0001104659-21-029400 | POS AM | XBRL Viewer

Document and Entity Information	12 Months Ended
Document and Entity Information	Dec. 31, 2020
Cover
Document Type	POS AM
Entity Registrant Name	DraftKings Inc.
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Central Index Key	0001772757
Amendment Flag	true
Amendment Description	AMENDMENT NO. 1

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 1,817,258	$ 76,533
Cash reserved for users	287,718	144,000
Receivables reserved for users	30,249	19,828
Accounts receivable	44,522	10,016
Prepaid expenses and other current assets	14,558	10,771
Total current assets	2,194,305	261,148
Property and equipment, net	40,827	25,945
Intangible assets, net	555,930	33,939
Goodwill	569,603	4,738
Operating lease right-of-use assets	68,077	0
Equity method investment	2,955	2,521
Deposits and other non-current assets	7,632	2,434
Total assets	3,439,329	330,725
Current liabilities:
Accounts payable and accrued expenses	223,633	85,295
Liabilities to users	317,942	163,035
Operating lease liabilities, current portion	12,837	0
Revolving credit line	0	6,750
Total current liabilities	554,412	255,080
Convertible promissory notes	0	68,363
Non-current operating lease liabilities	68,775	0
Long-term income tax liability	72,066	0
Other long-term liabilities	47,287	56,862
Total liabilities	742,540	380,305
Commitments and contingent liabilities (Note 15)
Stockholders' equity (deficit):
Treasury stock, at cost; 6,807 shares as of December 31, 2020	(288,784)	0
Additional paid-in capital	4,745,014	949,186
Accumulated deficit	(1,843,054)	(998,784)
Accumulated other comprehensive income	83,534	0
Total stockholders' equity (deficit)	2,696,789	(49,580)
Total liabilities and stockholders' equity (deficit)	3,439,329	330,725
Class A Common Stock
Stockholders' equity (deficit):
Common stock	40	18
Class B Common Stock
Stockholders' equity (deficit):
Common stock	$ 39	$ 0

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands	Dec. 31, 2020	Dec. 31, 2019
Treasury stock ( in shares)	6,807
Class A Common Stock
Common shares, par value	$ 0.0001	$ 0.0001
Common shares, shares authorized	900,000	735,000
Common shares, shares issued	403,110	184,626
Common shares, shares outstanding	396,303	184,626
Class B Common Stock
Common shares, par value	$ 0.0001
Common shares, shares authorized	900,000
Common shares, shares issued	393,014
Common shares, shares outstanding	393,014

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
CONSOLIDATED STATEMENTS OF OPERATIONS
Revenue	$ 614,532	$ 323,410	$ 226,277
Cost of revenue	346,589	103,889	48,689
Sales and marketing	495,192	185,269	145,580
Product and technology	168,633	55,929	32,885
General and administrative	447,374	124,868	75,904
Loss from operations	(843,256)	(146,545)	(76,781)
Other (expense) income:
Interest (expense) income, net	(1,070)	1,348	666
Gain on initial equity method investment	0	3,000	0
Loss before income tax (benefit) provision	(844,326)	(142,197)	(76,115)
Income tax (benefit) provision	(622)	58	105
Loss from equity method investment	566	479	0
Net loss attributable to common stockholders	$ (844,270)	$ (142,734)	$ (76,220)
Loss per share attributable to common shareholders:
Basic and diluted (in dollars per share)	$ (2.76)	$ (0.77)	$ (0.45)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Net loss	$ (844,270)	$ (142,734)	$ (76,220)
Other comprehensive income
Foreign currency translation adjustments, net of nil tax	83,534	0	0
Comprehensive loss	$ (760,736)	$ (142,734)	$ (76,220)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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+ Details

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Foreign currency translation adjustments, net of tax	$ 0	$ 0	$ 0

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($)	As previously reported Ordinary Shares Class A Common Stock	As previously reported Additional Paid-in Capital	As previously reported Accumulated Deficit	As previously reported Convertible Redeemable Preferred Stock	As previously reported	Adjustment Ordinary Shares Class A Common Stock	Adjustment Additional Paid-in Capital	Adjustment Convertible Redeemable Preferred Stock	Adjustment	Ordinary Shares Class A Common Stock	Ordinary Shares Class B Common Stock	Ordinary Shares Series F Preferred Stock	Additional Paid-in Capital Series F Preferred Stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Income	Treasury Stock Amount	Convertible Redeemable Preferred Stock	Class A Common Stock	Series F Preferred Stock	Total
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Conversion of shares due to merger recapitalization						$ (364,000)	$ 119,373,000	$ (119,009,000)	$ 119,009,000
Conversion of shares due to merger recapitalization (in shares)						(218,302)		(54,901)
Balance at the beginning at Dec. 31, 2017	$ 380,000	$ 661,085,000	$ (779,830,000)	$ 119,009,000	$ (118,365,000)					$ 16,000				$ 780,458,000	$ (779,830,000)						$ 644,000
Balance at the beginning (in shares) at Dec. 31, 2017	379,932			54,901						161,630
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of Series F preferred stock												$ 2,000	$ 141,588,000							$ 141,590,000
Issuance of Series F preferred stock (in shares)												20,181
Equity consideration issued to acquire SBTech																					0
Common stock issued in offerings														340,000							340,000
Common stock issued in offerings (in shares)										139
Issuance of Common Stock for In-kind Transfer														1,934,000							1,934,000
Issuance of Common Stock for In-kind Transfer (in shares)										459
Exercise of stock options														552,000							552,000
Exercise of stock options (in shares)										844
Foreign currency translation adjustments arising during period																					0
Stock-Based compensation expense														7,210,000							7,210,000
Net loss															(76,220,000)						(76,220,000)
Balance at the end at Dec. 31, 2018	$ 384,000	670,439,000	(856,050,000)	$ 261,277,000	(185,227,000)					$ 18,000				932,082,000	(856,050,000)			$ 0			76,050,000
Balance at the end (in shares) at Dec. 31, 2018	384,009			111,969						183,253								0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Conversion of shares due to merger recapitalization						$ (366,000)	261,643,000	$ (261,277,000)	261,277,000
Conversion of shares due to merger recapitalization (in shares)						(200,756)		(111,969)
Equity consideration issued to acquire SBTech																					0
Common stock issued in offerings														439,000							439,000
Common stock issued in offerings (in shares)										674
Issuance of Common Stock for In-kind Transfer														1,364,000							1,364,000
Issuance of Common Stock for In-kind Transfer (in shares)										290
Exercise of stock options														1,148,000							1,148,000
Exercise of stock options (in shares)										1,017
Repurchase of preferred stock and issuance of promissory note														(11,722,000)							(11,722,000)
Repurchase of preferred stock and issuance of promissory note (in shares)										(1,626)
Recapitalization of issuance of Series F preferred stock													7,824,000							7,824,000
Recapitalization of issuance of Series F preferred stock (in shares)												1,018
Issuance of warrants														438,000							438,000
Foreign currency translation adjustments arising during period																					0
Stock-Based compensation expense														17,613,000							17,613,000
Net loss															(142,734,000)						(142,734,000)
Balance at the end at Dec. 31, 2019	$ 389,610	$ 690,443,000	$ (998,784,000)	$ 258,371,000	$ (307,951,000)					$ 18,000				949,186,000	(998,784,000)						(49,580,000)
Balance at the end (in shares) at Dec. 31, 2019				110,250						184,626
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Conversion of shares due to merger recapitalization						$ (372,000)	$ 258,743,000	$ (258,371,000)	$ 258,371,000
Conversion of shares due to merger recapitalization (in shares)						204,984		110,250
Issuance of Series F preferred stock												$ 1,526	$ 11,000,000							$ 11,000,000
Merger recapitalization, net repurchase of $7,192 and issuance costs of $11,564														(18,756,000)							(18,756,000)
Merger recapitalization, net repurchase of $7,192 and issuance costs of $11,564 (in shares)										278
Conversion of Convertible Notes to common shares										$ 1,000				112,544,000							112,545,000
Conversion of Convertible Notes to common shares (in shares)										11,254
DEAC shares recapitalized, net of redemptions and equity issuance costs of $10,631										$ 7,000				667,304,000					$ 667,300,000		667,311,000
DEAC shares recapitalized, net of redemptions and equity issuance costs of $10,631 (in shares)										74,122
Equity consideration issued to acquire SBTech										$ 4,000				789,060,000							789,064,000
Equity consideration issued to acquire SBTech (in shares)										40,739
Shares issued for earn outs - SBTech (in shares)										720
Shares issued for earn outs - DEAC and DK										$ 1,000				(1,000)
Shares issued for earn outs - DEAC and DK (in shares)										5,280
Shares issued for exercise of warrants										$ 2,000				202,032,000							202,034,000
Shares issued for exercise of warrants (in shares)										17,698
Common stock issued in offerings										$ 4,000				1,680,063,000							1,680,067,000
Common stock issued in offerings (in shares)										36,820
Exercise of stock options										$ 2,000				27,585,000							27,587,000
Exercise of stock options (in shares)										14,900
Purchase of treasury stock										$ (1,000)							$ (288,784,000)				(288,785,000)
Purchase of treasury stock (in shares)										(6,807)
RSU Vesting										$ 2,000				(2,000)
RSU Vesting (in shares)										15,703
Foreign currency translation adjustments arising during period																$ 83,534,000					83,534,000
Stock-Based compensation expense											$ 39,000			324,999,000							325,038,000
Stock-Based compensation expense (in shares)											393,014
Net loss															(844,270,000)						(844,270,000)
Balance at the end at Dec. 31, 2020										$ 40,000	$ 39,000			$ 4,745,014,000	$ (1,843,054,000)	$ 83,534,000	$ (288,784,000)				$ 2,696,789,000
Balance at the end (in shares) at Dec. 31, 2020										396,303	393,014

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (Parenthetical) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
Merger recapitalization, repurchase costs	$ 7,192
Merger recapitalization, issuance costs	11,564
DEAC shares recapitalized, Redemptions and equity issuance costs	10,631
Shares issued in Offering, issuance costs	$ 41,536

CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Cash flows from operating activities:
Net loss	$ (844,270)	$ (142,734)	$ (76,220)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization	77,410	13,636	7,499
Non-cash interest expense	3,114	424	31
Stock-based compensation expense, including value of Class B common shares	325,038	17,613	7,210
Loss from equity method investment	566	479	0
Gain on initial equity method investment	0	(3,000)	0
Deferred income taxes	(2,279)	54	19
Other non-cash expenses	0	2,711	1,934
Changes in operating assets and liabilities:
Cash reserved for users	(143,718)	(32,302)	(22,633)
Receivables reserved for users	(10,421)	1,506	(4,087)
Accounts receivable	(13,802)	(3,118)	(4,203)
Prepaid expenses and other current assets	1,152	(6,436)	1,989
Deposits and other non-current assets	(3,730)	(930)	728
Operating leases, net	2,640	0	0
Accounts payable and accrued expenses	103,574	27,946	5,736
Other long-term liabilities	12,355	18,405	12,068
Settlement liability	0	(3,400)	(2,212)
Long-term income tax liability	(411)	0	0
Liabilities to users	154,907	30,266	26,562
Net cash used in Operating Activities	(337,875)	(78,880)	(45,579)
Cash Flows from Investing Activities:
Purchases of property and equipment	(11,752)	(16,703)	(13,683)
Cash paid for internally developed software costs	(27,489)	(14,816)	(12,738)
Purchases of intangible assets	(1,625)	0	0
Investment in equity method investment	(1,000)	0	0
Cash paid for Business Combination, net of cash acquired	(178,645)	0	0
Acquisition of gaming licenses	(6,830)	(10,752)	(251)
Net cash used in investing activities	(227,341)	(42,271)	(26,672)
Cash Flows from Financing Activities:
Proceeds from revolving credit line	37,750	3,000	0
Repayments of revolving credit line	(44,500)	0	(1,250)
Cash buyout of unaccredited investors	(7,192)	0	0
Net proceeds from issuance of redeemable convertible stock	0	7,824	141,590
Issuance costs related to merger recapitalization	(11,564)	0	0
Net proceeds from issuance of convertible promissory notes	41,077	68,087	0
Proceeds from recapitalization of DEAC shares, net of issuance costs	669,825	0	0
Proceeds from shares issued for warrants	202,034	0	0
Net proceeds from issuance of common stock	1,680,067	439	0
Purchase of treasury stock	(288,785)	0	0
Proceeds from exercise of stock options	27,587	1,148	552
Net cash provided by Financing Activities	2,306,299	79,776	140,892
Effect of foreign exchange rates on cash and cash equivalents	(358)	0	0
Net Increase (Decrease) in Cash	1,740,725	(41,375)	68,641
Cash and cash equivalents at the beginning of period	76,533	117,908	49,267
Cash and cash equivalents,end of period	1,817,258	76,533	117,908
Supplemental Disclosure of Noncash Investing and Financing Activities
Non-cash redemption of Series F redeemable convertible preferred to stock through issuance of promissory notes	0	11,000	0
Conversion of convertible notes and accrued interest to common shares	112,545	0	0
Increase in net liabilities acquired from DEAC	2,514	0	0
Increase in accounts payable and accrued expenses from gaming licenses, net	3,976	1,000	0
Increase in accounts payable and accrued expenses from property and equipment and internally developed software costs	990	0	0
Equity consideration issued to acquire SBTech	789,064	0	0
Supplemental Disclosure of Cash Activities
Cash paid for interest	417	260	261
Cash paid for taxes	1,442	0	0
Series F redeemable convertible preferred stock
Cash Flows from Financing Activities:
Repurchase of preferred stock	$ 0	$ (722)	$ 0

