By Dhirendra Tripathi
Investing.com – DraftKings (NASDAQ:DKNG) shares slumped by more than 7% Tuesday after Hindenburg Research revealed it was short the stock while alleging that the betting company generates significant revenue from questionable gambling practices.
According to CNBC, Hindenburg compares DraftKings’ valuation to that of rival firms and questions the company’s promotional spend and future potential in the highly competitive sports gambling landscape.
The links to black money are an outcome of a merger of SBTech, a European tech company, with DraftKings as part of a SPAC deal, according to the Hindenburg report.
The report, as per CNBC, alleges that SBTech generates significant revenue from questionable gambling practices in overseas markets, particularly in some Asian markets.
“This report is written by someone who is short on DraftKings stock with an incentive to drive down the share price,” DraftKings said, CNBC reported. “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. We do not comment on speculation or allegations made by former SBTech employees."