and purports to seek a judgment in favor of the Company, the Company does not believe, based on currently available information, that the outcome of the proceedings 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.

On December 8, 2023, plaintiffs Melissa Scanlon and Shane Harris, individually and on behalf of others similarly situated, filed a purported Massachusetts class action lawsuit against DraftKings in Middlesex County Superior Court of Massachusetts.

Because this action alleges claims on behalf of the Company and purports to seek a judgment in favor of the Company, the Company does not believe, based on currently available information, that the outcome of the proceedings 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.

On December 8, 2023, plaintiffs Melissa Scanlon and Shane Harris, individually and on behalf of others similarly situated, filed a purported class action lawsuit against DraftKings in Middlesex County Superior Court of Massachusetts.

Among other things, Plaintiffs allege that the Company’s promotion that offered new customers an opportunity to earn up to 1,000 in site credits, and related advertisements, were:

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The Plaintiffs are seeking, among other things, injunctive relief, actual damages, double or treble damages, and attorneys’ fees.

On March 26, 2024, the case was transferred to the Business Litigation Session (“BLS”) of the Massachusetts Superior Court.

On January 29, 2024, DraftKings served its Motion to Dismiss all of Plaintiffs’ claims.

On August 19, 2024, the court denied the motion to dismiss.

The Company intends to vigorously defend this case.

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The Company also cannot provide an estimate of the possible loss or range of loss.

Any adverse outcome

in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.

On June 10, 2024, Plaintiff Matthew McAfee, individually and on behalf of all others similarly situated, filed a purported class action lawsuit against DraftKings in the Hamilton County Superior Court, State of Indiana.

Among other things, Plaintiff alleges that those customers who had winning bets placed and accepted on the October 24, 2023 Lakers versus Nuggets basketball game that were subsequently canceled by DraftKings for obvious error were not timely canceled and should have been paid.

Plaintiff brings claims for:

(1) Indiana Deceptive Consumer Sales Act – Incurable Deceptive Act;

(2) Indiana Deceptive Consumer Sales Act – Uncured Deceptive Act;

and (3) breach of contract.

Plaintiff seeks, among other things, actual and statutory damages, treble and exemplary damages, interest, and attorney fees and costs.

On July 12, 2024, DraftKings removed the matter to the United States District Court for the Southern District of Indiana.

On August 14, 2024, DraftKings filed a motion to dismiss.

On February 7, 2025, the court granted DraftKings’ motion to dismiss as to plaintiff’s DCSA claims and denied DraftKings’ motion to dismiss as to plaintiff’s breach of contract claim.

The court also held that DraftKings may amend its response to Plaintiff’s motion for class certification up until February 24, 2025.

On February 12, 2025, McAfee filed a motion for leave to file a first amended complaint.

On November 20, 2024, Plaintiff filed a motion for class certification.

On December 16, 2024, DraftKings filed its opposition, and on December 24, 2024, Plaintiff filed his reply.

The class certification motion remains pending.

The Company intends to vigorously defend this case.

Any adverse outcome in this matter could subject the Company to substantial damages and/or require alterations to the Company’s business.

The Company cannot provide any assurance as to the outcome of this matter.

The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.

The Company also cannot provide an estimate of the possible loss or range of loss.

Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.

On September 30, 2024, plaintiff Nerye Aminov, individually and on behalf of others similarly situated, filed a purported class action lawsuit against DraftKings in the Supreme Court of the State of New York, County of Queens.

Among other things, Plaintiff alleges that the Company’s promotion that offered new customers an opportunity to earn up to 1,000 in site credits, and related advertisements were unfair or deceptive practices in violation of New York General Business Law §§ 349-350.Plaintiff also asserts claims for intentional misrepresentation, fraudulent inducement, and quasi-contract/unjust enrichment.

Plaintiff seeks, among other things, injunctive relief, actual damages, punitive damages, and attorneys’ fees.

Plaintiff seeks to certify a nationwide class, with a New York subclass.

On December 11, 2024, DraftKings removed this matter to the United States District Court for the Eastern District of New York.

DraftKings filed its motion to dismiss on February 3, 2025.

That motion remains pending.

The Company intends to vigorously defend this case.

Any adverse outcome in this matter could subject the Company to substantial damages and/or require alterations to the Company’s business.