Description of Business	12 Months Ended
Description of Business	Dec. 31, 2020
Description of Business
Description of Business	1. Description of Business DraftKings Inc., a Nevada corporation (the “Company” or “DraftKings”), was incorporated in Nevada as DEAC NV Merger Corp., a wholly owned subsidiary of our legal predecessor, Diamond Eagle Acquisition Corp. (“DEAC”), a special purpose acquisition company. On April 23, 2020, DEAC consummated the transactions contemplated by the Business Combination Agreement (the “Business Combination”) dated December 22, 2019, as amended on April 7, 2020 and, in connection therewith, (i) DEAC merged with and into the Company, whereby the Company survived the merger and became the successor issuer to DEAC by operation of Rule 12g-3(a) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (ii) the Company changed its name to “DraftKings Inc.,” (iii) the Company acquired DraftKings Inc., a Delaware corporation (“Old DK”), by way of a merger and (iv) the Company acquired all of the issued and outstanding share capital of SBTech (Global) Limited (“SBTech”). Upon consummation of the preceding transactions, Old DK and SBTech became wholly owned subsidiaries of the Company. DraftKings is a digital sports entertainment and gaming company. The Company’s business-to-consumer (“B2C”) segment provides users with daily fantasy sports (“DFS”), sports betting (“Sportsbook”) and online casino (“iGaming”) products. The Company’s business-to-business (“B2B”) segment is involved in the design, development and licensing of sports betting and casino gaming software for its Sportsbook and casino gaming products. 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. As of December 31, 2020, the U.S. jurisdictions with statutes legalizing online sports betting are Colorado, Illinois, Indiana, Iowa, Michigan, Nevada, New Hampshire, New Jersey, Oregon, Pennsylvania, Puerto Rico, Rhode Island, Tennessee, Virginia, Washington, D.C and West Virginia. The jurisdictions with statutes legalizing sports betting at certain land-based retail locations are Arkansas, Colorado, Delaware, Illinois, Indiana, Iowa, Michigan, Mississippi, Montana, Nevada, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Puerto Rico, Rhode Island, Virginia, Washington, Washington, D.C and West Virginia. Several of the jurisdictions have enacted laws authorizing sports betting in retail locations, but we have yet to begin operations in those jurisdictions. The jurisdictions with statutes legalizing online casinos are Delaware, Michigan, New Jersey, Pennsylvania and West Virginia. As of December 31, 2020, the Company operates online Sportsbooks in Colorado, Illinois, Indiana, Iowa, New Hampshire, New Jersey, Oregon (B2B), Pennsylvania, Tennessee and West Virginia, has retail Sportsbooks in Colorado, Illinois, Iowa, Mississippi, New Hampshire, New Jersey and New York. Subsequent to December 31, 2020, the Company also operates online Sportsbooks in Michigan and Virginia. As of December 31, 2020, the Company has iGaming products in New Jersey, Pennsylvania and West Virginia. Subsequent to December 31, 2020, the Company also has an iGaming product in Michigan. The Company also has arrangements in place with land-based casinos to expand operations into additional states upon the passing of the relevant legislation and the issuance of related regulations and the receipt of required licenses. The novel coronavirus (“COVID-19”) has adversely impacted global commercial activity, disrupted supply chains and contributed to significant volatility in financial markets. In 2020, the COVID-19 pandemic adversely impacted many different industries. The ongoing COVID-19 pandemic could have a continued material adverse impact on economic and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the extent and the duration of the impact of COVID-19. COVID-19 therefore presents material uncertainty and risk with respect to us and our performance and could affect our financial results in a materially adverse way. To date, the primary impacts of the COVID-19 pandemic to the Company have been the suspension, cancellation and rescheduling of sports seasons and sporting events. Beginning in March and continuing through the end of the second quarter, many sports seasons and sporting events, including the MLB regular season, domestic soccer leagues and European Cup competitions, the NBA regular season and playoffs, the NCAA college basketball tournament, the Masters golf tournament, and the NHL regular season and playoffs, were suspended or cancelled. The suspension of sports seasons and sporting events reduced customers’ use of, and spending on, the Company’s Sportsbook and DFS product offerings. Starting in the third quarter and continuing into the fourth quarter of the Company’s fiscal year, major professional sports leagues resumed their activities. The MLB began its season after a three-month delay and also completed the World Series, the NHL resumed its season and completed the Stanley Cup Playoffs, the Masters golf tournament was held, most domestic soccer leagues resumed and several European cup competitions were held, and the NFL season began on its regular schedule. During this period, the NBA also resumed its season, completed the NBA Finals and commenced its 2020-2021 season. The return of major sports and sporting events, as well as the unique and concentrated sports calendar, generated significant user interest and activity in our Sportsbook and DFS product offerings. However, the possibility remains that sports seasons and sporting events may be suspended, cancelled or rescheduled due to COVID-19 outbreaks. The suspension and alteration of sports seasons and sporting events earlier in the year reduced customers’ use of, and spending on, the Company’s Sportsbook and DFS product offerings and caused the Company to issue refunds for canceled events. Additionally, while retail casinos where the Company has branded Sportsbooks and DFS have reopened, they continue to operate with reduced capacity. The Company’s revenues vary based on sports seasons and sporting events amongst other things, and cancellations, suspensions or alterations resulting from COVID-19 have the potential to adversely affect its revenue, possibly materially. However, the Company’s product offerings that do not rely on sports seasons and sporting events, such as iGaming, may partially offset this adverse impact on revenue. DraftKings is also innovating to develop more products that do not rely on traditional sports seasons and sporting events, for example, products that permit wagering and contests on events such as eSports, simulated NASCAR and League of Legends. A significant or prolonged decrease in consumer spending on entertainment or leisure activities would likely have an adverse effect on demand for the Company’s product offerings, reducing cash flows and revenues, and thereby materially harming the Company’s business, financial condition and results of operations. In addition, a recurrence of COVID-19 cases or an emergence of additional variants or strains could cause other widespread or more severe impacts depending on where infection rates are highest. As steps taken to mitigate the spread of COVID-19 have necessitated a shift away from a traditional office environment for many employees, the Company has business continuity programs in place to ensure that employees are safe and that the business continues to function with minimal disruptions to normal work operations while employees work remotely. The Company will continue to monitor developments relating to disruptions and uncertainties caused by COVID-19.

Summary of Significant Accounting Policies and Practices

12 Months Ended

Dec. 31, 2020

Summary of Significant Accounting Policies and Practices

Summary of Significant Accounting Policies and Practices

2. Summary of Significant Accounting Policies and Practices

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The consolidated financial statements include the accounts and operations of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions are eliminated upon consolidation. Certain amounts in the prior years’ consolidated statements of changes in stockholders’ equity and statements of cash flows have been reclassified to conform to the current year presentation.

Pursuant to the Business Combination, the merger between a subsidiary of DEAC and Old DK was accounted for as a reverse recapitalization in accordance with U.S. GAAP (the “Reverse Recapitalization”). Under this method of accounting, DEAC was treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of Old DK issuing stock for the net assets of DEAC, accompanied by a recapitalization. The net assets of DEAC are stated at historical cost, with no goodwill or other intangible assets recorded. The consolidated assets, liabilities and results of operations prior to the Reverse Recapitalization are those of Old DK. The shares and corresponding capital amounts and earnings per share available for common stockholders, prior to the Business Combination, have been retroactively restated as shares reflecting the exchange ratio established in the Business Combination. Further, Old DK was determined to be the accounting acquirer in the SBTech Acquisition, as such, the acquisition is considered a business combination under Accounting Standards Codification (“ASC”), Topic 805, Business Combinations, (“ASC 805”) and was accounted for using the acquisition method of accounting. DraftKings recorded the fair value of assets acquired and liabilities assumed from SBTech. The presented financial information for the year ended December 31, 2020 includes the financial information and activities for SBTech for the period from April 24, 2020 to (and including) December 31, 2020.

Comprehensive Loss

Comprehensive loss consists of foreign currency translation adjustments related to the effect of foreign exchange on the value of our assets and liabilities denominated in Euros. The cumulative net translation gain or loss is included in the consolidated statements of comprehensive loss.

Foreign Currency

Our reporting currency is the U.S. dollar while the functional currency of the Company’s non-U.S. subsidiaries is the Euro. The financial statements of the Company’s non-U.S. subsidiaries are 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.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. 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; fair value estimates of embedded derivatives; purchase price allocations, including fair value estimates of intangible assets; the estimated useful lives of fixed assets and intangible assets, including internally developed software costs; and accrued expenses.

Going Concern

Based on anticipated spend and cash received from the Business Combination, exercise of certain warrants, the June 2020 and October 2020 follow-on equity offerings and the timing of expenditure assumptions, the Company currently expects that its cash will be sufficient to fund its operating expenses and capital expenditure requirements for at least 12 months after February 26, 2021. The Company has experienced operating losses and negative operating cash flows for the years ended December 31, 2020, 2019 and 2018.While certain geographies may experience improved cash flow, the Company expects to continue to incur annual operating losses and annual negative operating cash flow for the foreseeable future.

Concentrations Related to Credit Risk and Vendors

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of operating cash and cash equivalents and cash reserved for users. The Company maintains separate accounts for cash and cash reserved for users primarily across four financial institutions. Some amounts exceed federally insured limits with the majority of cash held in one financial institution. Management believes all financial institutions holding its cash are of high credit quality and does not believe the Company is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

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 allows the Company to host its sports betting, iGaming and daily fantasy sports 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.

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. 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.

Cash and cash equivalents

Cash and cash equivalents consist of highly liquid, unrestricted savings, checking and other bank accounts. The Company also utilizes short-term certificates of deposit, each with a duration of three months or less.

Cash Reserved for Users

The Company maintains separate bank accounts to segregate users’ funds from operational funds. In certain regulated jurisdictions, user funds are held by DK Player Reserve, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company, which was organized for the purpose of protecting users’ funds in the event of creditor claims.

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 doubtful accounts if appropriate. These receivables arise, primarily, due to process timing between when a user deposits and when the Company receives that deposit from the payment processor. Receivables also arise due to the securitization policies of certain payment processors. The allowance for doubtful accounts 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. On assessment that the receivable will not be collected, the associated amount is written off with no impact to the consolidated statements of operations. The provision at December 31, 2020 and December 31, 2019 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 doubtful accounts. The allowance for doubtful accounts is determined based on the Company’s assessment of the probability of 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. On assessment that the receivable will not be collected, the associated amount is written off with no impact to the consolidated statements of operations. The provision at December 31, 2020 and December 31, 2019 did not have a material impact on the Company’s consolidated financial statements.

Property and Equipment, Net

Property and equipment are carried at cost, net of accumulated depreciation. Depreciation is computed utilizing the straight-line method over the estimated useful life of the asset. Leasehold improvements depreciation is computed over the shorter of the lease term or estimated useful life of the asset. Additions and improvements are capitalized, while repairs and maintenance are expensed as incurred. Useful lives of each asset class are as follows:


Computer equipment and software		3 years
Furniture and fixtures		7 years
Leasehold improvements		Lesser of the lease terms or the estimated useful lives of the improvements, generally 1–10 years

Intangible Assets, Net

The Company’s intangible assets consist of developed technology, customer relationships, internally-developed software, gaming licenses and trademarks and tradenames. The related amortization expense is classified as cost of revenue in the consolidated statements of operations.

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 recorded at fair value at the date of acquisition. Additional development costs are capitalized and amortized on a straight-line basis over their estimated useful life of eight years once the development is completed and the assets are in use. All other expenditures, including those incurred in order to maintain an intangible asset’s current level of performance, are expensed as incurred.

Customer Relationships

Customer (or “user”) relationships are finite-lived intangible assets which are amortized over their estimated useful lives of five years. Customer relationships are generally recognized as the result of business combinations.

Internally Developed Software

Software that is developed for internal use is accounted for pursuant to ASC 350-40, Intangibles, Goodwill and Other — Internal-Use Software. Qualifying costs incurred to develop internal-use software are capitalized when (i) the preliminary project stage is completed, (ii) management has authorized further funding for the completion of the project and (iii) it is probable that the project will be completed and perform as intended. These capitalized costs include compensation for employees who develop internal-use software and external costs related to development of internal use software. Capitalization of these costs ceases once the project is substantially complete and the software is ready for its intended purpose. Internally developed software is amortized using the straight-line method over an estimated useful life of three to four years. All other expenditures, including those incurred in order to maintain an intangible asset’s current level of performance, are expensed as incurred.

Gaming Licenses

The Company incurs fees in connection with applying for and maintaining good standing in jurisdictions via business licenses. Fees incurred in connection with the application and subsequent renewals are capitalized and amortized using the straight-line method over an estimated useful life. In certain arrangements, the Company enters into agreements to operate on a business partner’s license in exchange for upfront fees. These fees are capitalized and amortized over the shorter of their expected benefit under the partnership agreement or estimated useful life.

Trademarks and Tradenames

The Company incurs fees in connection with applying for and maintaining trademarks and tradenames. Fees incurred in connection with the application and subsequent renewals are capitalized and amortized using the straight-line method over an estimated useful life of three years.

Impairment of Long-Lived Assets

Long-lived assets, except for goodwill, consist of property and equipment and finite-lived acquired intangible assets, such as internal-use software, developed software, gaming licenses, trademarks, tradenames and customer relationships. Long-lived assets, except for goodwill, are tested for recoverability whenever events or changes in business circumstances indicate that the carrying amount of the asset may not be fully recoverable. Impairment expense is recognized to the extent an asset’s expected undiscounted future cash flows are less than the asset’s carrying amount. There was immaterial impairment related to internally developed software on abandoned projects during the years ended December 31, 2019 and 2018. As of December 31, 2020, the Company determined that long-lived assets were not impaired.

Goodwill

The Company’s business is classified into three reporting units: B2C, Media and B2B. 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, 2020 and concluded that goodwill was not impaired.

Equity Method Investment

The Company acquired an additional 3.4% interest in November 2020 in DKFS, LLC, also known as DRIVE by DraftKings, for $1.0 million, bringing its total ownership interest to 49.9% as of December 31, 2020. 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 does not exercise control. The Company’s carrying value in the equity method investee is reflected in the caption “Equity method investment” on the consolidated balance sheets. Changes in value of DKFS, LLC are recorded in “Loss from equity method investment” on the consolidated statements of operations. 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.

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. The Company performs a qualitative assessment annually and recognizes an impairment if there are sufficient indicators that the fair value of the investment is less than carrying value.

Leases

The Company leases certain office spaces, equipment and vehicles and recognizes lease expense on a straight-line basis over the initial term of the lease unless external economic factors exist such that renewals are reasonably certain. In those instances, the renewal period would be included in the lease term to determine the period in which to recognize the lease expense.

Leases for periods through December 31, 2019 were reported under ASC 840, Leases (Topic 840) (“ASC 840”), including the disclosure requirements. The Company recognizes rent expense on operating leases on a straight-line basis over the non-cancellable lease term. Operating leases with landlord-funded leasehold improvements are considered tenant allowances and are amortized as a reduction of rent expense over the non-cancellable lease term. Deferred rent liability, which is calculated as the difference between contractual lease payments and the rent expense, is recorded in accounts payable and accrued expenses and other long-term liabilities in the consolidated balance sheets.

The Company adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASU 2016-02”), using the alternative transition method provided in ASU 2018-11, Leases (Topic 842) (“ASU 2018-11”): Targeted Improvements as of January 1, 2020 at December 31, 2020. Using the alternative transition method, the Company applied the transition requirements at the effective date of ASU 2016-02.

The Company elected the package of practical expedients permitted under the transition guidance within the new standard. In addition, the Company has elected to apply the practical expedient to combine lease and related non-lease components, for all classes of underlying assets, and account for the combined contract as a lease component, as well as the election was made to apply the short-term lease recognition exemption.

Liabilities to Users

The Company records liabilities for user account balances. User account balances consist of user deposits, most promotional awards and user winnings less user withdrawals, tax withholdings and user losses. Cash reserved for users and receivables reserved for users equal or exceed the Company’s liabilities to users at all times.

Loss Contingencies

The Company’s loss contingencies, which are included within other long-term liabilities in the consolidated balance sheets, are uncertain by nature and their estimation requires significant management judgment as to the probability of loss and estimation of the amount of such loss. These contingencies include, but may not be limited to, indirect taxes, regulatory investigations and proceedings and management’s evaluation of complex laws and regulations, and the extent to which they may apply to our business and industry.

The Company regularly reviews its contingencies to determine whether the likelihood of loss is probable and to assess whether a reasonable estimate of the loss can be made. Determination of whether a loss estimate can be made is a complex undertaking that considers the judgement of management, third-party research, the prospect of negotiation and interpretations by regulators and courts, among other information. When a loss is determined to be probable, and the amount of the loss can be reasonably estimated, an estimated contingent liability is recorded.

Revenue Recognition

Effective January 1, 2019, the Company adopted ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), using the modified retrospective method for all contracts not completed as of the date of adoption. 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. In addition, the standard requires more detailed disclosures to enable readers of the financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The cumulative effect of the adoption was immaterial to the consolidated financial statements. See Note 9 – Revenue Recognition for further details.

The Company determines revenue recognition through the following steps:

Identify the contract, or contracts, with the customer;

Identify the performance obligations in the contract;

Determine the transaction price;

Allocate the transaction price to performance obligations in the contract; and

Recognize revenue when, or as, the Company satisfies performance obligations by transferring the promised good or services.

The Company is currently engaged in the business of digital sports entertainment and gaming and provides its users with online gaming opportunities. The Company also provides online sportsbook and casino operators with technical infrastructure as well as related services with respect to its direct customers and distributors. The following is a description of the Company’s revenue streams:

Online Gaming

DFS is a peer-to-peer product in which users compete against one another for prizes. Users pay an entry fee (ranging from $0 to $10,000 per user) to join a DFS contest and compete for prizes, which are distributed to the highest performing competitors in each contest as defined by each contest’s prize table. DFS revenue is generated from contest entry fees from users, net of prizes and customer incentives awarded to users.

Sportsbook or sports betting involves a user wagering money on an outcome or series of outcomes occurring. When a user’s wager wins, the Company pays the user a pre-determined amount known as fixed odds. Sportsbook revenue is generated by setting odds such that there is a built-in theoretical margin in each sports wagering opportunity offered to users. Sportsbook revenue is generated from users’ wagers net of payouts made on users’ winning wagers and incentives awarded to users.

iGaming, or online casino, typically includes digital versions of wagering games available in land-based casinos, such as blackjack, roulette and slot machines. For these offerings, the Company functions similarly to land-based casinos, generating revenue through hold, as users play against the house. iGaming revenue is generated from user wagers net of payouts made on users’ winning wagers and incentives awarded to users.

