DraftKings (DKNG) risk factors, FY2025 10-K

Summary of Material Risk Factors

1. 01Risk Factors Relating to Our Business and Industry
2. 02Economic downturns and political and market conditions beyond our control could adversely affect our business, financial condition and results of operations
3. 03Certain of our operations are in non-U.S. jurisdictions and are subject to the economic, political, regulatory, and other risks of international operations36% rewritten
4. 04Reductions in discretionary consumer spending could have an adverse effect on our business, financial condition, results of operations and prospects21% rewritten
5. 05Our financial results have fluctuated in the past, and we expect our financial results to fluctuate from quarter to quarter in the future. These fluctuations may be due to a variety of factors, some of which are outside of our control and may not fully reflect the underlying performance of our business
6. 06We have a history of losses and we may not be consistently profitable in the futureNew
7. 07Our results of operations fluctuate due to seasonality and other factors and, therefore, our periodic operating results are not guarantees of future performance
8. 08The success, including win or hold rates, of existing or future sports betting and iGaming product offerings depends on a variety of factors and is not completely controlled by us
9. 09We use artificial intelligence, machine learning, data science and similar technologies in our business, and challenges with properly managing such technologies could result in reputational harm, competitive harm and legal liability, and adversely affect our results of operations95% rewritten
10. 10In addition, customers or other third parties may use AI-powered bots or similar computer programs to interfere with or attempt to gain an unfair advantage in connection with our products or offerings, which could adversely affect our business and results of operationsNew
11. 11We rely on Amazon Web Services to deliver our product offerings to users, and any disruption of or interference with our use of Amazon Web Services could adversely affect our business, financial condition, results of operations and prospects
12. 12Our technology contains third-party open source software components, and failure to comply with the terms of the underlying open source software licenses could restrict our ability to provide our product offerings
13. 13We rely on third-party payment processors to process deposits and withdrawals made by our users, and if we cannot manage our relationships with such third parties and other payment-related risks, our business, financial condition, results of operations and prospects could be adversely affected
14. 14We rely on other third-party service providers, and if such third parties do not perform adequately or terminate their relationships with us, our costs may increase and our business, financial condition, results of operations and prospects could be adversely affected64% rewritten
15. 15If we fail to detect fraud or theft, including by our users and employees, our reputation may suffer which could harm our brand and reputation and negatively impact our business, financial condition, results of operations and prospects and could subject us to investigations and litigation
16. 16If internet and other technology-based service providers experience service interruptions, our ability to conduct our business may be impaired and our business, financial condition and results of operations could be adversely affected
17. 17Our growth depends, in part, on the success of our strategic relationships with third parties. Overreliance on certain third parties, or our inability to extend existing relationships or agree to new relationships, may cause unanticipated costs for us and impact our financial performance in the future
18. 18Our growth will depend on our ability to attract and retain users, and the loss of our users, failure to attract new users in a cost-effective manner or failure to effectively manage our growth could adversely affect our business, financial condition, results of operations and prospects
19. 19Our core values of focusing on our users first and acting for the long term may conflict with the short-term interests of our business
20. 20We may require additional capital to support our growth plans, and such capital may not be available on terms acceptable to us, if at all. This could hamper our growth and adversely affect our business
21. 21We may invest in or acquire other businesses, and our business may suffer if we are unable to successfully integrate acquired businesses into our Company or otherwise manage the growth associated with multiple acquisitions
22. 22We are party to pending litigation in various jurisdictions and with various plaintiffs, and we may be subject to future litigation in the operation of our business. An adverse outcome in one or more proceedings could adversely affect our business91% rewritten
23. 23Compliance with data privacy and security laws and regulations could require us to incur significant expenses, and failure to comply with such laws and regulations could carry penalties and potential criminal sanctions, as well as risk of litigation
24. 24Our growth prospects and market potential will depend on our ability to obtain licenses to operate in a number of jurisdictions, and if we fail to obtain and subsequently maintain such licenses, our business, financial condition, results of operations and prospects could be impaired
25. 25We follow the industry practice of restricting and managing betting limits at the individual customer level based on individual customer profiles and risk level to the enterprise; however, there is no guarantee that jurisdictions will allow operators such as us to limit on the individual customer level
26. 26We may have difficulty accessing the service of banks, credit card issuers and payment processing service providers, which may make it difficult to offer our product offerings and services
27. 27Failure to maintain adequate financial, information technology and management processes and controls could result in material weaknesses and lead to errors in our financial reporting, which could adversely affect our business as a public company
28. 28All of our named executive officers are employees-at-will. The unexpected loss of services of one or more of these key employees, or failure to manage executive succession successfully, could have a material adverse effect on our business, financial condition, results of operations and prospects
29. 29Failure to protect or enforce our intellectual property rights or the costs involved in such enforcement could harm our business, financial condition and results of operations
30. 30Our insurance may not provide adequate levels of coverage against claims
31. 31Our non-U.S. operations expose us to certain foreign currency transaction risks. As a result, changes in the valuation of the U.S. dollar in relation to other currencies could have positive or negative effects on our profit and financial position
32. 32We have substantial debt outstanding and may incur additional debt22% rewritten
33. 33The conditional conversion features of the Convertible Notes, if triggered, may adversely affect our financial condition and operating results
34. 34The Capped Call Transactions may affect the value of the Convertible Notes and our Class A common stock
35. 35We are subject to counterparty risk with respect to the Capped Call Transactions
36. 36The trading price of our Class A common stock has been, and will likely continue to be, volatile and you could lose all or part of your investment
37. 37Sales of substantial amounts of Class A common stock in the public market, or the perception that such sales may occur, could cause the market price for our Class A common stock to decline
38. 38We may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations, prospects and stock price, which could cause you to lose some or all of your investment
39. 39The coverage of our business or our Class A common stock by securities or industry analysts or the absence thereof could adversely affect our securities and trading volume27% rewritten
40. 40Because we are a “controlled company” under The Nasdaq Stock Market listing standards, our stockholders may not have certain corporate governance protections that are available to stockholders of companies that are not controlled companiesNew
41. 41Our dual class structure has the effect of concentrating voting power with our Chief Executive Officer and Chairman, which limits an investor’s ability to influence the outcome of important transactions, including a change in control
42. 42Our dual class structure may affect the trading price of our Class A common stock
43. 43Nevada law and provisions of our amended and restated articles of incorporation and amended and restated bylaws could make a takeover proposal more difficult
44. 44Stock repurchases under our stock repurchase program are discretionary, and we cannot guarantee that our stock repurchase program will achieve the desired objectives. Stock repurchases diminish our cash reserves and could also increase the volatility of the trading price of our Class A common stock