The Company cannot provide any assurance as to the outcome of this matter.

The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.

The Company also cannot provide an estimate of the possible loss or range of loss.

Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.

National Football League Players Association

On August 20, 2024, the plaintiffs, National Football League Players Association and National Football League Players Incorporated, filed a complaint against DraftKings in the United States District Court for the Southern District of New York alleging, among other things, that DraftKings breached its Licensing Agreement (the “Agreement”) with the plaintiffs.

The plaintiffs are seeking, among other things, payment of all purported unpaid sums due under the Agreement On November 25,

2024, DraftKings filed its partial motion to dismiss the complaint;

on December 16, 2024, NFLPA filed its opposition;

and on January 3, 2025, DraftKings filed its reply.

On January 27, 2025, the parties filed a joint motion to stay the action until March 28, 2025 on the basis that the parties had reached a non-binding settlement in principle, subject to the mutual execution of a definitive settlement agreement.

On January 28, 2025, the court ordered a dismissal of the action without prejudice to the right to reopen the action within thirty days of the date of the order if the settlement is not consummated.

We have established an accrual for this matter as of December 31, 2024.

On December 13, 2024, Plaintiff Jeffrey Wan, individually and on behalf of all others similarly situated, filed a purported class action complaint against the Company in the United States District Court for the Southern District of New York.

Plaintiff alleges, among other things, that the Company violated the Video Privacy Protection Act (“VPPA”) through the use of pixels and other tracking technologies on the Company’s website and mobile application in connection with the Company’s online casino games.

Plaintiff seeks, among other things, compensatory, punitive and statutory damages, and declaratory relief.

DraftKings response to the complaint is due on February 21, 2025.

The Company intends to vigorously defend this case.

Any adverse outcome in this matter could subject the Company to substantial damages and/or require alterations to the Company’s business.

The Company cannot provide any assurance as to the outcome of this matter.

The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.

The Company also cannot provide an estimate of the possible loss or range of loss.

Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.

On December 23, 2024, Plaintiff Eric Avila, individually and on behalf of all others similarly situated, filed a purported class action complaint against DraftKings Inc.

and DK Player Reserve LLC in the United States District Court, District of Massachusetts.

Plaintiff alleges that DraftKings has interfered or prevented customers from withdrawing balances from closed accounts.

Plaintiff asserts claims for breach of contract, violation of Texas Deceptive Trade Practices Act, fraud, unjust enrichment, and conversion.

Plaintiff seeks, on behalf of himself and the purported class, damages, punitive damages and attorney fees.

Plaintiff seeks a nationwide class of (i) all persons whose DraftKings’ accounts were terminated by DraftKings and who were denied access to their account balances by DraftKings;

and (ii) a Texas subclass of all persons in Texas whose DraftKings accounts were terminated by DraftKings and who were denied access to their account balances by DraftKings.

DraftKings’ response to the complaint is currently due on April 1, 2025.

The Company intends to vigorously defend this case.

Any adverse outcome in this matter could subject the Company to substantial damages and/or require alterations to the Company’s business.

The Company cannot provide any assurance as to the outcome of this matter.

The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.

The Company also cannot provide an estimate of the possible loss or range of loss.

Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.

On January 7, 2025, Plaintiff Matthew Youngs, individually and on behalf of all others similarly situated, filed a purported class action complaint against DraftKings Inc., Crown NJ Gaming Inc.

dba DraftKings, DGMB Casino LLC and Resorts Atlantic City in the United States District Court, District of New Jersey.

Among other things, Plaintiff alleges that the Company’s “risk-free” and “no sweat” promotions, and the promotion that offered new customers an opportunity to earn up to 1,000 site credits as a sportsbook deposit match, as well as promotions that offered site credits in connection with a casino deposit match, were unfair, unconscionable, and misleading.

Plaintiff asserts claims for violation of the New Jersey Consumer Fraud Act, intentional misrepresentation, negligence, unjust enrichment, and conversion.

Plaintiff seeks compensatory damages, punitive damages, attorney fees and costs.

Plaintiff seeks to certify a nationwide class of anyone who participated in the casino deposit match promotion and lost part of all of their initial deposit (with subclasses for New Jersey, Connecticut, Pennsylvania,

Michigan, and West Virginia).

