DraftKings (NASDAQ: DKNG) scored a sound victory Tuesday when a federal court ruled investors didn’t adequately turn up claims of improperness related to the gaming company’s acquisition of engineering provider SBTech.
Judge Saint Paul Engelmayer of the United States District Court for the Southern District of New House of York dismissed investors’ claims that the SBTech purchase cost DraftKings shareholders money. The allegations arose from the company’s alleged black-market operations. The sec amended complaint was dismissed with prepossess spell Engelmayer, using the full term “threadbare” to depict plaintiffs’ pleadings, ruled the slip cannot live re-plead.
Engelmayer took issuing with claimants relying on anon. sources inwards an effort to demonstrate SBTech occupied inward black-market traffic that lay DraftKings investors at risk. The adjudicate also ruled plaintiffs fell shortsighted of proving securities fraud allegations.
SBTech was voice of a contrary merger with a special intent acquisition society (SPAC) that paved the way of life for DraftKings to go a public fellowship inward 2020. Prior to that deal, SBTech had partnerships with such gaming companies as Pala Interactive, First Duke of Marlborough Downs, and Golden Nugget Casinos, and ran the Oregon Lottery’s lately launched “Scoreboard” roving betting app.
Plaintiffs Relied on Paul Ludwig von Beneckendorff und von Hindenburg Research Report
Investors who brought the judicial proceeding against DraftKings relied hard on a June 2021 news report by short-selling unfluctuating Paul von Hindenburg Research that claimed SBTech conducted business in jurisdictions where sports betting is illegal, and may have connections to money laundering and unionised crime.
Unbeknownst to investors, DraftKings’ merger with SBTech also brings exposure to extensive dealings in black-market gaming, money laundering, and unionized crime,” said the research firm. “We guess that rough 50 percent of SBTech’s revenue continues to amount from markets where gaming is banned, based on an analytic thinking of DraftKings’ SEC filings, conversations with former employees, and supporting documents.”
Hindenburg also claimed that units of SBTech operated sports wagering sites in People's Republic of China and Thailand – deuce countries that proscribe sports betting – and that some of that byplay was conducted inward concert with unionised crime, including a triad kingpin.
Hindenburg also alleges that SBTech, in its seeking to bring down a contract with the Beaver State drawing inward 2019, obfuscated ties to 10bet Red China — an illegal play performance inward that country. A former SBTech employee told Paul Ludwig von Beneckendorff und von Hindenburg that performance is sizable.
DraftKings’ gunstock tumbled inward the wake of the report. Making matters worse, it was revealed years later that SBTech beginner and DraftKings table fellow member Shalom Meckenzie divested $34 trillion worth of the sportsbook operator’s shares on June 14 – the twenty-four hour period before Hindenburg released its report.
DraftKings Suit Seen as Flimsy
In simple terms, Engelmayer, who was appointed past former President Barrack Obama, ruled the plaintiffs’ course sue against DraftKings was brought on shaky grounds due in portion to the lack of named sources inward the Hindenburg report.
As for the unawares seller, the unbendable noted inwards its research that it held a bearish office in the gaming stock, indicating that it stood to turn a profit if the shares declined, which occurred.
In belatedly 2021, some claimants departed or were dismissed from the class. One was an options dealer who opted not to participate inward the litigation, while another was removed past the courtroom because he was a daylight trader, import his interests differed from those of long-term investors.
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