In re DRAFTKINGS INC.

 UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 101198 / September 26, 2024 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-22205 
  
 
In the Matter of 
 
DRAFTKINGS INC., 
 
Respondent. 
 
 
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS, PURSUANT TO 
SECTION 21C OF THE SECURITIES 
EXCHANGE ACT OF 1934, MAKING 
FINDINGS, AND IMPOSING A CEASE-
AND-DESIST ORDER 
   
 
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate that public 
cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the 
Securities Exchange Act of 1934 (the “Exchange Act”) against DraftKings Inc. (“DraftKings,” or 
“Respondent”). 
 
II. 
 
In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings 
herein, except as to the Commission’s jurisdiction over it and the subject matter of these 
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
and-Desist Proceedings, Pursuant to Section 21C of the Securities Exchange Act of 1934, Making 
Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below. 
 
III. 
 
 On the basis of this Order and Respondent’s Offer, the Commission finds that: 
 
Summary 
 
1. This matter concerns Massachusetts-based publicly-traded company DraftKings’ 
violation of Regulation FD, a rule under the Exchange Act that prohibits public companies from 

 
 2 
selectively disclosing material, nonpublic information to certain persons outside the company.  In 
July 2023, material, nonpublic information concerning DraftKings’ second quarter 2023 (the 
quarter ended June 30, 2023) earnings was selectively disclosed to certain persons outside the 
company via social media, specifically the personal X (formerly Twitter) and LinkedIn accounts in 
the name of DraftKings’ CEO operated by DraftKings’ public relations firm.   
 
2. DraftKings provides customers with online sports betting (“Sportsbook”), online 
casino (“iGaming”), and daily fantasy sports product offerings.  DraftKings began obtaining state 
licenses for its Sportsbook and iGaming products in 2018 and has expanded the number of states in 
which the company services customers.  In announcing its first quarter results on May 5, 2023, 
DraftKings stated that growth in states where it had existing operations was a “critical element” of 
DraftKings’ business model.  On July 27, 2023, following the close of the company’s fiscal second 
quarter on June 30, 2023, DraftKings’ public relations firm published a post on the personal X 
account of DraftKings’ CEO, which stated: “There’s massive potential for growth in new 
markets—but we’re still seeing really strong growth in existing states.  Our 2018-2019 state 
vintage grew over 80% on the revenue basis year-over-year in Q1.  With those numbers, we expect 
robust growth even without new states opening.”  DraftKings’ public relations firm also published 
a similar post on the personal LinkedIn account of DraftKings’ CEO.  The disclosure was selective 
in that the posts were released on the CEO’s personal X account and personal LinkedIn account, 
neither of which is an official source of DraftKings’ company information, and both of which are 
followed by some holders of DraftKings’ shares.  The content of the posts that DraftKings was 
“still seeing really strong growth in existing states” was also both material and nonpublic because 
information about growth during the second quarter in those states where DraftKings had existing 
operations was not generally known or available to the public when DraftKings’ public relations 
firm published the posts on July 27, 2023. 
 
3. Shortly after the social media posts were published, DraftKings’ communications 
staff recognized the error.  Within a half hour of the X account post DraftKings’ communications 
staff instructed the public relations firm to remove the social media posts, which were taken down.  
Notwithstanding the fact that DraftKings’ communications staff recognized the error, DraftKings 
made no prompt public disclosure by releasing to the general public the same information that was 
in the July 27 social media posts.  Instead, the first disclosure DraftKings made to the general 
public, including investors, following the July 27 social media posts was on August 3, 2023, when 
it publicly released its financial earnings for the quarter ended June 30, 2023.  DraftKings’ 
selective disclosure of material, nonpublic information without making a prompt public disclosure 
constituted a violation of Regulation FD and Section 13(a) of the Exchange Act. 
 
Respondent 
4. DraftKings Inc. is a Nevada corporation with its principal place of business in 
Boston, Massachusetts.  DraftKings’ securities are registered pursuant to Section 12(b) of the 
Exchange Act, and its shares trade on Nasdaq under the ticker symbol DKNG. 