DFS, Sportsbook and iGaming, 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 contest, wager, or wagering game hand.Incentives can be used across online gaming products. Additionally, certain incentives given to customers create material rights and represent separate performance obligations. 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. In contrast, the Company provides distributors with the right to resell the Company’s software-as-a-service offering to their clients, using their own infrastructure. In reseller arrangements, revenue is generally calculated via a fixed monthly fee and an additional monthly fee which varies based on the number of gaming operators to whom each reseller sub-licenses the Company’s software. 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. In reseller arrangements, as opposed to direct customer arrangements, the resellers purchase a software license which enables them to install, host, and serve their operators’ base using the Company’s software.

Transaction Price Considerations

Variability in the transaction price arises primarily due to market-based pricing, cash discounts, revenue sharing and usage-based fees. DraftKings offers loyalty programs, free plays, deposit bonuses, discounts, rebates and other rewards and incentives to its customers. Revenue for DFS, Sportsbook and iGaming 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.

Contracts with customers may include multiple performance obligations. For such arrangements, the transaction price is allocated to performance obligations on a relative standalone selling price basis. 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 DFS, Sportsbook and iGaming, 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.

Certain costs to obtain or fulfill contracts

Under ASC 606, certain costs to obtain or fulfill a contract with a customer must be capitalized, to the extent recoverable from the associated contract margin, and subsequently amortized as the products or services are delivered to the customer. These costs are capitalized as contract acquisition costs and are amortized over the period of benefit to the customer. For the Company, the period of benefit is typically less than or equal to 1 year. As such, the Company applied the practical expedient and contract acquisition costs are expensed immediately. Customer contract costs which do not qualify for capitalization as contract fulfillment costs are expensed as incurred.

Contract balances

Contract assets and liabilities represent the differences in the timing of revenue recognition from the receipt of cash from the Company’s customers and billings to those customers. Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billing.

Deferred revenue relates to payments received in advance of the satisfaction of performance under the contract. The Company maintains various programs to incentivize user behaviors, which allows users to earn awards. Incentive awards generally represent a material right to the user, and awards may be redeemed for future services. Incentive awards earned by users, but not yet redeemed, are generally recognized as a reduction to revenue and included within liabilities to users on the consolidated balance sheets. When a user redeems most types of awards, the Company recognizes revenue on the consolidated statements of operations.

Certain player awards are not subject to expiration or have not been expired historically, on such awards the Company recognizes breakage (for amounts not expected to be redeemed) to the extent there is no requirement for remitting such balances to regulatory agencies.

Cost of Revenue

Cost of revenue consists primarily of variable costs. These include mainly (i) payment processing fees and chargebacks, (ii) product taxes, (iii) technology costs, (iv) revenue share / market access arrangements, and (v) feed / provider services. The Company incurs payment processing fees on user deposits, withdrawals and deposit reversals from payment processors (“chargebacks”). Chargebacks have not been material to date. Cost of revenue also includes expenses related to the distribution of our services, amortization of intangible assets and compensation of revenue associated personnel.

Sales and Marketing

Sales and marketing expenses consist primarily of expenses associated with advertising and related software, conferences, strategic league and team partnerships and costs related to free to play contests, rent and facilities maintenance and the compensation of sales and marketing personnel, including stock-based compensation expenses. Advertising costs are expensed as incurred and are included in sales and marketing expense in the consolidated statements of operations. During the years ended December 31, 2020, 2019 and 2018, advertising costs were $430.4 million, $152.2 million, and $124.5 million, respectively.

Product and Technology

Product and technology expenses consist primarily of expenses which are not subject to capitalization or otherwise classified within Cost of Revenue. Product and Technology expenses include software licenses, rent and facilities maintenance and depreciation of hardware and software and costs related to the compensation of product and technology personnel, including stock-based compensation.

General and Administrative

General and administrative expenses consist of costs not related to Sales and Marketing, Product and Technology or Revenue. General and administrative costs include professional services (including legal, regulatory, audit, accounting, lobbying and services related to the Business Combination), rent and facilities maintenance, contingencies, insurance, allowance for doubtful accounts receivable, depreciation of leasehold improvements and furniture and fixtures and costs related to the compensation of executive and non-executive personnel, including stock-based compensation.

Stock-based Compensation

The Company measures compensation expense for stock options and other stock awards in accordance with ASC 718, Compensation — Stock Compensation. Stock-based compensation is measured at fair value on grant date and recognized as compensation expense over the requisite service period. Generally, the Company issues stock options and other stock awards to employees with service-based and/or performance-based vesting conditions. For awards with only service-based vesting conditions, the Company records compensation cost for these awards using the straight-line method less an assumed forfeiture rate. For awards with performance-based vesting conditions, the Company recognizes compensation cost on a tranche-by-tranche basis (the accelerated attribution method) less an assumed forfeiture rate.

Under the provisions of ASC 505-50, Equity-Based Payments to Non-Employees, the Company measures stock-based awards granted to non-employees based on the fair value of the award on the date on which the related service is completed. Compensation expense is recognized over the period during which services are rendered by non-employees until service is completed. At the end of each financial reporting period, for share based payments issued in lieu of cash prior to completion of the service, the fair value of these awards is remeasured using the then-current fair value of the Company’s common stock.

Income Taxes

The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or in the Company’s tax returns. Deferred tax assets and liabilities are determined on the basis of the differences between U.S. GAAP treatment and tax treatment of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by considering taxable income in carryback years, existing taxable temporary differences, prudent and feasible tax planning strategies and estimated future taxable profits.

The Company accounts for uncertainty in income taxes recognized in the consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate, as well as the related net interest and penalties.

Fair Value Measurements

Certain assets and liabilities are carried at fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

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

Earnings (loss) per share

Basic earnings (loss) per share is calculated using the two-class method. Under the two-class method, basic earnings (loss) is computed by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the period excluding the effects of any potentially dilutive securities. The weighted-average number of common shares outstanding during the period includes Class A common stock but is exclusive of Class B common stock as these shares have no economic or participating rights. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if potential common shares had been issued if such additional common shares were dilutive. Since the Company had net losses for all the periods presented, basic and diluted earnings (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

ASU 2016-02, Leases (Topic 842)

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, and since that date has issued subsequent amendments to the initial guidance intended to clarify certain aspects of the guidance and to provide certain practical expedients that entities can elect upon adoption. ASC 842 introduces new requirements to increase transparency and comparability among organizations for leasing transactions for both lessees and lessors. The principle of ASC 842 is that a lessee recognizes assets and liabilities that arise from leases. Lessees need to recognize a right-of-use asset and a lease liability for all leases (other than leases that meet the definition of a short-term lease). The lease liability is equal to the present value of lease payments, and the right-of-use asset is equal to the lease liability, adjusted for other factors. For income statement purposes, ASC 842 requires leases to be classified as either operating or finance. Operating leases result in a straight-line expense pattern while finance leases result in a front-loaded expense pattern. Lessor accounting remains largely unchanged, other than certain targeted improvements intended to align lessor accounting with the lessee accounting model and with the updated revenue recognition guidance.

The Company adopted ASC 842 effective January 1, 2020 using the alternative transition method and elected to apply the new guidance at the adoption date without adjusting comparative periods presented. Comparative information has not been restated and will continue to be reported under accounting standards in effect for those periods. In adopting the new guidance, the Company elected to apply the package of transition practical expedients, which allows the Company not to reassess: (1) whether any expired or existing contracts contain leases under the new definition of a lease; (2) lease classification for any expired or existing leases; and (3) whether previously capitalized initial direct costs would qualify for capitalization under ASC 842. In transition, the Company did not elect to apply the hindsight practical expedient, which permits entities to use hindsight in determining the lease term and assessing impairment of right-of-use assets.

The adoption of ASC 842 resulted in the recognition of a new right-of-use assets and lease liabilities on the balance sheet for all operating leases. For the year ended December 31, 2019, the short-term and long-term deferred rent liabilities were $1.1 million and $9.7 million, respectively. As a result of the Company’s adoption on January 1, 2020, the Company recorded operating right-of-use assets of $33.9 million, including an offsetting deferred rent of $10.8 million, along with associated operating lease liabilities of $44.7 million.

ASU No. 2018-07, Compensation — Stock Compensation (Topic 718)

In June 2018, the FASB issued ASU No. 2018-07, Compensation — Stock Compensation (Topic 718), to simplify the accounting for share-based payments to non-employees by aligning it with the accounting for share- based payments to employees, with certain exceptions. Under the new standard, equity-classified non- employee awards are initially measured on the grant date and re-measured only upon modification, rather than at each reporting period. Measurement is based on an estimate of the fair value of the equity instruments to be issued. The Company adopted this pronouncement as of January 1, 2020. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements and related disclosures.

ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326)

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326). The new guidance replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that utilizes a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses. For receivables reserved for users and accounts receivable held at the reporting date and measured at an amortized cost basis, the Company estimates all expected credits losses based on historical experience, current conditions and reasonable and supportable forecasts. The Company adopted this standard as of January 1, 2020 at December 31, 2020. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements and related disclosures.

ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40)

In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the accounting for implementation costs incurred in a hosting arrangement that is a service contract with the accounting for implementation costs incurred to develop or obtain internal-use software under ASC 350-40, in order to determine which costs to capitalize and recognize as an asset and which costs to expense. The Company adopted this standard as of January 1, 2020 at December 31, 2020. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements and related disclosures.

Recent Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes—Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. ASU 2019-12 is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company is currently evaluating the timing of adopting this guidance and the impact of adoption on its financial position, results of operations and cash flows.

Business Combination

12 Months Ended

Dec. 31, 2020

Business Combination

Business Combination

3. Business Combination

As discussed in Note 1, on April 23, 2020 DEAC consummated the transactions contemplated by the Business Combination Agreement, dated December 22, 2019 as amended on April 7, 2020 and, in connection therewith, (i) DEAC merged with and into the Company, whereby the Company survived the merger (the “DK Merger”) and became the successor issuer to DEAC by operation of Rule 12g-3(a) promulgated under the Exchange Act, (ii) the Company changed its name to “DraftKings Inc.,” (iii) the Company acquired Old DK by way of a merger and (iv) the Company acquired all of the issued and outstanding share capital of SBTech (the “SBTech Acquisition”). Upon consummation of the foregoing transactions, Old DK and SBTech became wholly owned subsidiaries of the Company. Under ASC 805, Old DK was deemed the accounting acquirer based on the following predominant factors: its former owners have the largest portion of voting rights in the Company, the Board and Management have more individuals coming from Old DK than either DEAC or SBTech, Old DK was the largest entity by revenue and by assets at the time of the Business Combination, and the headquarters of the Company is Old DK’s headquarters which is located in Boston, Massachusetts.

The DK Merger was accounted for as a reverse recapitalization, in accordance with U.S. GAAP. Under this method of accounting, DEAC was treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of Old DK issuing stock for the net assets of DEAC, accompanied by a recapitalization. The net assets of DEAC are stated at historical cost with no goodwill or other intangible assets recorded. The consolidated assets, liabilities and results of operations prior to the Reverse Recapitalization are those of Old DK. Reported shares and earnings per share available to holders of the Company’s common stock, prior to the Business Combination, have been retroactively restated as shares reflecting the exchange ratio established in the Business Combination. Further, Old DK was determined to be the accounting acquirer in the SBTech Acquisition. As such, the SBTech Acquisition was treated as a business combination under ASC 805, and was accounted for using the acquisition method of accounting. DraftKings recorded the fair value of assets acquired and liabilities assumed from SBTech. The business combination agreement contains provisions that indemnifies DraftKings for various losses.

Operating results for SBTech are included in the consolidated statements of operations as of December 31, 2020 from the day of the acquisition.

Purchase Price Accounting for the SBTech Acquisition

The Company acquired 100% of the equity of SBTech pursuant to the Business Combination Agreement by issuing 45.0 million shares, options, and earnout shares of Class A common stock of the Company at a weighted average fair value of $17.53 to the former stockholders and option holders of SBTech. The following summarizes the consideration transferred at Closing for the SBTech Acquisition (in thousands):


Cash consideration (1)	$	184,688
Share consideration (2)		789,064
Other cash consideration (3)		3,615
Total SBTech consideration	$	977,367

(1)Includes the cash consideration, adjusted for the Net Debt Amount, the Working Capital Adjustment, and the Aggregate Strike Price Amount, as stipulated by the Business Combination Agreement, resulting in cash consideration of $184.7 million.

(2)Includes $776.5 million for the share consideration for SBTech equity of 40.7 million shares and SBTech employees’ vested options of 3.6 million options, and $12.6 million of contingent consideration, which has been paid out, for the 720 thousand earnout shares issued to former stockholders of SBTech as part of the Business Combination, recognized at their Acquisition Date fair value.

(3)Includes transaction costs incurred by SBTech shareholders to be borne by DraftKings, costs related to the SBTech restructuring transaction that were paid by DraftKings, and the tail liability insurance for SBTech’s directors and officers, as specified in the Business Combination Agreement.

The acquired assets and assumed liabilities of SBTech were recorded at their estimated fair values. The purchase price allocation for the Business Combination was finalized as of December 31, 2020.

The following table summarizes the consideration paid for SBTech and the final fair value of the assets acquired and liabilities assumed at the acquisition date on April 23, 2020.


Cash and cash equivalents	$	9,639
Trade receivables		17,815
Other current assets		3,674
Property and equipment		10,677
Intangible assets		484,051
Operating lease right-of-use assets		27,696
Other non-current assets		1,017
Total identifiable assets acquired		554,569
Liabilities assumed:
Accounts payable and accrued expenses		23,613
Current operating lease liabilities		3,583
Long-term income tax liability		63,575
Non-current operating lease liabilities		24,113
Other long-term liabilities		558
Total liabilities assumed		115,442
Net assets acquired (a)		439,127
Purchase consideration (b)		977,367
Goodwill (b) – (a)	$	538,240

Goodwill represents the excess of the gross considerations transferred over the fair value of the underlying net assets acquired and 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 marketplace participant, as well as acquiring a talented workforce and cost savings opportunities. Goodwill associated with the SBTech Acquisition is assigned as of the acquisition date to the Company’s B2C and B2B segments in the amounts of $348.3 million and $189.9 million respectively, which include the Company’s reporting units that are expected to benefit from the synergies of the combination. Goodwill recognized is not deductible for local tax purposes.

Intangible Assets


			Weighted-
			Average
			Useful Life (in
	Fair Value		years)
Developed Technology	$	385,566	8
Customer relationships		93,699	5
Trademarks and trade names		4,308	3
Gaming License		478	2-3
Total	$	484,051

The fair value of the developed technology was determined using the Multi-Period Excess Earnings Method (“MPEEM”), a form of the Income Approach. The MPEEM is a specific application of the Discounted Cash Flow Method. The principle behind the MPEEM is that the value of an intangible asset is equal to the present value of the incremental after-tax cash flows attributable only to the subject intangible asset after deducting contributory asset charges (“CAC”). The principle behind a CAC is that an intangible asset ‘rents’ or ‘leases’ from a hypothetical third party all the assets it requires to produce the cash flows resulting from its development, that each project rents only those assets it needs (including elements of goodwill) and not the ones that it does not need, and that each project pays the owner of the assets a fair return on (and of, when appropriate) the value of the rented assets. The fair value of the customer relationships was determined by using the With and Without Method, a form of the Income Approach. In this method, the present value of the after-tax cash flows of the business assuming that the intangible asset is in place is compared to the present value of the after-tax cash flows of the business assuming the absence of the intangible asset. This method isolates the impact of the intangible asset and provides the basis for an estimation of value. The fair value of the trademark and tradename was determined by using the Relief-from-Royalty Method, a form of the Income Approach. The basic tenet of the Relief-from-Royalty Method is that without ownership of the subject intangible asset, the user of that intangible asset would have to make a stream of payments to the owner of the asset in return for the rights to use that asset. By acquiring the intangible asset, the user avoids these payments.

Transaction Costs

The Company incurred $30.9 million, for the year ended December 31, 2020, in advisory, legal, accounting and management fees in conjunction with the Business Combination, which are included in general and administrative expenses on the consolidated statement of comprehensive loss.

Direct and incremental transaction costs related to the Business Combination and additional equity offerings that would not otherwise have been incurred are treated as a reduction of the cash proceeds and are deducted from the Company’s additional paid-in capital. Accordingly, $63.7 million was incurred related to equity issuance costs for the year ended December 31, 2020.

