ADDITIONAL CASES Michiel Ten Hoorn, Individually and on Behalf of All Others Similarly Situated, Plaintiff v. Draftkings Inc. f/k/a Diamond Eagle Acquisition Corp., Jason D, Robins, Jason K. Park, Jeff Sagansky, and Eli Baker, Defendants; 21 Civ. 6497 OPINION & ORDER In July 2021, the above two putative class actions were filed on behalf of purchasers of certain securities of DraftKings, Inc. f/k/a Diamond Eagle Acquisition Corp. (“DraftKings”) between December 23, 2019, and June 15, 2021, inclusive (the “Class Period”). Plaintiffs in each case allege that DraftKings and the individual defendants (each a DraftKings officer) made false and misleading statements about, and/or failed to disclose, that a company with which DraftKings had merged, SB Tech (Global) Limited (“SBTech”), had a history of unlawful operations. Plaintiffs allege that SBTech’s transgressions left DraftKings exposed to dealings in black-market gaming, which exposed DraftKings to regulatory and criminal risks and meant that some of its revenues derived from unlawful conduct. As a result, plaintiffs allege, various public statements by DraftKings were materially false and misleading, causing its shares to trade at artificially inflated prices during the Class Period. However, plaintiffs allege, on June 15, 2021, Hindenburg Research (“Hindenburg”) published a report exposing SBTech’s history and alleging that the merger with SBTech exposed DraftKings to black-market gaming. After the report, DraftKings shares fell 4.17 percent. Pending before the Court are two sets of motions. One, unopposed, is to consolidate the actions. The other consists of motions from six individual investors, each seeking appointment as lead plaintiff and appointment of their respective attorneys as lead counsel. These movants are: (1) Tim Kaintz (“Kaintz”); (2) Robert Downs (“Downs”); (3) Walter Marino (“Marino”); (4) Stephen Goering (“Goering”); (5) Robert Mendoza (“Mendoza”); and (6) Mario E. Ernst (“Ernst”). Goering, Mendoza, and Ernst have since conceded that they lack the largest financial interest in this litigation, and have filed notices of non-opposition. Dkts. 29, 30, 31.1 The Court’s choice is, therefore, between Kaintz, Downs, and Marino (collectively, “movants”). For the reasons that follow, the Court (1) consolidates the two actions; (2) appoints Marino lead plaintiff; and (3) appoints as lead counsel Marino’s counsel, Robbins Geller Rudman & Dowd LLP. I. Background A. Factual Background2 DraftKings was incorporated in Nevada as a wholly owned subsidiary of a special purpose acquisition company, Diamond Eagle Acquisition Corporation (“DEAC”). DraftKings is a U.S.-based digital sports entertainment and gaming company. It provides users daily sports, sports betting, and gaming opportunities; it is also involved in the design, development, and licensing of sports betting and casino gaming platform software for online and retail sportsbook and casino gaming products. Dkt. 1 (“Rodriguez Compl.”) 2. DraftKings’s common stock trades on the NASDAQ under the ticker “DKNG.” Id. On April 23, 2020, DEAC executed transactions as contemplated by a Business Combination Agreement (“Business Combination”) dated December 22, 2019, as amended April 7, 2020. Id. 3. Pursuant to the Business Combination, in relevant part, (1) DEAC merged with and into DraftKings, such that DraftKings survived the merger and became the successor issuer to DEAC; (2) DraftKings acquired DraftKings Inc., a Delaware corporation (“Old DK”), by way of merger; and (3) DraftKings acquired all issued and outstanding share capital of SBTech. After the transactions, Old DK and SBTech became wholly owned subsidiaries of DraftKings. Id.
3, 13. Plaintiffs allege that, throughout the Class Period, in press releases, SEC filings, and investor calls, DEAC, DraftKings, and/or the individual defendants touted DraftKings’s strong earnings and the valued added by SBTech, See id.
