DraftKings secures a $500 million credit line, facilitated by a group of lenders led by Morgan Stanley.
DraftKings, the popular online sports betting and fantasy gaming company, has announced the successful launch of a new senior secured term loan B credit facility, worth $600 million. This facility, originally proposed at $500 million, reflects strong market demand and replaces a previous credit line worth $125 million.
The new credit facility matures in March 2032, with an interest rate of SOFR plus 1.75% per annum, and requires annual repayments of 1% of the principal. The proceeds from this facility are intended for general corporate purposes, which typically include investments in expansion and operational activities.
In comparison, DraftKings had a prior $500 million revolving credit facility that closed in November 2024. The new facility's structure and size suggest a more committed funding source, offering greater long-term financial flexibility to support DraftKings' expansion and investment plans.
The company has not yet announced specific details about how the money from the new credit facility will be used or any specific investment or expansion plans. However, DraftKings has emphasized ongoing investment in initiatives such as a $10 million Responsible Gaming national advertising campaign developed with NFL and NBA branding, signaling a continued focus on marketing and brand expansion.
On an investor call last week, DraftKings' CEO Jason Robins confirmed the company's intention to explore opening a prediction market. This move could further diversify DraftKings' offerings and potentially impact its financial health and future operations significantly.
The new credit facility offers a cheaper way for DraftKings to borrow compared to the previous one, potentially freeing up funds for other purposes such as diversification. The facility has not specified the specific rates for borrowing, but at current interest rates, the difference between the rates of the new and old credit facilities is likely to be over a percentage point.
The new credit facility is provided by a syndicate fronted by Morgan Stanley. This significant financial move for DraftKings provides the company with greater liquidity and flexibility in its operations, potentially facilitating the diversification of its offerings.
In recent months, DraftKings has made strides in diversifying its offerings. The company has launched its player vs player poker games in a second state this year, and is considering opening a prediction market. These moves could help DraftKings attract a wider audience and solidify its position in the online gaming industry.
| Feature | Previous Credit Facility (Nov 2024) | New Credit Facility (Feb 2025) | |------------------------------------|----------------------------------------|----------------------------------------------| | Type | Revolving credit facility | Senior secured term loan B | | Amount | $500 million | Increased from $500 million to $600 million | | Maturity | Not specified in detail | March 2032 | | Interest Rate | Not specified | SOFR + 1.75% per annum | | Repayment | Revolving (flexible repayments) | 1% principal repayment annually | | Purpose | Funding general corporate needs | Funding general corporate needs, including expansion and marketing investments |
With this new credit facility, DraftKings is well-positioned to pursue growth and other corporate initiatives with more confidence and a longer-term financing horizon.
The new senior secured term loan B credit facility, valued at $600 million, will provide DraftKings with a cheaper borrowing option compared to the previous revolving credit facility, potentially freeing up funds for other purposes such as diversification. The new credit facility, maturing in March 2032, is expected to offer greater financial flexibility to support DraftKings' expansion and investment plans in the future.