 
 3 
Facts 
 
DraftKings’ Business Plan Emphasizes Growth in Existing Markets 
5. In 2018, DraftKings launched the first online Sportsbook in New Jersey and, since 
2018, DraftKings has steadily expanded the number of states in which it offers its Sportsbook 
product.  DraftKings launched its iGaming product in 2019 and has also expanded the number of 
states in which iGaming is offered.  Growth in those states where DraftKings has previously 
launched its Sportsbook and iGaming products is a key component of DraftKings’ business plan.  
DraftKings’ first quarter 2023 financial earnings report recognized the importance of this trend.  In 
a “Business Update” released with its first quarter 2023 earnings results, DraftKings stated: “We 
are also continuing to experience strong trends in our most mature online Sportsbook and iGaming 
state vintages.  In each of our 2018-2019 and 2020-2021 state vintages, first quarter 2023 handle 
grew more than 25% compared to the same period in 2022, revenue grew at least 80% year-over-
year . . . .  This trend is a critical element of our business model; our older states continue to 
generate revenue growth.” 
The CEO’s X Account and LinkedIn Posts on July 27, 2023 
6. Pursuant to DraftKings’ Regulation FD Policy, DraftKings observes a “quiet 
period” during which DraftKings employees are prohibited from discussing financial or 
operational results and referring to, or commenting on, any previously issued forward-looking 
financial guidance.  DraftKings’ Regulation FD Policy defines the “quiet period” as running from 
the last day of the last month of the calendar quarter through the first full trading day after the 
filing with the Commission of DraftKings’ next Form 10-Q (quarterly report) or Form 10-K 
(annual report).  DraftKings issued its Form 10-Q for the second quarter of 2023 (the quarter ended 
June 30, 2023) before the securities markets opened on August 4, 2023.  Accordingly, for the 
second quarter of 2023, the first day of the “quiet period” was June 30, 2023, and the last day of 
the “quiet period” was August 4, 2023. 
 
7. DraftKings’ public relations firm produced content for and operated social media 
accounts in the name of a few DraftKings senior executives, including their personal X and 
LinkedIn accounts.  DraftKings’ staff reviewed and approved content before it was published. 
 
8. At 5:52 p.m. on July 27, 2023, DraftKings’ public relations firm published a post 
on the personal X account of DraftKings’ CEO that stated in its entirety: 
 
There’s massive potential growth in new markets – but we’re still seeing really strong 
growth in existing states. 
 
Our 2018-2019 state vintage grew over 80% on the revenue basis year-over-year in Q1.  
With those numbers, we expect robust growth even without new states opening. 
 
9. That same day, DraftKings’ public relations firm published a post on the CEO’s 
personal LinkedIn account, which stated: 

 
 4 
Not only do we see a massive potential for growth in new markets – but we’re still seeing 
really strong growth in existing states. 
 
Our 2018-2019 state vintage grew over 80% on the revenue basis year-over-year in Q1.  
When you’re seeing that kind of scale out of your existing markets, you can expect many 
years of robust growth even without new state launches – and of course new state launches 
will only contribute further. 
 
What’s leading to this growth? 
 
Organic demand is growing and we’re also taking market share, we’re increasing our hold 
rate without losing demand just by offering more ways for customers to play. 
 
#Entreprenuership #StartUps #Business 
 
10. The statement in both posts that, as of July 27, 2023, DraftKings was “still seeing 
really strong growth in existing states” was nonpublic, as DraftKings had not previously disclosed 
in any other forum that DraftKings continued to achieve growth in existing markets in the second 
quarter of 2023.  DraftKings’ staff reviewed and approved the content of the two July 27 posts. 
 
11. Publication of the X account and LinkedIn posts violated multiple DraftKings 
policies.  DraftKings’ Social Media Policy prohibits sharing “any potentially or actual confidential 
or financial / performance information about the Company” via social media except if an employee 
receives prior written approval of the DraftKings communications team.  In addition, Section 11 of 
DraftKings’ Regulation FD Policy, titled “Use of Social Networks,” which states that: “Use of 
social networks, including corporate blogs, employee blogs, chat boards, Facebook, Twitter and 
the like to disclose material, nonpublic information may be considered selective disclosure and is 
prohibited under this Policy.”  Section 8 of its Regulation FD Policy provides that, during the 
“quiet period” described above, DraftKings’ authorized spokespersons are prohibited from 
discussing financial or operational results or guidance, including previously disclosed results, and 
referring to or commenting on any previously issued forward-looking guidance. 
 