Unaudited Pro-Forma Information

The financial information in the table below summarizes the combined results of operations of Old DK and SBTech, on a pro forma basis, as though the companies had been combined as of the beginning of the periods presented. The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place on January 1, 2019 or of results that may occur in the future.

The following pro forma financial information for years ended December 31, 2020 and 2019 combines the historical results for Old DK for the years ended December 31, 2020 and 2019 and the historical results of SBTech, as converted to U.S. GAAP, for the respective periods:


	Year Ended December 31,
	2020		2019
	Pro Forma		Pro Forma
Revenue	$	643,502	$	431,834
Net loss	$	(845,086)	$	(219,829)

These pro forma results were based on estimates and assumptions, which the Company believes are reasonable. The pro forma results include adjustments primarily related to purchase accounting adjustments. Acquisition costs and other non-recurring charges incurred are included in the earliest period presented.

Property and Equipment

12 Months Ended

Dec. 31, 2020

Property and Equipment

Property and Equipment

4. Property and Equipment

Property and equipment, net consists of the following:


	December 31, 2020		December 31, 2019
Computer equipment and software	$	25,824	$	9,685
Furniture and fixtures		7,754		5,891
Leasehold improvements		24,687		17,373
Property and Equipment		58,265		32,949
Accumulated depreciation		(17,438)		(7,004)
Property and Equipment, net	$	40,827	$	25,945

During the years ended December 31, 2020, 2019, and 2018 the Company recorded depreciation expense on property and equipment of $9.3 million, $4.1 million, and $1.2 million, respectively.

Intangible Assets and Goodwill

12 Months Ended

Dec. 31, 2020

Intangible Assets and Goodwill

Intangible Assets and Goodwill

5. Intangible Assets and Goodwill

Intangible Assets

The Company has the following intangible assets, net at December 31, 2020:


	Weighted-
	Average
	Remaining	Gross
	Amortization	Carrying		Accumulated
	Period	Amount		Amortization		Net
Developed technology	7.32	$	439,624	$	(37,704)	$	401,920
Internally developed software	2.32		72,268		(33,179)		39,089
Gaming licenses	3.46		23,685		(6,354)		17,331
Trademarks and tradenames	2.82		6,537		(1,123)		5,414
Customer relationships	4.32		106,836		(14,660)		92,176
Intangible Assets, net		$	648,950	$	(93,020)	$	555,930

The Company has the following intangible assets, net at December 31, 2019:


	Weighted-
	Average
	Remaining	Gross
	Amortization	Carrying		Accumulated
	Period	Amount		Amortization		Net
Internally developed software	2.35	$	43,753	$	(21,188)	$	22,565
Gaming Licenses	4.86		12,003		(629)		11,374
Intangible Assets, net		$	55,756	$	(21,817)	$	33,939

During the years ended December 31, 2020, 2019, and 2018 the Company recorded amortization expense on intangible assets of $68.1 million, $9.5 million, and $6.3 million, respectively

At December 31, 2020, the Company expects its aggregate annual amortization expense for amortizable intangible assets for fiscal 2021 through 2025 to be as follows:


	Estimated
Year ending December 31,	Amortization
2021	$	(105,453)
2022		(97,779)
2023		(88,461)
2024		(78,379)
2025		(61,679)

Goodwill

The changes in the carrying amount of goodwill for the year ended December 31, 2020 by segment (refer to Note 12 for segment definitions) are:


	B2C		B2B		Total
Balance as of December 31, 2019	$	4,738	$	—	$	4,738
Goodwill acquired in SBTech Acquisition		348,345		189,895		538,240
Cumulative Translation Adjustment		—		26,625		26,625
Balance as of December 31, 2020	$	353,083	$	216,520	$	569,603

The Company recorded an increase of $538.2 million in goodwill in connection with the SBTech Acquisition during the year ended December 31, 2020, as outlined in Note 3. No impairment of goodwill was recorded in the years ended December 31, 2020, 2019 and 2018.

Accounts Payable and Accrued Expenses

12 Months Ended

Dec. 31, 2020

Accounts Payable and Accrued Expenses

Accounts Payable and Accrued Expenses

6. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following:


	December 31,		December 31,
	2020		2019
Accounts payable	$	28,076	$	16,618
Accrued compensation and related expenses		48,449		17,770
Accrued marketing		51,436		11,855
Accrued professional fees		10,640		10,344
Accrued operating taxes		19,509		5,745
Accrued partnership fees		21,112		7,868
Accrued other expenses		44,411		15,095
Total	$	223,633	$	85,295

Current and Long-term Liabilities	12 Months Ended
Current and Long-term Liabilities	Dec. 31, 2020
Current and Long-term Liabilities
Current and Long-term Liabilities	7. Current and Long-term Liabilities Revolving Line of Credit In October 2016, the Company entered into an amended and restated loan and security agreement with Pacific Western Bank, which was most recently amended in September 2020 (as amended, the “Credit Agreement”). The Credit Agreement provides a revolving line of credit of up to $60.0 million. The Credit Agreement has a maturity date of March 1, 2022. 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) 6.50%, and the Credit Agreement requires monthly, interest-only payments. In addition, the Company is required to pay quarterly in arrears a fee equal to 0.25% per annum of the unused portion of the revolving line of credit. As of December 31, 2020 and December 31, 2019, the Credit Agreement provided a revolving line of credit of up to $60.0 million and $50.0 million, respectively. There was no principal outstanding as of December 31, 2020. The principal amount outstanding under the Credit Agreement totaled $6.8 million as of December 31, 2019. Net facility available from the Credit Agreement as of December 31, 2020 and December 31, 2019 totaled $55.8 million and $38.8 million, respectively, which exclude the letters of credit outlined in Note 15. The Company is also subject to certain affirmative and negative covenants until maturity. As of December 31, 2020, the Company was in compliance with all covenant obligations under the Credit Agreement. Indirect Taxes Taxation of e-commerce is becoming more prevalent and could negatively affect the Company’s business as it pertains to DFS and its users. The ultimate impact of indirect taxes on the Company’s business is uncertain, as is the period required to resolve this uncertainty. The Company’s estimated contingent liability for indirect taxes represents the Company’s best estimate of tax liability in jurisdictions in which the Company believes taxation is probable. The Company frequently reevaluates its tax positions for appropriateness. Indirect tax statutes and regulations are complex and subject to differences in application and interpretation. Tax authorities may impose indirect taxes on Internet-delivered activities based on statutes and regulations which, in some cases, were established prior to the advent of the Internet and do not apply with certainty to the Company’s business. The Company’s estimated contingent liability for indirect taxes may be materially impacted by future audit results, litigation and settlements, should they occur. The Company’s activities by jurisdiction may vary from period to period, which could result in differences in the applicability of indirect taxes from period to period. As of December 31, 2020, and December 31, 2019, the Company’s estimated contingent liability for indirect taxes was $45.9 million and $35.9 million, respectively. The estimated contingent liability for indirect taxes is recorded within other long-term liabilities on the consolidated balance sheets and general and administrative expenses on the consolidated statements of operations. Convertible Promissory Notes As of December 31, 2019, the Company had $68.4 million of subordinated convertible promissory notes outstanding (the “Convertible Notes”). During 2020, the Company issued additional Convertible Notes with net proceeds of $41.1 million. Upon the consummation of the Business Combination, the mandatory conversion feature was triggered and all Convertible Notes were converted into shares of the Company’s Class A common stock. As of December 31, 2020, the Company did not have any Convertible Notes outstanding. Refer to Note 8 of our Consolidated Financial Statements for additional information.

Stockholders' Equity (Deficit)	12 Months Ended
Stockholders' Equity (Deficit)	Dec. 31, 2020
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit)	8. Stockholders’ Equity (Deficit) The consolidated statements of changes in equity reflect the Reverse Recapitalization and SBTech Acquisition as defined in Note 1 as of April 23, 2020. As Old DK was deemed the accounting acquirer in the Reverse Recapitalization with DEAC, all periods prior to the consummation date reflect the balances and activity of Old DK. The consolidated balances as of December 31, 2019 and 2018 from the audited consolidated financial statements of Old DK as of that date, share activity (convertible redeemable preferred stock and common stock) and per share amounts in these consolidated statements of equity were retroactively adjusted, where applicable, using the recapitalization exchange ratio of 0.353628. All convertible redeemable preferred stock classified as mezzanine was retroactively adjusted, converted into Class A common stock, and reclassified to permanent as a result of the Reverse Recapitalization. Redeemable convertible preferred Series E-1 stock converted into shares of Old DK common stock at a share conversion factor of 1.40 whereas Series F converted into shares of Old DK common stock at a share conversion factor of 1 and both were immediately exchanged for Class A common stock of the Company using the recapitalization exchange ratio of 0.353628 as a result of the Reverse Recapitalization. Immediately prior to the Business Combination, Old DK issued 393.0 million shares of Class B common stock to Jason Robins (the Chief Executive Officer of Old DK and of the Company) which converted into 393.0 million shares of Class B common stock of the Company as a result of the Business Combination and is recorded as stock-based compensation for the year ended December 31, 2020. Such shares carry 10 votes per share and allow Jason Robins to have as of the closing of the Business Combination, approximately 90% of the voting power of the capital stock of DraftKings on a fully-diluted basis. As these shares have no economic rights and are non-participating, they are allocated no earnings or losses when calculating earnings per share pursuant to the two-class method. Upon the consummation of the Business Combination, the mandatory conversion feature was triggered for the Company’s convertible notes. All outstanding principal of $109.2 million and unpaid accrued interest of $3.4 million was collectively converted to equity securities at $10 per share. The noteholders received 11.3 million shares of Class A common stock in New DraftKings as result of the conversion. As part of the Business Combination $667.3 million of Class A common stock and Additional Paid in Capital was recorded, net of transaction costs of $10.6 million, in relation to DEAC shares being recapitalized. The Company then used $188.3 million as cash consideration in its acquisition of SBTech and $7.2 million for the buyout of unaccredited investors. Net cash proceeds to the Company were $484.0 million. In June 2020, we issued 16.0 million new shares of our Class A common stock in a public offering for net proceeds (net of underwriting fees) of $620.8 million. In October 2020, the Company issued 20.8 million shares of its Class A common stock in a public offering for net proceeds (net of underwriting fees) of $1,059.3 million. As of December 31, 2020, 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, 2020 or December 31, 2019.

Revenue Recognition

12 Months Ended

Dec. 31, 2020

Revenue Recognition

Revenue Recognition

9. Revenue Recognition

Deferred Revenue

The Company included deferred revenue within accounts payable and accrued expenses and liabilities to users in the consolidated balance sheets. The deferred revenue balances were as follows:


	Year Ended December 31,
	2020		2019
Deferred revenue, beginning of the period	$	20,760	$	13,581
Deferred revenue, end of the period	$	30,627	$	20,760
Revenue recognized in the period from amounts included in deferred revenue at the beginning of the period	$	11,221	$	11,865

Deferred revenue primarily represents contract liabilities related to the Company’s obligation to transfer future value in relation to in period transactions in which the Company has received consideration. Such obligations are recognized as liabilities when awarded to users and are recognized as revenue when those liabilities are later resolved. The Company included deferred revenue within accounts payable and accrued expenses and liabilities to users on the consolidated balance sheets.

Revenue Disaggregation

Disaggregation of revenue for years ended December 31, 2020, 2019 and 2018 are as follows:


	Year Ended December 31,
	2020		2019		2018
Online gaming	$	517,632	$	308,177	$	219,131
Gaming software		75,629		—		—
Other		21,271		15,233		7,146
Total Revenue	$	614,532	$	323,410	$	226,277

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

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


	Year ended December 31,
	2020		2019		2018
United States	$	544,463	$	318,144	$	219,415
International		70,069		5,266		6,862
Total Revenue	$	614,532	$	323,410	$	226,277

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
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-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

+ Details

Stock-Based Compensation

12 Months Ended

Dec. 31, 2020

Stock-Based Compensation

Stock-Based Compensation

10. Stock-Based Compensation

In 2012, the Board of Directors adopted the 2012 Stock Option and Restricted Stock Incentive Plan (the “2012 Plan”), which provides for the granting of incentive and nonqualified stock options, shares of restricted stock, and other equity interests or awards in the Company. The Company only issued time-based vesting awards under the 2012 Plan.

In 2017, the Board approved the 2017 Equity Incentive Plan (the “2017 Plan”). No new awards have been issued under the 2012 Plan following the approval of the 2017 Plan. The 2017 Plan provides for the granting of incentive and nonqualified stock options, shares of restricted stock, and other equity interests or awards in the Company. The Company issued time-based and performance-based vesting awards under the 2017 Plan. As of December 31, 2020, the total combined number of shares available for grant under the 2012 Plan and 2017 Plan was 10.1 million.

In 2020, the Board approved the 2020 Incentive Award Plan (the “2020 Plan”, together with the 2012 Plan and the 2017 Plan, the “Plans”). The 2020 Plan provides for the granting of incentive and nonqualified stock options, shares of restricted stock, and other equity interests or awards in the Company. As of December 31, 2020, the total number of shares available for grant under the 2020 Plan was 35.1 million shares. The Company issued time-based and performance-based vesting awards under the 2020 Plan.

As of December 31, 2020, a share reserve established that the aggregate number of shares may not exceed 900.0 million shares under the Plans. 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. Incentive stock options may only be granted to employees and the exercise price shall not be less than the fair value of the stock on the grant date. For awards issued under the 2012 Plan, if an employee owns more than 10% of the combined voting stock of the Company, the exercise price may not be less than 110% of the fair market value of the stock on the grant date.

The Company has historically issued three types of stock-based compensation: time-based awards, long term incentive plan (“LTIP”) awards and performance-based stock compensation plan (“PSP”) awards. 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 short-term performance-based equity awards which establish performance objectives related to one or two particular fiscal years. All stock-based compensation awards expire seven to ten years after the grant date.

Time-based awards generally vest over a four-year period in annual and/or quarterly installments and expire no later than ten years from the date of grant. Time-based options are valued using the Black-Scholes option-pricing model with the assumptions noted in the table below. The fair value of time-based restricted stock units (“RSUs”) is estimated on the grant date using the underlying share price.

PSP awards vest based on meeting both revenue and EBITDA targets. PSP awards have been issued under the terms of the 2017 Plan and 2020 Plan. PSP options are valued using the Black-Scholes option-pricing model with the assumptions noted in the table below. The fair value of PSP RSUs is estimated on the grant date using the underlying share price.

The fair value of each option is estimated on the grant date using the Black-Scholes option-pricing model and the assumptions noted in the table below. The fair value is recognized over the requisite service period of the awards, which is generally the vesting period. For awards with only service-based vesting conditions, the Company recognizes compensation cost using the straight-line method. Expected volatility is based on average volatility for a representative sample of comparable public companies.