Plaintiff also seeks a statewide class of (i) anyone in New Jersey who allegedly opted into the “risk free” or “no sweat” promotion and lost a bet;

and (ii) anyone in New Jersey who opened an account and deposited money while in New Jersey in response to the 1,000 new customer sportsbook deposit match promotion.

DraftKings’ response to the Complaint is due on March 27, 2025.

The Company intends to vigorously defend this case.

Any adverse outcome in this matter could subject the Company to substantial damages and/or require alterations to the Company’s business.

The Company cannot provide any assurance as to the outcome of this matter.

The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.

The Company also cannot provide an estimate of the possible loss or range of loss.

Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.

James Beyer and Wyatt Robertson

On January 7, 2025, Plaintiffs James Beyer and Wyatt Robertson, individually and on behalf of all others similarly situated, filed a purported class action complaint against DraftKings Inc.

and Crown KY Gaming LLC in the United States District Court, Western District of Kentucky.

Among other things, Plaintiffs allege that the Company’s “risk-free” and “no sweat” promotions, and the promotion that offered new customers an opportunity to earn up to 1,000 site credits as a deposit match, were unfair and misleading.

Plaintiffs also allege that DraftKings targets underage users with its advertising and by allowing them to participate in daily fantasy sports contests in order to inculcate gaming habits.

Plaintiffs bring claims for violation of the Kentucky Consumer Protection Act, intentional misrepresentation, fraudulent inducement, unjust enrichment, and declaratory relief.

Plaintiffs seek, among other things, compensatory damages, punitive damages, attorney fees and costs.

Plaintiffs seek to certify a nationwide class of (i) anyone who opted into a DraftKings promotion advertising a “risk-free” or “no sweat” bet and lost their bet (with a Kentucky subclass);

(ii) anyone who opened an account and deposited money in response to the new customer 1,000 site credit promotion (with a Kentucky subclass);

and (iii) anyone who opened an account and entered free promotions on DraftKings’ platform before reaching their legal gaming age and then placed paid bets on DraftKings after reaching the legal gaming age (with a Kentucky subclass).

Plaintiffs also seek a declaration that DraftKings has breached agreements with Apple and Google relating to their respective app stores.

DraftKings’ response to the Complaint is due on March 31, 2025.

The Company intends to vigorously defend this case.

Any adverse outcome in this matter could subject the Company to substantial damages and/or require alterations to the Company’s business.

The Company cannot provide any assurance as to the outcome of this matter.

The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.

The Company also cannot provide an estimate of the possible loss or range of loss.

Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.

James Beyer, Collin Smothers, Mateen Zafer and Corey Davis

On January 8, 2025, Plaintiffs James Beyer, Collin Smothers, Mateen Zafer and Corey Davis, individually and on behalf of all others similarly situated, filed a purported class action complaint against DraftKings Inc., Crown IL Gaming LLC dba DraftKings, Northside Crown Gaming LLC, and Casino Queen Inc.

in the Circuit Court of Cook County, Illinois Law Division.

Plaintiffs also allege that DraftKings targets underage users with its advertising and by allowing them to participate in daily fantasy sports contests in order to inculcate gaming habits.

Plaintiffs bring claims for violation of the Illinois Consumer Fraud and Deceptive Practices Act, intentional misrepresentation, fraudulent inducement, unjust enrichment, civil conspiracy, and declaratory relief.

Plaintiffs seek, among other things, unspecified compensatory damages, punitive damages, attorney fees and costs.

Plaintiffs seek to certify a nationwide class of (i) anyone who opted into a DraftKings promotion advertising a “risk-free” or “no sweat” bet and lost their bet (with an Illinois subclass);

(ii) anyone who opened an account and deposited money in response to the new customer 1,000 site credit promotion (with an Illinois subclass);

and (iii) anyone who opened an account and entered free promotions on DraftKings’ platform before turning twenty-one years old and then placed paid bets on DraftKings after turning twenty-one years old (with an Illinois subclass).

On February 7, 2025, DraftKings removed the complaint to the United States District Court, Northern District of Illinois, Eastern Division.

DraftKings response to the complaint is due on April 4, 2025.

The Company intends to vigorously defend this case.

Any adverse outcome in this matter could subject the Company to substantial damages and/or require alterations to the Company’s business.