12. Some DraftKings shareholders follow the CEO’s personal X and LinkedIn accounts.  
Accordingly, posting this content on the CEO’s personal X and LinkedIn accounts constituted 
selective disclosure, as some but not all DraftKings shareholders received the information. 
 
DraftKings’ Response Following the Publication of the Posts 
13. Shortly after the X account post was published on July 27, members of DraftKings’ 
communications staff recognized that the public relations firm should not have posted the content 
contained in the post.  Within a half hour of the X account post, DraftKings’ communications staff 
instructed the public relations firm to remove the social media posts, which were taken down. 
 

 
 5 
DraftKings Announced Its Second Quarter Earnings on August 3, 2023 
14. Following the deletion of the July 27, 2023 social media posts, DraftKings made no 
disclosure to the general public until August 3, when the company announced its financial earnings 
for the second quarter of 2023 (the quarter ended June 30, 2023).  In a slide deck outlining its 
second quarter earnings results released to the public on August 3, DraftKings included a slide 
titled: “2018-2021 States Are Growing Revenue >70% with Contribution Profit Growing Faster.”  
That slide compared results from DraftKings’ existing markets (i.e., states where DraftKings 
started operations in 2018-2021) in the second quarter of 2022 against those results in the second 
quarter of 2023.  The slide stated that year-over-year revenue growth was over 70%, that “Adjusted 
Gross Margin” increased more than 800 basis points, and that year-over-year external marketing 
expense declined more than 10%. 
 
15. On a conference call the following morning during which management of 
DraftKings publicly discussed its financial results (often referred to by public companies and the 
securities industry as an “earnings call”), DraftKings’ Chief Executive Officer and Chief Financial 
Officer confirmed the importance of the growth in existing markets.  The CFO identified growth in 
existing markets as a reason for DraftKings to revise its full year 2023 revenue guidance upward.  
Similarly, in response to a question during this earnings call from a stock analyst about growth 
outlook and the breakdown by state vintage, the CEO emphasized that growth in older states 
“makes [ ] a very big impact on the overall business.”  The official second quarter earnings release 
and related statements confirm the materiality of the information disclosed in the X account and 
LinkedIn posts. 
 
Cooperation 
16. In determining to accept the Offer, the Commission considered cooperation 
afforded the Commission staff during the investigation. 
Violations 
17. As a result of the conduct described above, DraftKings violated Regulation FD, 
which prohibits public companies (sometimes also referred to as “issuers” of securities), or persons 
acting on their behalf, from selectively disclosing material, nonpublic information to certain 
persons outside the company, including holders of the issuer’s securities.  Whenever such an issuer 
or person acting on its behalf discloses material, nonpublic information to any such person, 
Regulation FD requires that the company also disclose the information to the public.  17 C.F.R. § 
243.100(a).  In the case of non-intentional selective disclosure, Regulation FD requires that the 
public disclosure be made “promptly,” which Regulation FD defines to mean “as soon as 
reasonably practicable (but in no event after the later of 24 hours or the commencement of the next 
day’s trading on the New York Stock Exchange) after a senior official of the issuer . . . learns that 
there has been a non-intentional disclosure by the issuer or person acting on behalf of the issuer of 
information that the senior official knows, or is reckless in not knowing, is both material and 
nonpublic.”  17 C.F.R. §§ 243.100(a)(2) and 243.101(d).  DraftKings failed to make the required 
prompt, public disclosure. 

 
 6 
 
18. Regulation FD creates reporting obligations for public companies under Section 
13(a) of the Exchange Act.  Accordingly, by violating Regulation FD, an issuer also violates 
Section 13(a). 
Undertakings 
19. Respondent has undertaken to:  
 
a. Within thirty (30) days of the issuance of this Order, require all DraftKings 
employees who have responsibilities relating to corporate communications to attend training 
regarding Regulation FD and DraftKings’ Regulation FD Policy. 
 
b. Within forty (40) days of the entry of this Order, certify, in writing, 
compliance with the undertakings ordered pursuant to Section IV.B below.  The 
certification shall identify the undertaking(s), provide written evidence of compliance in the 
form of a narrative, and be supported by exhibits sufficient to demonstrate compliance.  
The certification and supporting material shall be submitted to Celia D. Moore, Assistant 
Director, Securities and Exchange Commission, 33 Arch Street, 24th Floor, Boston, MA 
02110, or such other address as the Commission may provide, with a copy to the Office of 
Chief Counsel of the Division of Enforcement, Securities and Exchange Commission, 100 
F Street, NE, Washington, DC 20549. 
 
c. For good cause shown, the Commission staff may extend any of the 
procedural dates relating to these undertakings.  Deadlines for procedural dates shall be 
counted in calendar days, except that if the last day falls on a weekend or federal holiday, 
the next business day shall be considered the last day. 
IV. 
 