The expected term represents the period of time that the options are expected to be outstanding. The expected term is estimated using the midpoint between the requisite service period and the contractual term of the option. The risk-free interest rate is estimated using the rate of return on U.S. treasury notes with a life that approximates the expected life of the option. The fair value of the stock options issued was measured using the following assumptions for the years ended December 31:


	2020		2019		2018
Risk free interest rate	0.41	%	1.95	%	2.80	%
Expected term (in years)	6.11		6.02		6.11
Expected volatility	42.46	%	41.48	%	41.98	%
Expected dividend yield	0.00	%	0.00	%	0.00	%

For grants with market-based conditions, the fair value of each award was determined using a Monte Carole Simulation. The model uses multiple input variables that determined the probability of satisfying the market condition requirements as follows:


	2020
Risk free interest rate	1.72	%
Expected volatility	38.92	%
Expected dividend yield	0.00	%

The following table shows stock option activity for the year ended December 31, 2020, 2019, and 2018:


									Weighted	Weighted		Weighted
									Average	Average		Average
									Exercise	FMV		Remaining Term		Aggregate
									Price of	of		of Options		Intrinsic
	Time-based		PSP		LTIP		Total		Options	RSUs		(Years)		Value
	Options	RSUs	Options	RSUs	Options	RSUs
Outstanding at December 31, 2018	66,527	—	5,161	—	40,189	—	111,877	$	0.84	$	—	8.15	$	69,765
Recapitalization impact	(43,003)	—	(3,336)	—	(25,978)	—	(72,317)		1.54		—	—		—
Outstanding at December 31, 2018	23,524	—	1,825	—	14,211	—	39,560		2.38		—	8.15		69,765
Granted	5,756	—	2,214	—	1,990	—	9,960		4.68		—	—		—
Exercised options / vested RSUs	(1,003)	—	(39)	—	—	—	(1,042)		1.16		—	—		—
Forfeited	(424)	—	(28)	—	—	—	(452)		3.36		—	—		—
Outstanding at December 31, 2019	27,853	—	3,972	—	16,201	—	48,026		2.86		—	7.64		203,431
Granted	4,781	3,816	—	907	—	28,354	37,858		4.11		34.63	—		—
Exercised options / vested RSUs	(11,621)	(149)	(932)	—	(2,347)	(15,554)	(30,603)		1.28		21.03	—		—
Forfeited	(494)	(119)	(17)	—	—	—	(630)		5.24		33.72	—		—
Outstanding at December 31, 2020	20,519	3,548	3,023	907	13,854	12,800	54,651	$	3.57	$	47.01	7.05	$	2,410,943

As of December 31, 2020, total unrecognized stock-based compensation expense of $848.6 million related to granted and unvested share-based compensation arrangements is expected to be recognized over a weighted-average period of 2.2 years. The following table shows stock compensation expense for the years ended December 31, 2020, 2019, and 2018:


	Year ended						Year ended						Year ended
	December 31, 2020						December 31, 2019						December 31, 2018
	Options		RSUs		Total		Options		RSUs		Total		Options		RSUs		Total
Time Based	$	8,176	$	21,286	$	29,462	$	7,065	$	—	$	7,065	$	7,210	$	—	$	7,210
PSP		1,633		21,275		22,908		5,222		—		5,222		—		—		—
LTIP (1)		9,552		255,116		264,668		5,326		—		5,326		—		—		—
B Shares (2)		8,000		—		8,000		—		—		—		—		—		—
Total	$	27,361	$	297,677	$	325,038	$	17,613	$	—	$	17,613	$	7,210	$	—	$	7,210

(1) Resulting from amortization of stock-based compensation expense and anticipated achievement of share price targets

(2) Related to the Business Combination; Class B shares have no economic rights.

The weighted-average grant-date fair values of options granted during the years ended December 31, 2020 and 2019 were $2 per share. During the years ended December 31, 2020 and 2019, the Company received proceeds from the exercise of stock options of $27.6 million and $1.1 million, respectively, and the aggregate intrinsic value of those stock options exercised was $1,256 million and $3.4 million, respectively. The total grant date fair value of stock options that vested during the years ended December 31, 2020, 2019 and 2018 were $35.1 million and $9.8 million, respectively.

In September 2019, the Company issued warrants to a non-employee vendor providing marketing services. The warrant allows the vendor to purchase 0.3 million shares of common stock for an exercise price of $0.01 per share over a 5-year term. The warrants were issued for marketing services provided to the Company, were fully vested, and had no future requisite service period. Compensation cost of $0.4 million was recognized entirely in the year ended December 31, 2019. Compensation cost for this warrant is presented within general and administrative expenses in the consolidated statement of operations. As of December 31, 2019, the warrant remains unexercised.

Income Taxes

12 Months Ended

Dec. 31, 2020

Income Taxes

Income Taxes

11. Income Taxes

Loss before income tax (benefit) provision for the years ended December 31, 2020, 2019 and 2018 consist of the following:


	Year ended December 31,
	2020		2019		2018
United States	$	(780,917)	$	(142,198)	$	(76,122)
Foreign		(63,409)		1		7
Loss before income tax (benefit) provision	$	(844,326)	$	(142,197)	$	(76,115)

The components of the provision (benefit) for income taxes consisted of the following:


	Year Ended December 31,
	2020		2019		2018
Current:
Federal	$	(49)	$	—	$	—
State		250		—		—
Foreign		1,456		4		86
Total current provision		1,657		4		86
Deferred:
Federal		(442)		—		9
State		31		54		10
Foreign		(1,868)		—		—
Total deferred provision		(2,279)		54		19
Total income tax (benefit) provision	$	(622)	$	58	$	105

The reconciliation between income taxes computed at the U.S. statutory income tax rate to our provision for income taxes for the years ended December 31, 2020, 2019 and 2018 are as follows:


	Year ended December 31,
	2020		2019		2018
Provision (benefit) for income taxes at 21% rate	$	(177,309)	$	(29,863)	$	(15,984)
Prior year provision true-ups		(5)		3,164		(157)
State taxes, net of federal benefit		(13,328)		(7,522)		(7,525)
Stock-based compensation (benefit) expense		(190,766)		2,412		430
Non-deductible lobbying expenses		2,072		1,885		1,352
Non-deductible acquisition expenses		4,041		2,068		—
Change in valuation allowance		243,352		19,988		21,584
Net operating loss write-off		998		7,246		—
Non-deductible executive compensation		118,423		—		—
Foreign rate differential		13,456		—		—
Foreign currency adjustments		(2,086)		—		—
Income tax reserves		1,676		—		—
Other		(1,146)		680		405
Total income tax (benefit) provision	$	(622)	$	58	$	105

Significant components of the Company’s deferred tax assets (liabilities) as of December 31, 2020 and 2019 are as follows:


	Year ended December 31,
	2020		2019
Deferred tax assets:
Net operating loss carryforwards	$	459,508	$	217,836
Accrual and other temporary differences		19,432		21,045
Operating lease		15,002		—
Stock-based compensation		8,618		4,552
Total deferred tax assets:		502,560		243,433
Deferred tax liability:
Capitalized software costs		(8,469)		(6,335)
Fixed assets		(1,351)		(2,035)
Operating lease		(11,251)		—
Total Net Deferred Tax Assets		481,489		235,063
Valuation allowance		(478,667)		(235,280)
Net deferred tax assets (liabilities)	$	2,822	$	(217)

The Company records its deferred tax assets in deposits and other non-current assets and deferred tax liabilities 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, 2020. For the year ended December 31, 2020, the U.S. valuation allowance increased by $243.4 million primarily based on the current year operating loss.

As of December 31, 2020, the Company had U.S. federal and state tax net operating loss carryforwards of $671.3 million and $1,690.4 million, respectively, which may be available to offset future income tax liabilities and expire at various dates beginning in 2032 through 2040. Additionally, the Company has $980.0 million of federal net operating loss carryforwards which carryforward indefinitely. The Company has generated $2.7 million of foreign operating loss carryforwards which carryforward indefinitely.

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. 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. There could be additional ownership changes in the future, which may result in additional limitations on the utilization of the NOL and tax credit carryforwards. The Company has analyzed the impact of these limitations on its attributes and included the impact of these limitations in its U.S. deferred tax assets.

Undistributed earnings of certain foreign subsidiaries are immaterial as of December 31, 2020. Accordingly, no provision for state, local and foreign withholding income taxes has been provided thereon.

In addition to filing federal income tax returns, the Company files income tax returns in numerous states and foreign jurisdictions that impose an income tax. The Company is subject to U.S. federal, state and local income tax examinations by tax authorities for the years beginning in 2012 due to the carryover of previously incurred NOLs. The Company is currently under a federal income tax examination for 2017. Tax years after 2011 remain open in certain major foreign jurisdictions and are subject to examination by the taxing authorities.

The following table presents a reconciliation of the total amounts of unrecognized tax benefits, excluding interest and penalties, included in "Long-term Income Tax Liabilities" on the balance sheet.


	Year ended December 31,
	2020		2019		2018
Unrecognized tax benefits at the beginning of the year	$	—	$	—	$	—
Additions for tax positions of prior years		70,341		—		—
Unrecognized tax benefits at the end of the year	$	70,341	$	—	$	—

If the unrecognized tax benefit balance as of December 31, 2020 were recognized, it would decrease the Company’s effective tax rate. The Company does not anticipate any material changes to its unrecognized tax benefits within the next 12 months.

The Company recognizes interest and penalties accrued related to unrecognized tax benefits as income tax expense. During the years ended December 31, 2020, 2019 and 2018 the Company recognized $1.7 million, $0.0 million and $0.0 million in interest and penalties. The Company had $1.7 million, $0.0 million and $0.0 million of interest and penalties accrued at December 31, 2020, 2019 and 2018, respectively.

On March 27, 2020, the United States enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The CARES Act is an emergency economic stimulus package that includes spending and tax breaks to strengthen the United States economy and fund a nationwide effort to curtail the effect of COVID-19. As of December 31, 2020, the Company has analyzed the provisions of the CARES Act and determined it did not have a significant impact to the Company.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

Segment Information

12 Months Ended

Dec. 31, 2020

Segment Information

Segment Information

12. Segment Information

Prior to the second quarter of fiscal year 2020, the Company operated its business and reported its results through a single reportable segment. As a result of the acquisition of SBTech on April 23, 2020, the Company began to operate its business and report its results through two operating and reportable segments: B2C and B2B, in accordance with ASC Topic 280, Segment Reporting. The B2C segment is comprised of the Old DK business and the B2B segment is comprised of SBTech in its entirety. The B2C segment primarily provides users with DFS, Sportsbook and iGaming products while the B2B segment is involved in the design, development and licensing of sports betting and casino gaming software for its sportsbook and casino gaming products.

Operating segments are components of the Company for which separate discrete financial information is available to and evaluated regularly by the chief operating decision maker (“CODM”), who is the Company’s Chief Executive Officer, in making decisions regarding resource allocation and assessing performance. The CODM assesses a combination of metrics such as revenue and Adjusted EBITDA to evaluate the performance of each operating and reportable segment.

Any intercompany revenues or expenses are eliminated in consolidation. All of the Company’s operating revenues and expenses, other than those excluded from Adjusted EBITDA as detailed below, are allocated to the Company’s reportable segments. We define and calculate Adjusted EBITDA as net loss before the impact of interest income or expense, income tax expense and depreciation and amortization, and further adjusted for the following items: stock-based compensation, transaction-related costs, litigation, settlement and related costs and certain other non-recurring, non-cash and non-core items, as described in the reconciliation below.

A measure of segment assets and liabilities has not been currently provided to the Company’s CODM and therefore is not shown below. Summarized financial information for the Company’s segments is shown in the following tables:


	Year ended December 31,
	2020		2019		2018
Revenue:
B2C	$	538,903	$	323,410	$	226,277
B2B		75,629		—		—
Total revenue		614,532		323,410		226,277

Adjusted EBITDA:
B2C		(393,461)		(98,640)		(58,850)
B2B		1,542		—		—
Total adjusted EBITDA		(391,919)		(98,640)		(58,850)
Adjusted for:
Depreciation and amortization		77,410		13,636		7,499
Interest expense (income), net		1,070		(1,348)		(666)
Income tax (benefit) provision		(622)		58		105
Stock-based compensation		325,038		17,613		7,210
Transaction-related costs		36,406		10,472		—
Litigation, settlement and related costs		6,839		3,695		3,222
Other non-recurring costs and special project costs		5,644		2,489		—
Other non-operating costs		566		(2,521)		—
Net Loss attributable to common shareholders	$	(844,270)	$	(142,734)	$	(76,220)

Due to the timing of the Business Combination, the year ended December 31, 2020 reflects B2B/SBTech activity beginning April 24, 2020 and the year ended December 31, 2019 does not reflect B2B/SBTech activity.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8924-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 34
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8981-108599

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 21
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8721-108599

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9031-108599

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (f)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 26
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8844-108599

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9038-108599

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9054-108599

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8657-108599

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 21
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8721-108599

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-URI http://asc.fasb.org/topic&trid=2134510

+ Details

Loss Per Share

12 Months Ended

Dec. 31, 2020

Loss Per Share

Loss Per Share

13. Loss Per Share

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


	Year ended December 31,
	2020		2019		2018
Net loss	$	(844,270)	$	(142,734)	$	(76,220)
Basic and diluted weighted-average common shares outstanding		305,593		184,603		169,778
Loss per share attributable to common stockholders:
Basic and diluted	$	(2.76)	$	(0.77)	$	(0.45)

There were no preferred or other dividends declared for the period. For the periods presented, the following securities were not required to be included in the computation of diluted shares outstanding:


	Year ended December 31,
	2020		2019		2018
Warrants		2,061		182		856
Stock options and RSUs		54,651		48,031		39,563
Convertible notes		—		7,409		—
Total		56,712		55,622		40,419

Related-Party Transactions	12 Months Ended
Related-Party Transactions	Dec. 31, 2020
Related-Party Transactions
Related-Party Transactions	14. Related-Party Transactions Media Purchase Agreement (“MPA”) In July 2015, Old DK entered into an MPA with a related party for various media placements from 2015 through 2018. The MPA was amended to extend through 2021. The annual commitment for calendar years 2017 through 2021 was $15.0 million per year, plus an additional contingent commitment of $5.0 million per year. The contingent commitment relates to the Company’s allocation of its non-integration advertising with other advertisers. Effective January 2019, the future minimum commitments related to the MPA were reduced to $15.0 million in aggregate through December 31, 2021 ($5.0 million per year) and the contingent commitment was removed. If the Company satisfies the $15.0 million commitment prior to December 31, 2021, the MPA will expire unless the Company elects to extend the MPA through the next NFL season with no required minimum. The Company recorded expense of $25.8 million, $8.4 million and $23.3 million related to the MPA for the years ended December 31, 2020, 2019, and 2018, respectively, in sales and marketing expenses in the consolidated statements of operations. As of December 31, 2020 and 2019, $0 and $2.4 million, respectively, of MPA is included in accounts payable and accrued expenses in the consolidated balance sheets. Private Placement Agent Old DK entered into an engagement letter with a related party (the “Private Placement Agent”) in August 2019, as amended in December 2019. Pursuant to the engagement letter, the Private Placement Agent has acted as the exclusive financial advisor to Old DK, and Old DK agreed to pay certain acquisition and financing fees in connection with the Business Combination with SBTech and DEAC. For the years ended December 31, 2020, 2019, and 2018, Old DK incurred $12.3 million, $0, and $0, respectively, of fees with the Private Placement Agent. For the $12.3 million of fees incurred during the year ended December 31, 2020, approximately $7.0 million were charged against additional paid in capital in the accompanying consolidated balance sheet with the remainder included in general and administrative expenses in the accompanying consolidated statement of operations. Receivables from Equity Method Investment The Company provides office space and general operational support to DKFS, LLC, an equity-method affiliate. The operational support is primarily general and administrative services. As of December 31, 2020, and December 31, 2019, the Company had $1.1 million and $1.0 million, respectively, of receivables from the entity related to those services and expenses to be reimbursed to the Company, which are included within non-current assets in the consolidated balance sheets. In November of 2020, the Company invested an additional $1.0 million into DKFS, LLC. Subsequent to December 31, 2020, the Company committed to invest up to $17.0 million into DBDK Venture Fund I, LP, a Delaware limited partnership and a subsidiary of DKFS LLC. Transactions with a Shareholder and their Immediate Family Members As of December 31, 2020, the Company had a $1.9 million receivable from a shareholder and director included in other receivables. In addition, the Company had $2.7 million in sales and $0.5 million of lease expenses to entities related to an immediate family member of the shareholder for the year ended December 31, 2020 and had an associated accounts receivable balance of $0.5 million as of December 31, 2020 included in accounts receivable in the balance sheet. There were no related party transactions with the shareholder or their immediate family members for the years ended December 31, 2019 and 2018 and no related accounts receivable balance as of December 31, 2019.

Leases, Commitments and Contingencies

12 Months Ended

Dec. 31, 2020

Leases, Commitments and Contingencies

Leases, Commitments and Contingencies

15. Leases, Commitments and Contingencies

Leases

The Company leases corporate office facilities, data centers, and motor vehicles under operating lease agreements. The Company’s lease agreements have terms not exceeding ten years.

The components of lease expense for the year ended December 31, 2020 are as follows:


	December 31, 2020
Operating lease cost	$	14,968
Short term lease cost		2,538
Variable lease cost		3,652
Sublease income		(1,382)
Total lease cost	$	19,776

Other information related to leases for the year ended December 31, 2020 are as follows:


	December 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	11,586
Right-of-use assets obtained in exchange for new operating lease liabilities	$	42,673
Weighted-average remaining lease term (in years):
Operating leases		6.7
Weighted-average discount rate:
Operating leases		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.