The Company cannot provide any assurance as to the outcome of this matter.

The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.

The Company also cannot provide an estimate of the possible loss or range of loss.

Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.

Clara De Leon and Eric Mirsberger Jr.

On January 22, 2025, Plaintiffs Clara De Leon and Eric Mirsberger Jr., individually and on behalf of all others similarly situated, filed a purported class action complaint against DraftKings Inc.

and Crown NY Gaming Inc.

in the United States District Court, Southern District of New York.

Plaintiffs also allege that DraftKings targets players with gaming addiction issues, including by pairing players who bet large amounts of money with VIP hosts who, Plaintiffs allege, are trained to encourage customers to place frequent and large bets.

Plaintiffs brings claims for violation of the New York General Business Law sections 349 and 350, negligence, intentional misrepresentation, fraudulent inducement, unjust enrichment, and declaratory relief.

Plaintiffs seek, among other things, unspecified compensatory damages, punitive damages, attorney fees and costs.

Plaintiffs seek a nationwide class of (i) anyone who allegedly opted into the “risk free” or “no sweat” promotion and lost a bet (with a New York subclass);

(ii) anyone who allegedly opened an account and deposited money in response to the new customer 1,000 site credit promotion (with a New York subclass);

and (iii) anyone who was allegedly enticed by DraftKings’ VIP hosts to bet beyond their means (with a New York subclass).

Plaintiffs also seek a declaration that DraftKings has breached agreements with Apple and Google relating to their respective app stores.

The action has not yet been served on DraftKings.

The Company intends to vigorously defend this case.

Any adverse outcome in this matter could subject the Company to substantial damages and/or require alterations to the Company’s business.

The Company cannot provide any assurance as to the outcome of this matter.

The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.

The Company also cannot provide an estimate of the possible loss or range of loss.

Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.

On February 10, 2025, Winview IP Holdings, LLC (“Winview IP”) filed suit against DraftKings Inc., a Nevada corporation, DK Crown Holdings Inc., Crown Gaming Inc., SBTech US Inc., and SBTech (Global) Ltd.

District Court for the District of New Jersey.

In the complaint, Winview IP alleges that the Defendants infringe nine patents:

11,185,770 (“the ’770 Patent”), entitled “Methodology for equalizing systemic latencies in television reception in connection with games of skill played in connection with live television programming,” U.S.

11,235,237 (“the ’237 Patent”), entitled “Methodology for equalizing systemic latencies in television reception in connection with games of skill played in connection with live television programming,” U.S.

11,338,189 (“the ’189 Patent”), entitled “Method of and system for conducting multiple contests of skill with a single performance,” U.S.

11,451,883 (“the ’883 Patent”), entitled “Method of and system for managing client resources and assets for activities on computing devices,” U.S.

11,678,020 (“the ’020 Patent”), entitled “Methodology for equalizing systemic latencies in television reception in connection with games of skill played in connection with live television programming,” U.S.

11,736,771 (“the ’771 Patent”), entitled “Methodology for equalizing systemic latencies in television reception in connection with games of skill played in connection with live television programming,” U.S.

11,918,880 (“the ’880 Patent”), entitled “Method of and system for conducting multiple contests of skill with a single performance,” U.S.

11,951,402 (“the ’402 Patent”), entitled “Method of and system for conducting multiple contests of skill with a single performance,” and U.S.

12,005,349 (“the ’349 Patent”), entitled “Synchronized gaming and programming.” The allegations based on:

the ’770 Patent are directed to DK Sportsbook, DK Casino, and DK Horse;

the ’237 Patent are directed to DK Sportsbook and DK Horse;

the ’189 Patent are directed to DFS and Pick6;

the ’883 Patent are directed to DK Sportsbook, DK Horse, DK Casino, DFS, and Pick6;

the ’020 Patent are directed to DK Sportsbook, DK Horse, and DK Casino;

the ’771 Patent are directed to DK Sportsbook, DK Horse, and DK Casino;

the ’880 Patent are directed to DFS and Pick6;

the ’402 Patent are directed to DFS and Pick6;

and the ’349 Patent are directed to DK Sportsbook, DK Horse, and DK Casino.

We intend to vigorously defend this case.

We cannot predict with any degree of certainty the outcome of this matter or determine the extent of any potential liabilities.