In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
agreed to in Respondent DraftKings’ Offer. 
 
Accordingly, pursuant to Section 21C of the Exchange Act, it is hereby ORDERED that: 
 
 A. DraftKings cease and desist from committing or causing any violations and any 
future violations of Section 13(a) of the Exchange Act or Regulation FD. 
B. DraftKings shall comply with the undertakings enumerated in Section III, 
paragraphs 19(a) and 19(b) above. 
 
 C. Within 10 days of the entry of this Order, DraftKings shall pay a civil money 
penalty in the amount of $200,000 to the Commission for transfer to the general fund of the United 
States Treasury, subject to Securities Exchange Act of 1934 Section 21F(g)(3).  If timely payment 

 
 7 
is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717.  Payment must be made 
in one of the following ways: 
 
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request. 
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or 
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to: 
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK  73169 
 
Payments by check or money order must be accompanied by a cover letter identifying the 
Respondent and the file number of the proceedings; a copy of the cover letter and check or money 
order must be sent to Celia D. Moore, Assistant Director, Securities and Exchange Commission, 33 
Arch Street, Boston, MA 02110, or such other address as the Commission staff may provide.  
 
D. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
treated as penalties paid to the government for all purposes, including all tax purposes.  To 
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 
Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 
the Penalty Offset, notify the Commission’s counsel in this action and pay the amount of the 
Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 
an additional civil penalty and shall not be deemed to change the amount of the civil penalty 
imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 
private damages action brought against Respondent by or on behalf of one or more investors based 
on substantially the same facts as alleged in the Order instituted by the Commission in this 
proceeding. 
 
By the Commission. 
 
 
     Vanessa A. Countryman 
     Secretary 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 101198 / September 26, 2024 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-22205 

  

 

In the Matter of 

 

DRAFTKINGS INC., 

 

Respondent. 

 

 

ORDER INSTITUTING CEASE-AND-

DESIST PROCEEDINGS, PURSUANT TO 

SECTION 21C OF THE SECURITIES 

EXCHANGE ACT OF 1934, MAKING 

FINDINGS, AND IMPOSING A CEASE-

AND-DESIST ORDER 

   

 

I. 

 

 The Securities and Exchange Commission (“Commission”) deems it appropriate that public 

cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the 

Securities Exchange Act of 1934 (the “Exchange Act”) against DraftKings Inc. (“DraftKings,” or 

“Respondent”). 

 

II. 

 

In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings 

herein, except as to the Commission’s jurisdiction over it and the subject matter of these 

proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-

and-Desist Proceedings, Pursuant to Section 21C of the Securities Exchange Act of 1934, Making 

Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below. 

 

III. 

 

 On the basis of this Order and Respondent’s Offer, the Commission finds that: 

 

Summary 

 

1. This matter concerns Massachusetts-based publicly-traded company DraftKings’ 

violation of Regulation FD, a rule under the Exchange Act that prohibits public companies from 



 

 2 

selectively disclosing material, nonpublic information to certain persons outside the company.  In 

July 2023, material, nonpublic information concerning DraftKings’ second quarter 2023 (the 

quarter ended June 30, 2023) earnings was selectively disclosed to certain persons outside the 

company via social media, specifically the personal X (formerly Twitter) and LinkedIn accounts in 

the name of DraftKings’ CEO operated by DraftKings’ public relations firm.   

