{
  "docId": "019dd923-622c-750b-8b99-c6da1f4c0f8e",
  "docSlug": "fab8b03c0201",
  "documentTitle": "DraftKings Inc. (DKNG)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Spruce Point Capital Management",
  "documentKindSlug": "activist-deck",
  "documentKindLabel": "Activist deck",
  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2025-10-03 00:00:00",
  "orientation": "landscape",
  "aspectRatio": 1.3333334,
  "pageNumber": 6,
  "pageCount": 48,
  "prevPage": 5,
  "nextPage": 7,
  "slideType": "executive_summary",
  "function": "frame_problem",
  "density": "dense",
  "nDataPoints": 1,
  "notes": "The slide uses a yellow background to highlight the core thesis text. It references specific regulatory events in 2025 involving the CFTC, Kalshi, and Polymarket.",
  "elementsJson": [
    "headline_text",
    "paragraph"
  ],
  "metadataConfidence": 1,
  "imagePath": null,
  "slideHref": "/slides/019dd923-622c-750b-8b99-c6da1f4c0f8e/6",
  "deckHref": "/decks/019dd923-622c-750b-8b99-c6da1f4c0f8e",
  "deckJsonHref": "/decks/019dd923-622c-750b-8b99-c6da1f4c0f8e.json",
  "deckAnchorHref": "/decks/019dd923-622c-750b-8b99-c6da1f4c0f8e#slide-6",
  "components": [
    {
      "bbox": null,
      "kind": "callout",
      "text": "Spruce Point has been following the DKNG story closely, and despite the recent share price movement and other prescient short-seller critiques, we believe there is still significantly more downside risk.",
      "attrs": null,
      "subkind": null,
      "toolName": "Visual emphasis",
      "toolSlug": "visual-emphasis",
      "confidence": null,
      "componentId": "019dd953-78b7-702e-962a-5ec79a5193ad",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.38,
        "w": 0.96,
        "x": 0.02,
        "y": 0.59
      },
      "kind": "paragraph",
      "text": "The Commodity Futures Trading Commission (CFTC) regulates the prediction exchanges as designated contract markets (DCMs) under the Commodity Exchange Act (CEA). This federal jurisdiction effectively preempts state gaming laws, a critical distinction that allows prediction exchanges to operate nationwide rather than on a state-by-state basis. Spruce Point believes the regulatory landscape has shifted materially in the U.S. especially given KalshiEX LLC and its parent company Kalshi Inc. (Kalshi) listed sports prediction contracts three days after Trump was inaugurated. In May 2025, the CFTC voluntarily dismissed its appeal of a federal court ruling that allowed Kalshi to list certain event contracts, including those for election outcomes, marking a shift in the CFTC's stance toward these types of contracts. In July 2025, the U.S. Department of Justice (DOJ) and the CFTC formally ended their investigations into Polymarket, the world's largest crypto-based prediction exchange platform, without bringing any new charges. On September 3, 2025, the CFTC issued a no-action letter regarding event contracts. The letter, issued in response to a request from QCX LLC, a DCM and QC Clearing LLC, a derivatives clearing organization, both owned by Polymarket, in essence gives Polymarket a regulatory green light to re-enter the U.S. market. We believe it is important to note that Donald Trump Jr. is an advisor to Kalshi and both an advisor to and investor in Polymarket through 1789 Capital. In February 2025, President Trump nominated former Commissioner Brian Quintenz to be the next CFTC Chairman. It is our understanding that Brian Quintenz is currently an equity holder and on the Board of Kalshi. While Mr. Quintenz's nomination was withdrawn one potential new candidate is a partner at Milbank who represents Kalshi in their state cases.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "bb68043e-5de3-4dc2-9b5e-470652f22c9d",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.12,
        "w": 0.96,
        "x": 0.02,
        "y": 0.17
      },
      "kind": "paragraph",
      "text": "After conducting a forensic review of DraftKings Inc. (Nasdaq: DKNG) (\"DKNG\" or the \"Company\"), we have serious concerns regarding the impact to DKNG's sportsbook market share given the significant volume, or handle, being generated in the prediction markets for sports betting.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "e62117b2-40fa-459e-8e44-454eb576f3d1",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.22,
        "w": 0.96,
        "x": 0.02,
        "y": 0.36
      },
      "kind": "paragraph",
      "text": "Prediction markets are federally regulated exchanges where participants trade contracts based on the outcomes of future events. Unlike a sportsbook, which acts as the house, sets odds, and is taxed heavily by states on gross gaming revenue, a prediction exchange matches buyers and sellers peer-to-peer and charges a small transaction fee. While prediction exchanges have existed for many years in limited form, they exploded in popularity in 2024 thanks to the introduction of contracts that allowed people to bet on elections. There was over $3.5 billion of trading volume on prediction exchanges during the 2024 U.S. presidential election.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "fd87a3f6-0fff-4791-bd05-22f008651462",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.12,
        "w": 0.7,
        "x": 0.28,
        "y": 0.03
      },
      "kind": "title",
      "text": "Spruce Point Issues \"Strong Sell\" Recommendation On DraftKings Inc. (Nasdaq: DKNG)",
      "attrs": null,
      "subkind": "headline",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "58171bca-cd03-4b46-9c1b-f66939842fe0",
      "frameworkName": null,
      "frameworkSlug": null
    }
  ],
  "metrics": [],
  "tools": [],
  "frameworks": [],
  "arcBeats": [
    {
      "to": 20,
      "from": 6,
      "beatId": "4e1c17fc-d0a4-422f-b00f-a3e72a45a04a",
      "arcName": "Overcoming the Monster",
      "arcSlug": "overcoming-monster",
      "beatName": "The Struggle",
      "beatSlug": "overcoming-monster-the-struggle",
      "evidence": "Detailed analysis of Kalshi's advantages and DKNG's challenges",
      "position": 1,
      "confidence": 0.8,
      "parentBeatName": "Development",
      "parentBeatSlug": "development"
    }
  ],
  "loops": [],
  "imagePathAlt": null,
  "thumbSrc": null,
  "thumbSrcAlt": null,
  "locked": true
}