We also cannot provide an estimate of the possible loss or range of loss.

Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.

Other Litigation

In addition to the above actions, we are subject to various other legal proceedings and claims that arise in the ordinary course of business.

In our opinion, the amount of ultimate liability with respect to any of these actions is unlikely to materially affect our financial condition, results of operations or liquidity, though the outcomes could be material to our operating results for any particular period, depending, in part, upon the operating results for such period.

Internal Revenue Service

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The final resolution of that audit, and other audits or litigation, may differ from the amounts recorded in these consolidated financial statements and may materially affect the Company’s consolidated financial statements in the period or periods in which that determination is made.

Subsequent Events

Pending Acquisition of Jackpocket Inc.

(“Jackpocket”)

On February 11, 2024, the Company entered into a definitive agreement (the “Merger Agreement”) to acquire Jackpocket for total consideration of $ 750 million, with approximately 55 percent of the consideration payable in cash funded from the Company’s existing cash and cash equivalents balance, and approximately 45 percent of the consideration payable in the Company’s Class A common stock, subject to customary purchase price adjustments and the collar mechanism described below (the “Jackpocket Transaction”).

Under the terms of the Merger Agreement and subject to the terms and conditions set forth therein, the stock consideration will be subject to a collar pursuant to which a variable number of shares of DraftKings’ Class A common stock will be issued to Jackpocket stockholders in order to deliver a value of $ 337.5 million, so long as the 30 -trading-day volume weighted average price of DraftKings’ Class A common stock as of the second trading day immediately preceding the closing of the Jackpocket Transaction (the “Closing Stock Price”) remains between $ 31.68 and $ 42.86 .

In the event that DraftKings’ Closing Stock Price is above $ 42.86 or below $ 31.68 , Jackpocket stockholders will receive a fixed number of approximately 7,874,806 shares and 10,654,149 shares, respectively, of DraftKings’ Class A common stock, subject to adjustment in certain limited circumstances to the minimum extent necessary to maintain a tax-free transaction.

The consummation of the Jackpocket Transaction is subject to the receipt of required regulatory approvals and other customary closing conditions.

Exhibit Index

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Agreement and Plan of Merger and Plan of Reorganization, dated as of February 11, 2024, by and among DraftKings Inc., DraftKings Holdings Inc., Fortune Merger Sub Inc., Fortune Merger Sub LLC, JackPocket, Inc.

and Shareholder Representative Services LLC (incorporated by refere nce to Exhibit 2.1 of the Company ’ s Current Report on Form 8-K , filed with the SEC on February 1 5, 2024) .

and Shareholder Representative Services LLC (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K, filed with the SEC on February 15, 2024) .

Amended and Restated Articles of Incorporation of DraftKings Inc.

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(incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K, filed with the SEC on May 5, 2022).

Specimen Class A Common Stock Certificate of DraftKings.

Specimen Class A Common Stock Certificate of DraftKings (incorporated by reference to Exhibit 4.1 of the Company’s Annual Report on Form 10-K, filed with the SEC on February 16, 2024).

Form of Warrant Certificate of DraftKings Inc.

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First Supplemental Indenture, dated as of May 5, 2022, between DraftKings Inc., Old DraftKings and Computershare Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.6 of the Company's Current Report on Form 8-K, filed with the SEC on May 5, 2022).

Description of DraftKings Inc.

' s Capital Stock (incorporated by reference to DraftKings Inc .

' s Registration Statement on Form S-4 (Reg.

333-260174), filed with the SEC on December 9, 2021).

Assignment and Assumption Agreement, dated May 5, 2022, by and among DraftKings Inc .

, GNOG, Continental and Computershare (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K, filed with the SEC on May 5, 2022).

Assignment and Assumption Agreement, dated May 5, 2022, by and among DraftKings Inc.

, Old DraftKings and Computershare (incorporated by reference to Exhibit 4.5 of the Company’s Current Report on Form 8-K, filed with the SEC on May 5, 2022).

Description of DraftKings Inc.'s Capital Stock .

Assignment and Assumption Agreement, dated May 5, 2022, by and among DraftKings Inc., GNOG, Continental and Computershare (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K, filed with the SEC on May 5, 2022).