 

2. DraftKings provides customers with online sports betting (“Sportsbook”), online 

casino (“iGaming”), and daily fantasy sports product offerings.  DraftKings began obtaining state 

licenses for its Sportsbook and iGaming products in 2018 and has expanded the number of states in 

which the company services customers.  In announcing its first quarter results on May 5, 2023, 

DraftKings stated that growth in states where it had existing operations was a “critical element” of 

DraftKings’ business model.  On July 27, 2023, following the close of the company’s fiscal second 

quarter on June 30, 2023, DraftKings’ public relations firm published a post on the personal X 

account of DraftKings’ CEO, which stated: “There’s massive potential for growth in new 

markets—but we’re still seeing really strong growth in existing states.  Our 2018-2019 state 

vintage grew over 80% on the revenue basis year-over-year in Q1.  With those numbers, we expect 

robust growth even without new states opening.”  DraftKings’ public relations firm also published 

a similar post on the personal LinkedIn account of DraftKings’ CEO.  The disclosure was selective 

in that the posts were released on the CEO’s personal X account and personal LinkedIn account, 

neither of which is an official source of DraftKings’ company information, and both of which are 

followed by some holders of DraftKings’ shares.  The content of the posts that DraftKings was 

“still seeing really strong growth in existing states” was also both material and nonpublic because 

information about growth during the second quarter in those states where DraftKings had existing 

operations was not generally known or available to the public when DraftKings’ public relations 

firm published the posts on July 27, 2023. 

 

3. Shortly after the social media posts were published, DraftKings’ communications 

staff recognized the error.  Within a half hour of the X account post DraftKings’ communications 

staff instructed the public relations firm to remove the social media posts, which were taken down.  

Notwithstanding the fact that DraftKings’ communications staff recognized the error, DraftKings 

made no prompt public disclosure by releasing to the general public the same information that was 

in the July 27 social media posts.  Instead, the first disclosure DraftKings made to the general 

public, including investors, following the July 27 social media posts was on August 3, 2023, when 

it publicly released its financial earnings for the quarter ended June 30, 2023.  DraftKings’ 

selective disclosure of material, nonpublic information without making a prompt public disclosure 

constituted a violation of Regulation FD and Section 13(a) of the Exchange Act. 

 

Respondent 

4. DraftKings Inc. is a Nevada corporation with its principal place of business in 

Boston, Massachusetts.  DraftKings’ securities are registered pursuant to Section 12(b) of the 

Exchange Act, and its shares trade on Nasdaq under the ticker symbol DKNG. 



 

 3 

Facts 

 

DraftKings’ Business Plan Emphasizes Growth in Existing Markets 

5. In 2018, DraftKings launched the first online Sportsbook in New Jersey and, since 

2018, DraftKings has steadily expanded the number of states in which it offers its Sportsbook 

product.  DraftKings launched its iGaming product in 2019 and has also expanded the number of 

states in which iGaming is offered.  Growth in those states where DraftKings has previously 

launched its Sportsbook and iGaming products is a key component of DraftKings’ business plan.  

DraftKings’ first quarter 2023 financial earnings report recognized the importance of this trend.  In 

a “Business Update” released with its first quarter 2023 earnings results, DraftKings stated: “We 

are also continuing to experience strong trends in our most mature online Sportsbook and iGaming 

state vintages.  In each of our 2018-2019 and 2020-2021 state vintages, first quarter 2023 handle 

grew more than 25% compared to the same period in 2022, revenue grew at least 80% year-over-

year . . . .  This trend is a critical element of our business model; our older states continue to 

generate revenue growth.” 

The CEO’s X Account and LinkedIn Posts on July 27, 2023 

6. Pursuant to DraftKings’ Regulation FD Policy, DraftKings observes a “quiet 

period” during which DraftKings employees are prohibited from discussing financial or 

operational results and referring to, or commenting on, any previously issued forward-looking 

financial guidance.  DraftKings’ Regulation FD Policy defines the “quiet period” as running from 

the last day of the last month of the calendar quarter through the first full trading day after the 

filing with the Commission of DraftKings’ next Form 10-Q (quarterly report) or Form 10-K 

(annual report).  DraftKings issued its Form 10-Q for the second quarter of 2023 (the quarter ended 

June 30, 2023) before the securities markets opened on August 4, 2023.  Accordingly, for the 

second quarter of 2023, the first day of the “quiet period” was June 30, 2023, and the last day of 

the “quiet period” was August 4, 2023. 

 

7. DraftKings’ public relations firm produced content for and operated social media 

accounts in the name of a few DraftKings senior executives, including their personal X and 

LinkedIn accounts.  DraftKings’ staff reviewed and approved content before it was published. 

 

8. At 5:52 p.m. on July 27, 2023, DraftKings’ public relations firm published a post 

on the personal X account of DraftKings’ CEO that stated in its entirety: 

 

There’s massive potential growth in new markets – but we’re still seeing really strong 

growth in existing states. 