Maturity of lease liabilities as of December 31, 2020 are as follows:


	December 31, 2020
2021	$	17,288
2022		16,352
2023		15,143
2024		12,502
2025		11,257
Thereafter		28,272
Total undiscounted future cash flows		100,814
Less: Imputed interest		(19,202)
Present value of undiscounted future cash flows	$	81,612

Disclosures Related to Periods Prior to Adoption of ASC 842

Total rent expense for the years ended December 31, 2019, and 2018 was $10.4 million and $5.3 million, respectively.

Future minimum payments under operating leases as of December 31, 2019, are as follows:


	Years ending December 31,
2020	$	10,067
2021		8,300
2022		8,374
2023		8,292
2024		7,310
Thereafter		23,685
Total	$	66,028

Other Contractual Obligations and Contingencies

The Company is a party to several non-cancelable contracts with vendors where the Company is obligated to make future minimum payments under the terms of these contracts as follows:


	Years ending December 31,
2021	$	146,748
2022		135,355
2023		117,331
2024		106,076
2025		100,700
Thereafter		309,900
Total	$	916,110

* The above commitments include $437.0 million of future expected contractual obligations to a media company as part of a multi-year content integration agreement.

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.

In Re: Daily Fantasy Sports Litigation (Multi-District Litigation)

Between late 2015 and early 2016, certain individuals who allegedly registered and competed in daily sports fantasy contests on our and FanDuel’s websites, and their family members, filed numerous actions (primarily purported class actions) against us, FanDuel, and other related parties in courts across the United States. In February 2016, these actions were consolidated in a multi-district litigation in the U.S. District Court for the District of Massachusetts. The plaintiffs asserted 27 claims arising under both state and federal law against the DFS defendants. The plaintiffs’ claims against us generally fall into four categories: (1) the Company’s online daily fantasy sports contests constitute illegal gambling; (2) the Company promulgated false or misleading advertisements that emphasized the ease of play and likelihood of winning; (3) the Company induced consumers to lose money through a deceptive bonus program; and (4) the Company allowed our employees to participate in competitors’ fantasy sports contests using non-public information, which gave such employees an unfair advantage over other contestants. The plaintiffs seek money damages, equitable relief, and disgorgement of gains against the Company. DraftKings intend to vigorously defend this case. If the plaintiffs obtain a judgment in their favor in this matter, the Company could be subject to substantial damages and it could be restricted from offering DFS contests in certain states. The Company has established an accrual for this matter, but it cannot provide any assurance as to the outcome of this lawsuit.

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 DraftKings’ financial condition, although the outcome could be material to DraftKings’ operating results for any particular period, depending, in part, upon the operating results for such period.

1,000 Mass Arbitration Demands Filed by One Law Firm

On October 21, 2019, a law firm filed 1,000 “mass arbitrations” against the Company with the American Arbitration Association (“AAA”) on behalf of purported DraftKings users that assert claims similar to those in the multi-district litigation described above. After the law firm filed the 1,000 “mass arbitrations,” the AAA informed DraftKings in writing that it would close their files on, and decline to administer, the 1,000 “mass arbitrations” unless the Company waived two provisions in its terms of use and that the parties would then be free to bring their claims in court. The Company elected not to waive the subject terms of use provisions. On November 6, 2020 the law firm filed a complaint against DraftKings in Massachusetts Superior Court (Suffolk County), entitled Aaron Abramson, et al. v. DraftKings. In Abramson, the law firm is seeking, among other things, to compel arbitration against DraftKings on behalf of nine-hundred and ninety-nine (999) individuals.

The Company intends to vigorously defend all claims. If the claimants successfully compel arbitration and then obtain a judgment in their favor in these arbitrations, the Company could be subject to substantial damages and it could be restricted from offering DFS contests in certain states. 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 DraftKings’ financial condition, although the outcome could be material to DraftKings’ operating results for any particular period, depending, in part, upon the operating results for such period. The Company cannot predict with any degree of certainty the outcome of Abramson or determine the extent of any potential liability or damages should the cases proceed to arbitration. The Company also cannot provide an estimate of the possible loss or range of loss.

Interactive Games LLC

On June 14, 2019, Interactive Games LLC (“IG”) 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 additional patents. DraftKings 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.

Internal Revenue Service

The Company is currently under Internal Revenue Service audit for prior tax years, with the primary unresolved issues relating to excise taxation of fantasy sports contests and informational reporting and withholding. 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.

Letters of Credit

In connection with the Credit Agreement with Pacific Western Bank, the Company has entered into several letters of credit totaling $4.2 million and $4.5 million as of December 31, 2020 and December 31, 2019, respectively, for the Company’s leases of office space.

Summary of Significant Accounting Policies and Practices (Policies)

12 Months Ended

Dec. 31, 2020

Summary of Significant Accounting Policies and Practices

Basis of Presentation and Principles of Consolidation

Concentrations Related to Credit Risk and Vendors

Business Combinations

Cash and cash equivalents

Cash Reserved for Users

Receivables Reserved for Users

Accounts Receivables

Property and Equipment, net

Property and Equipment, Net


Computer equipment and software		3 years
Furniture and fixtures		7 years
Leasehold improvements		Lesser of the lease terms or the estimated useful lives of the improvements, generally 1–10 years

Intangible Assets, Net

Developed Technology

Customer Relationships

Internally Developed Software

Gaming Licenses

Trademarks and Tradenames

Impairment of Long-Lived Assets

Goodwill

Equity Method Investment

The Company determines revenue recognition through the following steps:

Identify the contract, or contracts, with the customer;

Identify the performance obligations in the contract;

Determine the transaction price;

Allocate the transaction price to performance obligations in the contract; and

Recognize revenue when, or as, the Company satisfies performance obligations by transferring the promised good or services.

Online Gaming

Gaming software

Transaction Price Considerations

Certain costs to obtain or fulfill contracts

Contract balances

Cost of Revenue

Sales and Marketing

Product and Technology

General and Administrative

Stock-based Compensation

Income Taxes

Fair Value Measurements

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Earnings (loss) per share

Recently Adopted Accounting Pronouncements

ASU 2016-02, Leases (Topic 842)

ASU No. 2018-07, Compensation — Stock Compensation (Topic 718)

ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326)

ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40)

Recent Accounting Pronouncements Not Yet Adopted

Summary of Significant Accounting Policies and Practices (Tables)

12 Months Ended

Dec. 31, 2020

Summary of Significant Accounting Policies and Practices

Schedule of property plant and equipment useful life


Computer equipment and software		3 years
Furniture and fixtures		7 years
Leasehold improvements		Lesser of the lease terms or the estimated useful lives of the improvements, generally 1–10 years

Business Combination (Tables)

12 Months Ended

Dec. 31, 2020

Business Combination

Summary of consideration transferred at Closing

The following summarizes the consideration transferred at Closing for the SBTech Acquisition (in thousands):


Cash consideration (1)	$	184,688
Share consideration (2)		789,064
Other cash consideration (3)		3,615
Total SBTech consideration	$	977,367

Summary of valuation analyses pertaining to intangible assets acquired and tax liabilities assumed including the calculation of deferred tax assets and liabilities

The following table summarizes the consideration paid for SBTech and the final fair value of the assets acquired and liabilities assumed at the acquisition date on April 23, 2020.


Cash and cash equivalents	$	9,639
Trade receivables		17,815
Other current assets		3,674
Property and equipment		10,677
Intangible assets		484,051
Operating lease right-of-use assets		27,696
Other non-current assets		1,017
Total identifiable assets acquired		554,569
Liabilities assumed:
Accounts payable and accrued expenses		23,613
Current operating lease liabilities		3,583
Long-term income tax liability		63,575
Non-current operating lease liabilities		24,113
Other long-term liabilities		558
Total liabilities assumed		115,442
Net assets acquired (a)		439,127
Purchase consideration (b)		977,367
Goodwill (b) – (a)	$	538,240

Summary of intangible assets


			Weighted-
			Average
			Useful Life (in
	Fair Value		years)
Developed Technology	$	385,566	8
Customer relationships		93,699	5
Trademarks and trade names		4,308	3
Gaming License		478	2-3
Total	$	484,051

Summary of pro forma financial information


	Year Ended December 31,
	2020		2019
	Pro Forma		Pro Forma
Revenue	$	643,502	$	431,834
Net loss	$	(845,086)	$	(219,829)

Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2020

Property and Equipment

Schedule of property and equipment, net


	December 31, 2020		December 31, 2019
Computer equipment and software	$	25,824	$	9,685
Furniture and fixtures		7,754		5,891
Leasehold improvements		24,687		17,373
Property and Equipment		58,265		32,949
Accumulated depreciation		(17,438)		(7,004)
Property and Equipment, net	$	40,827	$	25,945

Intangible Assets and Goodwill (Tables)

12 Months Ended

Dec. 31, 2020

Intangible Assets and Goodwill

Schedule of intangible assets


	Weighted-
	Average
	Remaining	Gross
	Amortization	Carrying		Accumulated
	Period	Amount		Amortization		Net
Developed technology	7.32	$	439,624	$	(37,704)	$	401,920
Internally developed software	2.32		72,268		(33,179)		39,089
Gaming licenses	3.46		23,685		(6,354)		17,331
Trademarks and tradenames	2.82		6,537		(1,123)		5,414
Customer relationships	4.32		106,836		(14,660)		92,176
Intangible Assets, net		$	648,950	$	(93,020)	$	555,930

The Company has the following intangible assets, net at December 31, 2019:


	Weighted-
	Average
	Remaining	Gross
	Amortization	Carrying		Accumulated
	Period	Amount		Amortization		Net
Internally developed software	2.35	$	43,753	$	(21,188)	$	22,565
Gaming Licenses	4.86		12,003		(629)		11,374
Intangible Assets, net		$	55,756	$	(21,817)	$	33,939

Schedule of estimated future amortization of intangible assets


	Estimated
Year ending December 31,	Amortization
2021	$	(105,453)
2022		(97,779)
2023		(88,461)
2024		(78,379)
2025		(61,679)

Schedule of Goodwill


	B2C		B2B		Total
Balance as of December 31, 2019	$	4,738	$	—	$	4,738
Goodwill acquired in SBTech Acquisition		348,345		189,895		538,240
Cumulative Translation Adjustment		—		26,625		26,625
Balance as of December 31, 2020	$	353,083	$	216,520	$	569,603

Accounts Payable and Accrued Expenses (Tables)

12 Months Ended

Dec. 31, 2020

Accounts Payable and Accrued Expenses

Schedule of Accounts payable and accrued expenses


	December 31,		December 31,
	2020		2019
Accounts payable	$	28,076	$	16,618
Accrued compensation and related expenses		48,449		17,770
Accrued marketing		51,436		11,855
Accrued professional fees		10,640		10,344
Accrued operating taxes		19,509		5,745
Accrued partnership fees		21,112		7,868
Accrued other expenses		44,411		15,095
Total	$	223,633	$	85,295

Revenue Recognition (Tables)

12 Months Ended

Dec. 31, 2020

Revenue Recognition

Summary of deferred revenue balances


	Year Ended December 31,
	2020		2019
Deferred revenue, beginning of the period	$	20,760	$	13,581
Deferred revenue, end of the period	$	30,627	$	20,760
Revenue recognized in the period from amounts included in deferred revenue at the beginning of the period	$	11,221	$	11,865

Summary of disaggregation of revenue


	Year Ended December 31,
	2020		2019		2018
Online gaming	$	517,632	$	308,177	$	219,131
Gaming software		75,629		—		—
Other		21,271		15,233		7,146
Total Revenue	$	614,532	$	323,410	$	226,277

Summary of company's revenue by geographical location


	Year ended December 31,
	2020		2019		2018
United States	$	544,463	$	318,144	$	219,415
International		70,069		5,266		6,862
Total Revenue	$	614,532	$	323,410	$	226,277

Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2020

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of assumptions used to measure fair value


	2020		2019		2018
Risk free interest rate	0.41	%	1.95	%	2.80	%
Expected term (in years)	6.11		6.02		6.11
Expected volatility	42.46	%	41.48	%	41.98	%
Expected dividend yield	0.00	%	0.00	%	0.00	%

Schedule of stock option activity

The following table shows stock option activity for the year ended December 31, 2020, 2019, and 2018:


									Weighted	Weighted		Weighted
									Average	Average		Average
									Exercise	FMV		Remaining Term		Aggregate
									Price of	of		of Options		Intrinsic
	Time-based		PSP		LTIP		Total		Options	RSUs		(Years)		Value
	Options	RSUs	Options	RSUs	Options	RSUs
Outstanding at December 31, 2018	66,527	—	5,161	—	40,189	—	111,877	$	0.84	$	—	8.15	$	69,765
Recapitalization impact	(43,003)	—	(3,336)	—	(25,978)	—	(72,317)		1.54		—	—		—
Outstanding at December 31, 2018	23,524	—	1,825	—	14,211	—	39,560		2.38		—	8.15		69,765
Granted	5,756	—	2,214	—	1,990	—	9,960		4.68		—	—		—
Exercised options / vested RSUs	(1,003)	—	(39)	—	—	—	(1,042)		1.16		—	—		—
Forfeited	(424)	—	(28)	—	—	—	(452)		3.36		—	—		—
Outstanding at December 31, 2019	27,853	—	3,972	—	16,201	—	48,026		2.86		—	7.64		203,431
Granted	4,781	3,816	—	907	—	28,354	37,858		4.11		34.63	—		—
Exercised options / vested RSUs	(11,621)	(149)	(932)	—	(2,347)	(15,554)	(30,603)		1.28		21.03	—		—
Forfeited	(494)	(119)	(17)	—	—	—	(630)		5.24		33.72	—		—
Outstanding at December 31, 2020	20,519	3,548	3,023	907	13,854	12,800	54,651	$	3.57	$	47.01	7.05	$	2,410,943

Summary of stock compensation expense


	Year ended						Year ended						Year ended
	December 31, 2020						December 31, 2019						December 31, 2018
	Options		RSUs		Total		Options		RSUs		Total		Options		RSUs		Total
Time Based	$	8,176	$	21,286	$	29,462	$	7,065	$	—	$	7,065	$	7,210	$	—	$	7,210
PSP		1,633		21,275		22,908		5,222		—		5,222		—		—		—
LTIP (1)		9,552		255,116		264,668		5,326		—		5,326		—		—		—
B Shares (2)		8,000		—		8,000		—		—		—		—		—		—
Total	$	27,361	$	297,677	$	325,038	$	17,613	$	—	$	17,613	$	7,210	$	—	$	7,210

(1) Resulting from amortization of stock-based compensation expense and anticipated achievement of share price targets

(2) Related to the Business Combination; Class B shares have no economic rights.

