DraftKings and noted short-seller Hindenburg Research are duking it out after allegations of improper activity were lobbed at the sports-betting company in a lengthy research note sending the shares lower.
"This report is written by someone who is short on DraftKings stock with an incentive to drive down the share price. Our business combination with SBTech was completed in 2020. We conducted a thorough review of their business practices and we were comfortable with the findings," a company spokesperson told FOX Business. "We do not comment on speculation or allegations made by former SBTech employees."
Hindenburg, which disclosed it has taken a bet that shares will fall, detailed the allegations.
"Unbeknownst to investors, DraftKings’ merger with SBTech also brings exposure to extensive dealings in black-market gaming, money laundering and organized crime," Hindenburg Research wrote in a report.
"We estimate that roughly 50% of SBTech’s revenue continues to come from markets where gambling is banned, based on an analysis of DraftKings’ SEC filings, conversations with former employees, and supporting documents," the allegations continue.
DraftKings, created via a merger with the special purpose acquisition company (SPAC) Diamon Eagle and gaming technology company SBTech, began trading in April 2020 and has seen its shares rise 175.59% since its debut.
AOL co-founder Steve Case was an early backer in the company.