 

Our 2018-2019 state vintage grew over 80% on the revenue basis year-over-year in Q1.  

With those numbers, we expect robust growth even without new states opening. 

 

9. That same day, DraftKings’ public relations firm published a post on the CEO’s 

personal LinkedIn account, which stated: 



 

 4 

Not only do we see a massive potential for growth in new markets – but we’re still seeing 

really strong growth in existing states. 

 

Our 2018-2019 state vintage grew over 80% on the revenue basis year-over-year in Q1.  

When you’re seeing that kind of scale out of your existing markets, you can expect many 

years of robust growth even without new state launches – and of course new state launches 

will only contribute further. 

 

What’s leading to this growth? 

 

Organic demand is growing and we’re also taking market share, we’re increasing our hold 

rate without losing demand just by offering more ways for customers to play. 

 

#Entreprenuership #StartUps #Business 

 

10. The statement in both posts that, as of July 27, 2023, DraftKings was “still seeing 

really strong growth in existing states” was nonpublic, as DraftKings had not previously disclosed 

in any other forum that DraftKings continued to achieve growth in existing markets in the second 

quarter of 2023.  DraftKings’ staff reviewed and approved the content of the two July 27 posts. 

 

11. Publication of the X account and LinkedIn posts violated multiple DraftKings 

policies.  DraftKings’ Social Media Policy prohibits sharing “any potentially or actual confidential 

or financial / performance information about the Company” via social media except if an employee 

receives prior written approval of the DraftKings communications team.  In addition, Section 11 of 

DraftKings’ Regulation FD Policy, titled “Use of Social Networks,” which states that: “Use of 

social networks, including corporate blogs, employee blogs, chat boards, Facebook, Twitter and 

the like to disclose material, nonpublic information may be considered selective disclosure and is 

prohibited under this Policy.”  Section 8 of its Regulation FD Policy provides that, during the 

“quiet period” described above, DraftKings’ authorized spokespersons are prohibited from 

discussing financial or operational results or guidance, including previously disclosed results, and 

referring to or commenting on any previously issued forward-looking guidance. 

 

12. Some DraftKings shareholders follow the CEO’s personal X and LinkedIn accounts.  

Accordingly, posting this content on the CEO’s personal X and LinkedIn accounts constituted 

selective disclosure, as some but not all DraftKings shareholders received the information. 

 

DraftKings’ Response Following the Publication of the Posts 

13. Shortly after the X account post was published on July 27, members of DraftKings’ 

communications staff recognized that the public relations firm should not have posted the content 

contained in the post.  Within a half hour of the X account post, DraftKings’ communications staff 

instructed the public relations firm to remove the social media posts, which were taken down. 

 



 

 5 

DraftKings Announced Its Second Quarter Earnings on August 3, 2023 

14. Following the deletion of the July 27, 2023 social media posts, DraftKings made no 

disclosure to the general public until August 3, when the company announced its financial earnings 

for the second quarter of 2023 (the quarter ended June 30, 2023).  In a slide deck outlining its 

second quarter earnings results released to the public on August 3, DraftKings included a slide 

titled: “2018-2021 States Are Growing Revenue >70% with Contribution Profit Growing Faster.”  

That slide compared results from DraftKings’ existing markets (i.e., states where DraftKings 

started operations in 2018-2021) in the second quarter of 2022 against those results in the second 

quarter of 2023.  The slide stated that year-over-year revenue growth was over 70%, that “Adjusted 

Gross Margin” increased more than 800 basis points, and that year-over-year external marketing 

expense declined more than 10%. 

 

15. On a conference call the following morning during which management of 

DraftKings publicly discussed its financial results (often referred to by public companies and the 

securities industry as an “earnings call”), DraftKings’ Chief Executive Officer and Chief Financial 

Officer confirmed the importance of the growth in existing markets.  The CFO identified growth in 

existing markets as a reason for DraftKings to revise its full year 2023 revenue guidance upward.  

Similarly, in response to a question during this earnings call from a stock analyst about growth 

outlook and the breakdown by state vintage, the CEO emphasized that growth in older states 

“makes [ ] a very big impact on the overall business.”  The official second quarter earnings release 

and related statements confirm the materiality of the information disclosed in the X account and 

LinkedIn posts. 

 

Cooperation 

16. In determining to accept the Offer, the Commission considered cooperation 

afforded the Commission staff during the investigation. 