Grants with market based conditions

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of assumptions used to measure fair value


	2020
Risk free interest rate	1.72	%
Expected volatility	38.92	%
Expected dividend yield	0.00	%

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income Taxes

Summary of loss before provision (benefit) for income taxes


	Year ended December 31,
	2020		2019		2018
United States	$	(780,917)	$	(142,198)	$	(76,122)
Foreign		(63,409)		1		7
Loss before income tax (benefit) provision	$	(844,326)	$	(142,197)	$	(76,115)

Components of the provision (benefit) for income taxes


	Year Ended December 31,
	2020		2019		2018
Current:
Federal	$	(49)	$	—	$	—
State		250		—		—
Foreign		1,456		4		86
Total current provision		1,657		4		86
Deferred:
Federal		(442)		—		9
State		31		54		10
Foreign		(1,868)		—		—
Total deferred provision		(2,279)		54		19
Total income tax (benefit) provision	$	(622)	$	58	$	105

Reconciliation between income taxes computed at statutory rate to the provision


	Year ended December 31,
	2020		2019		2018
Provision (benefit) for income taxes at 21% rate	$	(177,309)	$	(29,863)	$	(15,984)
Prior year provision true-ups		(5)		3,164		(157)
State taxes, net of federal benefit		(13,328)		(7,522)		(7,525)
Stock-based compensation (benefit) expense		(190,766)		2,412		430
Non-deductible lobbying expenses		2,072		1,885		1,352
Non-deductible acquisition expenses		4,041		2,068		—
Change in valuation allowance		243,352		19,988		21,584
Net operating loss write-off		998		7,246		—
Non-deductible executive compensation		118,423		—		—
Foreign rate differential		13,456		—		—
Foreign currency adjustments		(2,086)		—		—
Income tax reserves		1,676		—		—
Other		(1,146)		680		405
Total income tax (benefit) provision	$	(622)	$	58	$	105

Components of deferred tax assets and liabilities


	Year ended December 31,
	2020		2019
Deferred tax assets:
Net operating loss carryforwards	$	459,508	$	217,836
Accrual and other temporary differences		19,432		21,045
Operating lease		15,002		—
Stock-based compensation		8,618		4,552
Total deferred tax assets:		502,560		243,433
Deferred tax liability:
Capitalized software costs		(8,469)		(6,335)
Fixed assets		(1,351)		(2,035)
Operating lease		(11,251)		—
Total Net Deferred Tax Assets		481,489		235,063
Valuation allowance		(478,667)		(235,280)
Net deferred tax assets (liabilities)	$	2,822	$	(217)

Summary of reconciliation unrecognized tax benefits


	Year ended December 31,
	2020		2019		2018
Unrecognized tax benefits at the beginning of the year	$	—	$	—	$	—
Additions for tax positions of prior years		70,341		—		—
Unrecognized tax benefits at the end of the year	$	70,341	$	—	$	—

Segment Information (Tables)

12 Months Ended

Dec. 31, 2020

Segment Information

Summary of financial information for the Company's segments


	Year ended December 31,
	2020		2019		2018
Revenue:
B2C	$	538,903	$	323,410	$	226,277
B2B		75,629		—		—
Total revenue		614,532		323,410		226,277

Adjusted EBITDA:
B2C		(393,461)		(98,640)		(58,850)
B2B		1,542		—		—
Total adjusted EBITDA		(391,919)		(98,640)		(58,850)
Adjusted for:
Depreciation and amortization		77,410		13,636		7,499
Interest expense (income), net		1,070		(1,348)		(666)
Income tax (benefit) provision		(622)		58		105
Stock-based compensation		325,038		17,613		7,210
Transaction-related costs		36,406		10,472		—
Litigation, settlement and related costs		6,839		3,695		3,222
Other non-recurring costs and special project costs		5,644		2,489		—
Other non-operating costs		566		(2,521)		—
Net Loss attributable to common shareholders	$	(844,270)	$	(142,734)	$	(76,220)

Loss Per Share (Tables)

12 Months Ended

Dec. 31, 2020

Loss Per Share

Schedule of loss per share and weighted-average shares

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


	Year ended December 31,
	2020		2019		2018
Net loss	$	(844,270)	$	(142,734)	$	(76,220)
Basic and diluted weighted-average common shares outstanding		305,593		184,603		169,778
Loss per share attributable to common stockholders:
Basic and diluted	$	(2.76)	$	(0.77)	$	(0.45)

Schedule of securities and Convertible Notes


	Year ended December 31,
	2020		2019		2018
Warrants		2,061		182		856
Stock options and RSUs		54,651		48,031		39,563
Convertible notes		—		7,409		—
Total		56,712		55,622		40,419

Leases, Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2020

Leases, Commitments and Contingencies

Schedule of components of lease expense


	December 31, 2020
Operating lease cost	$	14,968
Short term lease cost		2,538
Variable lease cost		3,652
Sublease income		(1,382)
Total lease cost	$	19,776

Schedule of other information related to leases


	December 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	11,586
Right-of-use assets obtained in exchange for new operating lease liabilities	$	42,673
Weighted-average remaining lease term (in years):
Operating leases		6.7
Weighted-average discount rate:
Operating leases		6.5	%

Schedule of maturity of lease liabilities


	December 31, 2020
2021	$	17,288
2022		16,352
2023		15,143
2024		12,502
2025		11,257
Thereafter		28,272
Total undiscounted future cash flows		100,814
Less: Imputed interest		(19,202)
Present value of undiscounted future cash flows	$	81,612

Schedule of future minimum lease payments


	Years ending December 31,
2020	$	10,067
2021		8,300
2022		8,374
2023		8,292
2024		7,310
Thereafter		23,685
Total	$	66,028

Schedule of obligated to make future minimum payments under the non-cancelable


	Years ending December 31,
2021	$	146,748
2022		135,355
2023		117,331
2024		106,076
2025		100,700
Thereafter		309,900
Total	$	916,110

* The above commitments include $437.0 million of future expected contractual obligations to a media company as part of a multi-year content integration agreement.

Summary of Significant Accounting Policies and Practices - Property and Equipment, net (Details)	12 Months Ended
	Dec. 31, 2020
Computer equipment and software
Accounting Policies [Line Items]
Estimated useful lives	3 years
Furniture and fixtures
Accounting Policies [Line Items]
Estimated useful lives	7 years
Minimum \| Leasehold improvements
Accounting Policies [Line Items]
Estimated useful lives	1 year
Maximum \| Leasehold improvements
Accounting Policies [Line Items]
Estimated useful lives	10 years

Summary of Significant Accounting Policies and Practices - Intangible Assets, Net (Details)	12 Months Ended
	Dec. 31, 2020
Developed technology
Accounting Policies [Line Items]
Estimated useful life	8 years
Customer relationships
Accounting Policies [Line Items]
Estimated useful life	5 years
Trademarks and tradenames
Accounting Policies [Line Items]
Estimated useful life	3 years
Minimum \| Internally developed software
Accounting Policies [Line Items]
Estimated useful life	3 years
Maximum \| Internally developed software
Accounting Policies [Line Items]
Estimated useful life	4 years

Summary of Significant Accounting Policies and Practices - Additional information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Jan. 01, 2020
Accounting Policies [Line Items]
Advertising cost	$ 430,400	$ 152,200	$ 124,500
Deferred rent , short term		1,100
Deferred rent , long term		9,700
Operating lease right-of-use assets	68,077	$ 0		$ 33,900
Deferred rent				10,800
Operating lease liabilities	81,612			$ 44,700
Minimum
Accounting Policies [Line Items]
Entry fees	0
Maximum
Accounting Policies [Line Items]
Entry fees	$ 10

Business Combination (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands		12 Months Ended
	Apr. 23, 2020	Dec. 31, 2020	Dec. 31, 2019
Liabilities assumed:
Goodwill (b) - (a)		$ 569,603	$ 4,738
B2C segments
Liabilities assumed:
Goodwill (b) - (a)		353,083	4,738
B2B segments
Liabilities assumed:
Goodwill (b) - (a)		$ 216,520	$ 0
SB Tech
Business Acquisition [Line Items]
Equity interest acquired		100.00%
Shares, options, and earnout shares issued for acquisition		45,000
Weighted average fair value		$ 17.53
Purchase consideration
Cash consideration(1)		$ 184,688
Share consideration(2)		789,064
Other cash consideration(3)		3,615
Total SBTech consideration	$ 977,367	$ 977,367
Share consideration (in shares)		3.6
Share consideration excluding contingent consideration		$ 776,500
Vested options		40,700
Contingent consideration for earnout shares issued to former stockholders		$ 12,600
Contingent consideration for earnout shares issued to former stockholders (in shares)		720
Valuation analyses pertaining to intangible assets acquired and tax liabilities assumed
Cash and cash equivalents	9,639
Trade receivables	17,815
Other current assets	3,674
Property and equipment	10,677
Intangible assets	484,051
Operating lease right-of-use assets	27,696
Other non-current assets	1,017
Total identifiable assets acquired	554,569
Liabilities assumed:
Accounts payable and accrued expenses	23,613
Current operating lease liabilities	3,583
Long-term income tax liability	63,575
Non-current operating lease liabilities	24,113
Other long-term liabilities	558
Total liabilities assumed	115,442
Net assets acquired (a)	439,127
Purchase consideration (b)	977,367	$ 977,367
Goodwill (b) - (a)	538,240
SB Tech \| B2C segments
Liabilities assumed:
Goodwill (b) - (a)	348,300
SB Tech \| B2B segments
Liabilities assumed:
Goodwill (b) - (a)	$ 189,900

Business Combination Finite Lived Intangible Assets (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($)
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Asset, Residual Value	$ 484,051
Developed technology
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Asset, Residual Value	$ 385,566
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	8 years
Customer relationships
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Asset, Residual Value	$ 93,699
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	5 years
Trademarks and tradenames
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Asset, Residual Value	$ 4,308
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	3 years
Gaming licenses
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Asset, Residual Value	$ 478
Minimum \| Gaming licenses
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	2 years
Maximum \| Gaming licenses
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	3 years

Business Combination - Acquisition (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Business Combination
Transaction costs incurred	$ 30,900
Amount of expense incurred related to equity issuance costs	63,700
Business Acquisition, Pro Forma Information [Abstract]
Net Revenue	643,502	$ 431,834
Net Loss	$ (845,086)	$ (219,829)

Property and Equipment (Details) - USD ($) $ in Thousands	12 Months Ended
Property and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Property, Plant and Equipment [Line Items]
Property and Equipment	$ 58,265	$ 32,949
Accumulated depreciation	(17,438)	(7,004)
Property and Equipment, net	40,827	25,945
Depreciation expense	9,300	4,100	$ 1,200
Computer equipment and software
Property, Plant and Equipment [Line Items]
Property and Equipment	25,824	9,685
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and Equipment	7,754	5,891
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and Equipment	$ 24,687	$ 17,373

Intangible Assets and Goodwill (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 648,950	$ 55,756
Accumulated Amortization	(93,020)	(21,817)
Net	555,930	33,939
Amortization expense	$ 68,100	$ 9,500	$ 6,300
Developed technology
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Remaining Amortization Period	7 years 3 months 26 days
Gross Carrying Amount	$ 439,624
Accumulated Amortization	(37,704)
Net	$ 401,920
Internally developed software
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Remaining Amortization Period	2 years 3 months 26 days	2 years 4 months 6 days
Gross Carrying Amount	$ 72,268	$ 43,753
Accumulated Amortization	(33,179)	(21,188)
Net	$ 39,089	$ 22,565
Gaming licenses
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Remaining Amortization Period	3 years 5 months 16 days	4 years 10 months 10 days
Gross Carrying Amount	$ 23,685	$ 12,003
Accumulated Amortization	(6,354)	(629)
Net	$ 17,331	$ 11,374
Trademarks and tradenames
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Remaining Amortization Period	2 years 9 months 26 days
Gross Carrying Amount	$ 6,537
Accumulated Amortization	(1,123)
Net	$ 5,414
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Remaining Amortization Period	4 years 3 months 26 days
Gross Carrying Amount	$ 106,836
Accumulated Amortization	(14,660)
Net	$ 92,176

Intangible Assets and Goodwill - Amortiation expense (Details) $ in Thousands	Dec. 31, 2020 USD ($)
Intangible Assets and Goodwill
2021	$ (105,453)
2022	(97,779)
2023	(88,461)
2024	(78,379)
2025	$ (61,679)

Intangible Assets and Goodwill - Goodwill (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Balance at beginning of period	$ 4,738
Goodwill acquired in SBTech Acquisition	538,240
Cumulative Translation Adjustment	26,625
Balance at end of period	569,603	$ 4,738
Impairment of goodwill	0	0	$ 0
B2C segments
Balance at beginning of period	4,738
Goodwill acquired in SBTech Acquisition	348,345
Cumulative Translation Adjustment	0
Balance at end of period	353,083	4,738
B2B segments
Balance at beginning of period	0
Goodwill acquired in SBTech Acquisition	189,895
Cumulative Translation Adjustment	26,625
Balance at end of period	$ 216,520	$ 0

Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Accounts Payable and Accrued Expenses
Accounts payable	$ 28,076	$ 16,618
Accrued compensation and related expenses	48,449	17,770
Accrued marketing	51,436	11,855
Accrued professional fees	10,640	10,344
Accrued operating taxes	19,509	5,745
Accrued partnership fees	21,112	7,868
Accrued other expenses	44,411	15,095
Total	$ 223,633	$ 85,295

Current and Long-term Liabilities - Revolving Line of Credit (Details) - USD ($) $ in Thousands	1 Months Ended
	Oct. 31, 2016	Dec. 31, 2020	Sep. 30, 2020	Dec. 31, 2019
Revolving Line of Credit
Principal amount outstanding		$ 0		$ 6,750
Pacific Western Bank Revolving Line of Credit
Revolving Line of Credit
Maximum borrowing capacity		60,000	$ 60,000	50,000
Principal amount outstanding		0		6,800
Net facility available		$ 55,800		$ 38,800
Pacific Western Bank Revolving Line of Credit \| Prime rate
Revolving Line of Credit
Variable interest rate spread	1.00%
Variable annual interest rate floor	6.50%
Quarterly in arrears fee per annum	0.25%

- Definition

The carrying value as of the balance sheet date of the current portion of long-term obligations drawn from a line of credit, which is a bank's commitment to make loans up to a specific amount. Examples of items that might be included in the application of this element may consist of letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to a maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdowns on the line. Includes short-term obligations that would normally be classified as current liabilities but for which (a) postbalance sheet date issuance of a long term obligation to refinance the short term obligation on a long term basis, or (b) the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation on a long term basis and the following conditions are met (1) the agreement does not expire within 1 year and is not cancelable by the lender except for violation of an objectively determinable provision, (2) no violation exists at the BS date, and (3) the lender has entered into the financing agreement is expected to be financially capable of honoring the agreement.

+ References + Details

Current and Long-term Liabilities - Other (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Liabilities, Other than Long-term Debt, Noncurrent [Abstract]
Estimated liability for indirect taxes	$ 45.9	$ 35.9
Convertible promissory note outstanding amount		$ 68.4
Proceeds of convertible subordinate promissory note	$ 41.1

Stockholders' Equity (Deficit) (Details) $ / shares in Units, $ in Thousands	1 Months Ended		12 Months Ended
	Oct. 31, 2020 USD ($)	Jun. 30, 2020 USD ($)	Dec. 31, 2020 USD ($) $ / shares shares	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Class of Stock [Line Items]
DEAC shares recapitalized, net of redemptions and equity issuance costs of $10,631			$ 667,311
DEAC shares recapitalized, Redemptions and equity issuance costs			10,631
Buyout of unaccredited investors			7,192	$ 0	$ 0
Net proceeds from issuance of common stock			1,680,067	439	0
Common stock issued in offerings			$ 1,680,067	$ 439	$ 340
Preferred stock, shares authorized \| shares			300,000,000
Preferred stock, par value \| $ / shares			$ 0.0001
Preferred stock, shares issued \| shares			0
Preferred stock, shares outstanding \| shares			0
Jason Robins
Class of Stock [Line Items]
Number of votes per share			10
Voting power of the capital stock held			90.00%
Principal amount of debt converted to equity securities			$ 109,200
Unpaid accrued interest related to debt converted to equity securities			$ 3,400
Share Price \| $ / shares			$ 10
SB Tech
Class of Stock [Line Items]
Recapitalization exchange ratio				0.353628	0.353628
Cash and other cash consideration			$ 188,300
Buyout of unaccredited investors			7,200
Net cash proceeds			$ 484,000
Series F Preferred Stock \| SB Tech
Class of Stock [Line Items]
Share conversion factor			1.40
Class B Common Stock \| Jason Robins
Class of Stock [Line Items]
Common stock issued in offerings (in shares) \| shares			393,000,000
Class A Common Stock
Class of Stock [Line Items]
DEAC shares recapitalized, net of redemptions and equity issuance costs of $10,631			$ 667,300
DEAC shares recapitalized, Redemptions and equity issuance costs			$ 10,600
Net proceeds from issuance of common stock	$ 1,059,300	$ 620,800
Common stock issued in offerings	$ 20,800	$ 16,000
Class A Common Stock \| Convertible Noteholders
Class of Stock [Line Items]
Number of shares of common stock issued in conversion of debt \| shares			11,300,000
Class A Common Stock \| SB Tech
Class of Stock [Line Items]
Recapitalization exchange ratio			0.353628

Revenue Recognition - Deferred Revenue (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Revenue Recognition
Deferred revenue, beginning of the period	$ 20,760	$ 13,581
Deferred revenue, end of the period	30,627	20,760
Revenue recognized in the period from amounts included in deferred revenue at the beginning of the period	$ 11,221	$ 11,865

Revenue Recognition - Revenue Disaggregation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Disaggregation of Revenue [Line Items]
Total revenue	$ 614,532	$ 323,410	$ 226,277
Online gaming
Disaggregation of Revenue [Line Items]
Total revenue	517,632	308,177	219,131
Gaming software
Disaggregation of Revenue [Line Items]
Total revenue	75,629	0	0
Other
Disaggregation of Revenue [Line Items]
Total revenue	$ 21,271	$ 15,233	$ 7,146

