Billionaire Kenneth Dart Bets on DraftKings Despite Heavy Losses

Cayman Islands-based billionaire Kenneth Dart is significantly expanding his influence within the global gambling industry. Through his investment vehicle Candle Lake, Dart has disclosed a 5.8% stake in DraftKings, according to an SEC filing dated August 14. This move puts the US-born investor in a position where he now holds substantial interests in three of the industry's biggest names: Flutter Entertainment, Evolution, and DraftKings. This step is particularly noteworthy given that DraftKings' stock price on the NASDAQ has plummeted by 46.6% over the past year, currently trading at approximately $24.04.

Although the sector is currently facing pressure in the stock markets, Dart appears convinced of a forthcoming turnaround. His engagement with DraftKings involves exactly 28,581,386 Class A shares. Consequently, he is now a significant shareholder in both dominant players of the US sports betting market, FanDuel (owned by Flutter) and DraftKings. The fact that he is taking this step despite facing an estimated $4.2 billion paper loss on his Flutter Entertainment position underscores his risk tolerance and focus on market leadership.

Numbers and facts

DraftKings' market capitalization currently sits at just under $12 billion. Dart's entry is valued at approximately $691.94 million. Analysts remain optimistic despite the price drops. According to TipRanks data, 22 out of 25 analysts rate the stock as a buy, while three rate it as a hold. Mike Hickey from the Benchmark Company recently issued a target price of $30.

In addition to DraftKings, Dart already controls 31.56% of the Swedish live casino specialist Evolution via Candle Lake. This stake triggered a mandatory offer for the entire company, valuing Evolution at SEK 131.7 billion. Dart also holds around 29% in Flutter and is approaching the critical 30% threshold there, which could trigger another mandatory offer under Irish takeover rules.

Background

Kenneth Dart is known for building large positions in companies without acting as an activist investor. In the case of DraftKings, a hostile takeover would be difficult regardless, as co-founder and CEO Jason Robins controls more than 90% of the voting rights through Class B shares. Dart, on the other hand, holds Class A shares, which grant only one vote per share.

"Candle Lake made clear that it does not intend to manufacture a full takeover, but its control in Flutter may force it into another mandatory offer." - Editorial analysis of SEC filings

The billionaire has a history in the tobacco industry and now seems to have identified gambling as a new core area for his investments. Investing simultaneously in competitors like Flutter and DraftKings is a strategic move he shares with other renowned investors like Michael Burry, who also holds positions in both companies.

Why it matters for German players

For players in Germany, this entry has no immediate impact on daily operations, but it signals the stability of large international corporations. DraftKings itself is not represented on the German market with a license from the Joint Gambling Authority of the States (GGL). German customers must stick to providers listed on the so-called whitelist. These legal providers guarantee compliance with the Interstate Treaty on Gambling 2021 (GlüStV 2021). This includes strict rules such as the monthly deposit limit of 1,000 euros via the LUGAS system and the stake limit of one euro per spin for virtual slots. Investments by billionaires in US firms like DraftKings show, however, that the global sector is seen as a growth market despite local regulations in Europe.

What it means for GGL-licensed casinos

GGL-licensed German casinos operate in a highly regulated environment that differs significantly from the liberal US markets. While giants like DraftKings generate billions in the US, licensed German operators struggle with strict advertising bans and technical hurdles. Investments like Dart's primarily flow into markets with higher growth potential. Nevertheless, GGL-licensed providers also benefit indirectly from technological innovation driven by the capital of large investors in firms like Evolution, whose games may also be legally offered in Germany, provided the casino operator holds the appropriate license.