Violations 

17. As a result of the conduct described above, DraftKings violated Regulation FD, 

which prohibits public companies (sometimes also referred to as “issuers” of securities), or persons 

acting on their behalf, from selectively disclosing material, nonpublic information to certain 

persons outside the company, including holders of the issuer’s securities.  Whenever such an issuer 

or person acting on its behalf discloses material, nonpublic information to any such person, 

Regulation FD requires that the company also disclose the information to the public.  17 C.F.R. § 

243.100(a).  In the case of non-intentional selective disclosure, Regulation FD requires that the 

public disclosure be made “promptly,” which Regulation FD defines to mean “as soon as 

reasonably practicable (but in no event after the later of 24 hours or the commencement of the next 

day’s trading on the New York Stock Exchange) after a senior official of the issuer . . . learns that 

there has been a non-intentional disclosure by the issuer or person acting on behalf of the issuer of 

information that the senior official knows, or is reckless in not knowing, is both material and 

nonpublic.”  17 C.F.R. §§ 243.100(a)(2) and 243.101(d).  DraftKings failed to make the required 

prompt, public disclosure. 



 

 6 

 

18. Regulation FD creates reporting obligations for public companies under Section 

13(a) of the Exchange Act.  Accordingly, by violating Regulation FD, an issuer also violates 

Section 13(a). 

Undertakings 

19. Respondent has undertaken to:  

 

a. Within thirty (30) days of the issuance of this Order, require all DraftKings 

employees who have responsibilities relating to corporate communications to attend training 

regarding Regulation FD and DraftKings’ Regulation FD Policy. 

 

b. Within forty (40) days of the entry of this Order, certify, in writing, 

compliance with the undertakings ordered pursuant to Section IV.B below.  The 

certification shall identify the undertaking(s), provide written evidence of compliance in the 

form of a narrative, and be supported by exhibits sufficient to demonstrate compliance.  

The certification and supporting material shall be submitted to Celia D. Moore, Assistant 

Director, Securities and Exchange Commission, 33 Arch Street, 24th Floor, Boston, MA 

02110, or such other address as the Commission may provide, with a copy to the Office of 

Chief Counsel of the Division of Enforcement, Securities and Exchange Commission, 100 

F Street, NE, Washington, DC 20549. 

 

c. For good cause shown, the Commission staff may extend any of the 

procedural dates relating to these undertakings.  Deadlines for procedural dates shall be 

counted in calendar days, except that if the last day falls on a weekend or federal holiday, 

the next business day shall be considered the last day. 

IV. 

 

In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Respondent DraftKings’ Offer. 

 

Accordingly, pursuant to Section 21C of the Exchange Act, it is hereby ORDERED that: 

 

 A. DraftKings cease and desist from committing or causing any violations and any 

future violations of Section 13(a) of the Exchange Act or Regulation FD. 

B. DraftKings shall comply with the undertakings enumerated in Section III, 

paragraphs 19(a) and 19(b) above. 

 

 C. Within 10 days of the entry of this Order, DraftKings shall pay a civil money 

penalty in the amount of $200,000 to the Commission for transfer to the general fund of the United 

States Treasury, subject to Securities Exchange Act of 1934 Section 21F(g)(3).  If timely payment 



 

 7 

is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717.  Payment must be made 

in one of the following ways: 

 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request. 

 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or 

 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to: 

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK  73169 

 

Payments by check or money order must be accompanied by a cover letter identifying the 

Respondent and the file number of the proceedings; a copy of the cover letter and check or money 

order must be sent to Celia D. Moore, Assistant Director, Securities and Exchange Commission, 33 

Arch Street, Boston, MA 02110, or such other address as the Commission staff may provide.  

 

D. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 

treated as penalties paid to the government for all purposes, including all tax purposes.  To 

preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 

Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 

award of compensatory damages by the amount of any part of Respondent’s payment of a civil 

penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 

Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 

the Penalty Offset, notify the Commission’s counsel in this action and pay the amount of the 

Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 

an additional civil penalty and shall not be deemed to change the amount of the civil penalty 

imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 

private damages action brought against Respondent by or on behalf of one or more investors based 

on substantially the same facts as alleged in the Order instituted by the Commission in this 

proceeding. 

 

By the Commission. 

 

 

     Vanessa A. Countryman 

     Secretary 


	UNITED STATES OF AMERICA