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  "documentTitle": "DraftKings Inc. (DKNG)",
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  "authorName": "Spruce Point Capital Management",
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  "presentationDate": "2025-10-03 00:00:00",
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  "notes": "Uses external data (InGame analysis and former employee testimony) to challenge the valuation thesis of the target company.",
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      "text": "In other words, if DKNG pivots into exchanges in the coming years, the TAM expansion opportunity touted by sell-side equity analysts and others might not meet expectations.",
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      "text": "Twitter/X post by Adhi Rajaprabhakaran showing Kalshi volume and revenue data.",
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      "text": "Adhi Rajaprabhakaran, known as 50¢ Dollars on Substack, a former Kalshi employee, and prediction market expert estimates revenue to be ~1.3% of volume or handle.",
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      "text": "InGame reviewed millions of Kalshi trades from February to 2025 (over $1B in reported volume) and applied Kalshi’s published fee schedule to every contract, estimating $15.2M in fees or ~1.5% hold rate.",
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      "text": "$2.6 / $196 = 1.3%",
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      "text": "hold rate: 1.5%",
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      "text": "Typically, OSB operators keep $8–$10 of revenue on every $100 wagered through their 8–10% vig or margin. The 8-10% is the built-in margin if bets were perfectly balanced. DKNG’s actual sportsbook hold is ~6-8%. Spruce Point believes there is some perception by the market recently that the exchanges hold rate is ~4%. Spruce Point’s research indicates the hold rate is closer to ~1.5%. In other words, if DKNG pivots into exchanges in the coming years, the TAM expansion opportunity touted by sell-side equity analysts and others might not meet expectations. In addition, once all the litigation settles, we believe sports prediction exchanges will either operate in all 50 states or none unless the exchanges pivot to gambling licenses and paying taxes. We believe there is a TAM expansion opportunity for DKNG if the sports exchanges are free to operate in the 50 states but we believe it is also a very significant TAM and EBITDA detractor for DKNG’s business in its current 26 state sportsbook presence as a large portion of DKNG’s hold rate could fall from 6-8% down to the 1.5% to 3% range.",
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      "text": "Adhi Rajaprabhakaran, known as 50¢ Dollars on Substack, a former Kalshi employee, and prediction market expert estimates revenue to be ~1.3% of volume or handle.",
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      "text": "Source: Kalshi fee schedule.",
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      "text": "Market Misperceptions: Hold Rate",
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