Assignment and Assumption Agreement, dated May 5, 2022, by and among DraftKings Inc., Old DraftKings and Computershare (incorporated by reference to Exhibit 4.5 of the Company’s Current Report on Form 8-K, filed with the SEC on May 5, 2022).

Warrant Agreement, dated as of May 6, 2019, by and between Landcadia Holdings II, Inc.

and Continental Stock Transfer & Trust Company (incorporated by reference to Exhibit 4.1 of Golden Nugget Online Gaming, Inc.’s Current Report on Form 8-K, filed with the SEC on May 9, 2019).

DraftKings Inc.

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and Jason Robins (incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K, filed with the SEC on April 29, 2020).

DraftKings Inc.

Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K, filed with the SEC on April 29, 2020).

Amended and Restated DraftKings Inc.

Employee Stock Purchase Plan, Effective October 25, 2024.

Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on May 5, 2022).

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Fertitta, Fertitta Entertainment, Inc., Landry’s Fertitta, LLC, Golden Landry’s LLC, Golden Fertitta, LLC and New Duke Holdco, Inc., dated as of August 8, 2021 (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K, filed with the SEC on August 10, 2021).

Executive Employment Agreement, dated as of March 17, 2024, by and between DraftKings Inc.

and Alan Ellingson (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on March 18, 2024).

Letter Agreement, dated as of July 31, 2024, by and between DraftKings Inc.

and Jason Park (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q, filed with the SEC on August 2, 2024).

Letter Agreement, dated as of February 11, 2025, by and between DraftKings Inc.

and Jason Robins

Letter Agreement, dated as of February 11, 2025, by and between DraftKings Inc.

and Matthew Kalish

Letter Agreement, dated as of February 11, 2025, by and between DraftKings Inc.

and Paul Liberman

Credit Agreement, dated as of November 7, 2024, among DraftKings Inc., as Parent and a Borrower, DK Crown Holdings Inc., Golden Nugget Online Gaming, Inc., Jackpocket LLC, as Borrowers, the Lenders and Issuing Banks party thereto and Morgan Stanley Senior Funding, Inc.

as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on November 8, 2024).

Code of Business Ethics of the Company, dated April 23, 2020 (incorporated by reference to Exhibit 14.1 of the Company's Amended Annual Report on Form 10-K/A, filed with the SEC on May 3, 2021).

DraftKings Inc.

Insider Trading Policy.

List of Subsidiaries.

Consent of BDO USA, P.C.

, independent registered public accounting firm.

Consent of BDO USA, P.C., independent registered public accounting firm.

Certification of Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934.

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Executive Compensation Clawback Policy, dated as of December 1, 2023

Loan and Security Agreement, dated as of December 20, 2022, by and among DraftKings Inc., as borrower, the guarantors listed therein, the lenders listed therein, Pacific Western Bank, as administrative agent, collateral agent and payment agent, Citizens Bank, N.A., as syndication agent, and Pacific Western Bank and Citizens Bank, N.A., as joint bookrunners and joint lead arrangers (incorporated by reference to Exhibit 99.1 of the Company’s Annual Report on Form 10-K, filed with the SEC on February 17, 202 3 ) .

Executive Compensation Clawback Policy, dated as of December 1, 2023 (incorporated by reference to Exhibit 97.1 of the Company’s Annual Report on Form 10-K, filed with the SEC on February 16, 2024).

101.INS* XBRL Instance Document

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Each person whose individual signature appears below hereby authorizes and appoints Jason D.

Stanton Dodge, and Jason K.

Park, and each of them, with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this annual report on Form 10-K and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his or her substitute or substitutes may lawfully do or cause to be done by virtue thereof.

Stanton Dodge, and Alan W.

Ellingson, and each of them, with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this annual report on Form 10-K and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his or her substitute or substitutes may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

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Robins (Principal Executive Officer)

Park Chief Financial Officer February 16, 2024

Park (Principal Financial and Accounting Officer)

Ellingson Chief Financial Officer February 14, 2025

Ellingson (Principal Financial Officer)

/s/ Erik Bradbury Chief Accounting Officer February 14, 2025

Erik Bradbury (Principal Accounting Officer)

/s/ Harry Evans Sloan Vice Chairman February 14, 2025

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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-K

Item 9A. Controls and Procedures