- Definition

Amount, including tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value-added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9038-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130545-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8906-108599

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
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-Paragraph 22
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9031-108599

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 924
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-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 11.L)
-URI http://asc.fasb.org/extlink&oid=6472922&loc=d3e499488-122856

+ Details

Revenue Recognition - Revenue by Geographic region (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Total revenue	$ 614,532	$ 323,410	$ 226,277
United States
Total revenue	544,463	318,144	219,415
International
Total revenue	$ 70,069	$ 5,266	$ 6,862

- Definition

+ References

+ Details

Stock-Based Compensation (Details) - shares	12 Months Ended
Stock-Based Compensation (Details) - shares	Dec. 31, 2020	Dec. 31, 2017
2012 Plan \| Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee ownership percentage which results in higher exercise price	10.00%
Higher exercise price minimum, as a percentage, based on employee stock ownership	110.00%
2017 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of share awards issued		0
2012 Plan and 2017 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for grant	10,100,000
2012 Plan and 2017 Plan and 2020 Plan \| Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	4 years
Contractual term	10 years
2020 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for grant	35,100,000
Aggregated number of not to be exceeded	900,000,000
Share reserve	900,000,000

Stock-Based Compensation - Valuation Assumptions (Details)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Stock options
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Risk free interest rate	0.41%	1.95%	2.80%
Expected term (in years)	6 years 1 month 10 days	6 years 7 days	6 years 1 month 10 days
Expected volatility	42.46%	41.48%	41.98%
Expected dividend yield	0.00%	0.00%	0.00%
Grants with market based conditions
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Risk free interest rate	1.72%
Expected volatility	38.92%
Expected dividend yield	0.00%

Stock-Based Compensation - Stock Option Activity (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Weighted average exercise price
Outstanding			$ 0.84
Recapitalization Impact			1.54
Weighted average exercise price outstanding, beginning of period	$ 2.86	$ 2.38
Weighted average exercise price granted	4.11	4.68
Weighted average exercise price exercised	1.28	1.16
Weighted average exercise price forfeited	5.24	3.36
Weighted average exercise price outstanding, end of period	$ 3.57	$ 2.86	$ 2.38
Stock options
Number of shares
Options			$ 111,877
Recapitalization Impact			(72,317)
Number of shares outstanding, beginning of period	48,026	39,560
Number of shares granted	37,858	9,960
Number of shares exercised	(30,603)	(1,042)
Number of shares forfeited	(630)	(452)
Number of shares outstanding, end of period	54,651	48,026	39,560
Weighted average exercise price
Outstanding			$ 0.00
Recapitalization Impact			0.00
Weighted average exercise price outstanding, beginning of period	$ 0.00	$ 0.00
Weighted average exercise price granted	34.63	0.00
Weighted average exercise price exercised	21.03	0.00
Weighted average exercise price forfeited	33.72	0.00
Weighted average exercise price outstanding, end of period	$ 47.01	$ 0.00	$ 0.00
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Weighted average remaining term	7 years 18 days	7 years 7 months 21 days	8 years 1 month 24 days
Aggregate intrinsic value of stock options exercised	$ 2,410,943,000	$ 203,431,000	$ 69,765,000
Time Based Options
Number of shares
Options			$ 66,527
Recapitalization Impact			(43,003)
Number of shares outstanding, beginning of period	27,853	23,524
Number of shares granted	4,781	5,756
Number of shares exercised	(11,621)	(1,003)
Number of shares forfeited	(494)	(424)
Number of shares outstanding, end of period	20,519	27,853	23,524
Time Based RSUs
Number of shares
Options			$ 0
Recapitalization Impact			0
Number of shares outstanding, beginning of period	0	0
Number of shares granted	3,816	0
Number of shares exercised	(149)	0
Number of shares forfeited	(119)	0
Number of shares outstanding, end of period	3,548	0	0
PSP Options
Number of shares
Options			$ 5,161
Recapitalization Impact			(3,336)
Number of shares outstanding, beginning of period	3,972	1,825
Number of shares granted	0	2,214
Number of shares exercised	(932)	(39)
Number of shares forfeited	(17)	(28)
Number of shares outstanding, end of period	3,023	3,972	1,825
PSP RSUs
Number of shares
Options			$ 0
Recapitalization Impact			0
Number of shares outstanding, beginning of period	0	0
Number of shares granted	907	0
Number of shares exercised	0	0
Number of shares forfeited	0	0
Number of shares outstanding, end of period	907	0	0
LTIP Options
Number of shares
Options			$ 40,189
Recapitalization Impact			(25,978)
Number of shares outstanding, beginning of period	16,201	14,211
Number of shares granted	0	1,990
Number of shares exercised	(2,347)	0
Number of shares forfeited	0	0
Number of shares outstanding, end of period	13,854	16,201	14,211
LTIP RSUs
Number of shares
Options			$ 0
Recapitalization Impact			0
Number of shares outstanding, beginning of period	0	0
Number of shares granted	28,354	0
Number of shares exercised	(15,554)	0
Number of shares forfeited	0	0
Number of shares outstanding, end of period	12,800	0	0

Stock-Based Compensation - Stock compensation expense (Details) - USD ($)
$ / shares in Units, $ in Thousands

12 Months Ended

Dec. 31, 2020

Dec. 31, 2019

Dec. 31, 2018

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Stock compensation expense, Options

$ 27,361

$ 17,613

$ 7,210

Stock compensation expense, RSU

297,677

Share-based compensation expense

325,038

17,613

7,210

Proceeds from the exercise of stock options

27,587

$ 1,148

552

Stock options

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Unrecognized stock-based compensation

$ 848,600

Recognition period for unrecognized share-based compensation

2 years 2 months 12 days

Weighted average grant date fair value per share

$ 2.00

Proceeds from the exercise of stock options

$ 27,600

$ 1,100

Aggregate intrinsic value of stock options exercised

1,256,000

3,400

Grant date fair value of stock options vested

35,100

9,800

Time Based

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Stock compensation expense, Options

8,176

7,065

7,210

Stock compensation expense, RSU

21,286

Share-based compensation expense

29,462

7,065

7,210

PSP

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Stock compensation expense, Options

1,633

5,222

Stock compensation expense, RSU

21,275

Share-based compensation expense

22,908

5,222

LTIP

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Stock compensation expense, Options

^[1]

9,552

5,326

Stock compensation expense, RSU

^[1]

255,116

Share-based compensation expense

^[1]

264,668

5,326

Class B Common Stock

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Stock compensation expense, Options

^[2]

8,000

Stock compensation expense, RSU

^[2]

Share-based compensation expense

^[2]

$ 8,000

$ 0

[1]	Resulting from amortization of stock-based compensation expense and anticipated achievement of share price targets
[2]	Related to the Business Combination; Class B shares have no economic rights.

Stock-Based Compensation - Warrant For Marketing Services (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions	1 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Class of Warrant or Right [Line Items]
Compensation recognized		$ 325,038	$ 17,613	$ 7,210
Marketing Services Warrant \| Non-employee
Class of Warrant or Right [Line Items]
Number of stock to be purchased by warrants	0.3
Exercise price of warrants	$ 0.01
Warrant term	5 years
Compensation recognized			$ 400

Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Loss before provision for (benefit from) income taxes:
United States	$ (780,917)	$ (142,198)	$ (76,122)
Foreign	(63,409)	1	7
Loss before income tax (benefit) provision	(844,326)	(142,197)	(76,115)
Current:
Federal	(49)	0	0
State	250	0	0
Foreign	1,456	4	86
Total current provision	1,657	4	86
Deferred:
Federal	(442)	0	9
State	31	54	10
Foreign	(1,868)	0	0
Total deferred provision	(2,279)	54	19
Total income tax (benefit) provision	$ (622)	$ 58	$ 105

Income Taxes - Reconciliation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Effective Income Tax Rate Reconciliation, Amount [Abstract]
Provision (benefit) for income taxes at 21% rate	$ (177,309)	$ (29,863)	$ (15,984)
Prior year provision true-ups	(5)	3,164	(157)
State taxes, net of federal benefit	(13,328)	(7,522)	(7,525)
Stock-based compensation (benefit) expense	(190,766)	2,412	430
Non-deductible lobbying expenses	2,072	1,885	1,352
Non-deductible acquisition expenses	4,041	2,068	0
Change in valuation allowance	243,352	19,988	21,584
Net operating loss write-off	998	7,246	0
Non-deductible executive compensation	118,423	0	0
Foreign rate differential	13,456	0	0
Foreign currency adjustments	(2,086)	0	0
Income tax reserves	1,676	0	0
Other	(1,146)	680	405
Total income tax (benefit) provision	$ (622)	$ 58	$ 105

Income Taxes - Deferred Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Deferred tax assets:
Net operating loss carryforwards	$ 459,508	$ 217,836
Accrual and other temporary differences	19,432	21,045
Operating lease	15,002	0
Stock-based compensation	8,618	4,552
Total deferred tax assets:	502,560	243,433
Deferred tax liability:
Capitalized software costs	(8,469)	(6,335)
Fixed assets	(1,351)	(2,035)
Operating lease	(11,251)	0
Total Net Deferred Tax Assets	481,489	235,063
Valuation allowance	(478,667)	(235,280)
Net deferred tax liabilities		(217)
Deferred Tax Assets, Net	2,822
Change in valuation allowance	$ 243,352	$ 19,988	$ 21,584

Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Unrecognized tax benefits at the beginning of the year	$ 0	$ 0	$ 0
Additions for tax positions of prior years	70,341	0	0
Unrecognized tax benefits at the end of the year	70,341	0	0
Interest and penalties accrued	$ 1,700	$ 0	$ 0

Income Taxes - Net Operating Loss (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Operating Loss Carryforwards [Line Items]
Operating loss carryforward subject to 80% taxable income limitation	$ 980,000
Unrecognized Tax Benefits	70,341	$ 0	$ 0	$ 0
Federal
Operating Loss Carryforwards [Line Items]
Operating loss carryforward	671,300
State
Operating Loss Carryforwards [Line Items]
Operating loss carryforward	1,690,400
Foreign
Operating Loss Carryforwards [Line Items]
Operating loss carryforward subject to 80% taxable income limitation	$ 2,700

Segment Information (Details) $ in Thousands		12 Months Ended
Segment Information (Details) $ in Thousands	Apr. 23, 2020 segment	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Segment Reporting Information, Profit (Loss) [Abstract]
Total revenue		$ 614,532	$ 323,410	$ 226,277
Total adjusted EBITDA		(391,919)	(98,640)	(58,850)
Depreciation and amortization		77,410	13,636	7,499
Interest expense (income), net		1,070	(1,348)	(666)
Income tax (benefit) provision		(622)	58	105
Stock-based compensation		325,038	17,613	7,210
Transaction-related costs		36,406	10,472	0
Litigation, settlement and related costs		6,839	3,695	3,222
Other non-recurring costs and special project costs		5,644	2,489	0
Other non-operating costs		566	(2,521)	0
Net loss attributable to common stockholders		(844,270)	(142,734)	(76,220)
B2C segments
Segment Reporting Information [Line Items]
Number of operating segments \| segment	2
Segment Reporting Information, Profit (Loss) [Abstract]
Total revenue		538,903	323,410	226,277
Total adjusted EBITDA		(393,461)	(98,640)	(58,850)
B2B segments
Segment Reporting Information [Line Items]
Number of reportable segments \| segment	2
Segment Reporting Information, Profit (Loss) [Abstract]
Total revenue		75,629	0	0
Total adjusted EBITDA		$ 1,542	$ 0	$ 0

Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Loss Per Share
Net loss	$ (844,270)	$ (142,734)	$ (76,220)
Basic and diluted weighted-average common shares outstanding	305,593	184,603	169,778
Loss per share attributable to common shareholders:
Basic and diluted (in dollars per share)	$ (2.76)	$ (0.77)	$ (0.45)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

Loss Per Share - Diluted shares outstanding (Details) - shares	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	56,712	55,622	40,419
Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	2,061	182	856
Stock options and RSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	54,651	48,031	39,563
Convertible Notes
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	0	7,409	0

Related-Party Transactions (Details) - USD ($) $ in Thousands		1 Months Ended	12 Months Ended
	Jan. 01, 2021	Nov. 30, 2020	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Related Party Transaction [Line Items]
Payments to Acquire Equity Method Investments				$ 1,000	$ 0	$ 0
Revenue from related parties				2,700
Leases expenses to related parties				500
Administrative Services Agreement
Total administrative services expenses				12,300	0	0
Additional Paid-in Capital
Administrative Services Agreement
Total administrative services expenses				7,000
Shareholders and Directors
Related Party Transaction [Line Items]
Receivables from shareholders and directors				1,900
SB Tech
Related Party Transaction [Line Items]
Accounts receivable				500	0
Related party transactions					0	0
Media Purchase Agreement
Related Party Transaction [Line Items]
Annual commitment			$ 15,000	5,000
Additional contingent commitment			$ 5,000
Total commitment				15,000
Sales and marketing expenses from related party transaction				25,800	8,400	$ 23,300
Amount due to related party				0	2,400
Equity Method Investee
Related Party Transaction [Line Items]
Receivables from Equity Method Investment				$ 1,100	$ 1,000
Equity Method Investee \| DBDK Venture Fund
Related Party Transaction [Line Items]
Maximum investment commitment	$ 17,000
Equity Method Investee \| DKFC, an equity method affiliate
Related Party Transaction [Line Items]
Payments to Acquire Equity Method Investments		$ 1,000

Leases, Commitments and Contingencies - Leases (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2020
Property, Plant and Equipment [Line Items]
Rent expenses	$ 10.4	$ 5.3
Corporate office facilities \| Maximum
Property, Plant and Equipment [Line Items]
Term of contract			10 years

Leases, Commitments and Contingencies - Components of Lease Expense (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($)
Leases, Commitments and Contingencies
Operating lease cost	$ 14,968
Short term lease cost	2,538
Variable lease cost	3,652
Sublease income	(1,382)
Total lease cost	$ 19,776

Leases, Commitments and Contingencies - Other Information Related to Leases (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ 11,586
Right-of-use assets obtained in exchange for new operating lease liabilities	$ 42,673
Weighted-average remaining lease term (in years): Operating leases	6 years 8 months 12 days
Weighted-average discount rate: Operating leases	6.50%

Leases, Commitments and Contingencies - Maturity of Lease Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Jan. 01, 2020
Lessee, Operating Lease, Liability, Payment, Due [Abstract]
2021	$ 17,288
2022	16,352
2023	15,143
2024	12,502
2025	11,257
Thereafter	28,272
Total undiscounted future cash flows	100,814
Less: Imputed interest	(19,202)
Present value of undiscounted future cash flows	$ 81,612	$ 44,700

Leases, Commitments and Contingencies - Future Minimum Lease Payments (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Leases, Commitments and Contingencies
2020	$ 10,067
2021	8,300
2022	8,374
2023	8,292
2024	7,310
Thereafter	23,685
Total	$ 66,028

Leases, Commitments and Contingencies - Future Minimum Payments Under the Non-Cancelable (Details) $ in Thousands	Dec. 31, 2020 USD ($)
Leases, Commitments and Contingencies
2021	$ 146,748
2022	135,355
2023	117,331
2024	106,076
2025	100,700
Thereafter	309,900
Total	$ 916,110

Leases, Commitments and Contingencies - Other Contractual Obligations, Contingencies and Letters of Credit (Details) $ in Millions	Nov. 06, 2020 item	Oct. 21, 2019 claim	Jun. 14, 2019 patent	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
Mass Arbitration Demands Filed by One Law Firm
Other Commitments [Line Items]
Number of mass arbitrations filed against the company \| claim		1,000
Number of individuals filed against the company \| item	999
Interactive Games LLC \| Daily Fantasy Sports
Other Commitments [Line Items]
Number of patents allegedly infringed \| patent			2
Interactive Games LLC \| Sportsbook product
Other Commitments [Line Items]
Number of patents allegedly infringed \| patent			2
Media Purchase Agreement
Other Commitments [Line Items]
Contractual Obligation \| $				$ 437.0
Pacific Western Bank \| Letter of Credit [Member]
Other Commitments [Line Items]
Letters of credit \| $				$ 4.2	$ 4.5