v3.26.1
Business Combinations
 6 Months Ended
Jun. 30, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Business Combinations Business Combinations
2025 Business Combinations
Acquisition of Railbird Technologies Inc. (“Railbird”)
On October 21, 2025 (the “Railbird Acquisition Date”), the Company entered into a definitive agreement (the “Railbird Merger Agreement”) to acquire Railbird and its wholly owned subsidiary Railbird Exchange, LLC, a federally licensed exchange designated by the Commodity Futures Trading Commission (the “Railbird Transaction”). The acquisition provides a foundation for the Company’s entrance into Prediction Markets through regulated event contracts.
Under the terms of the Railbird Merger Agreement and subject to certain exclusions contained therein, Railbird equityholders received closing consideration of approximately $18.3 million of cash consideration and approximately $28.7 million of equity consideration on the Railbird Acquisition Date, excluding contingent consideration. The present value of the contingent consideration of $37.8 million at the Railbird Acquisition Date, which is payable upon, and subject to, the achievement of certain performance targets, is included in Other long-term liabilities on the consolidated balance sheet.
Operating results for Railbird on and after the Railbird Acquisition Date are included in the Company’s condensed consolidated statements of operations for the six months ended June 30, 2026. The amount of revenue and earnings attributable to the Railbird business from the Railbird Acquisition Date through June 30, 2026, which is included within revenue and loss attributable to common stockholders in the Company’s condensed consolidated statements of operations, is not material. Pro forma financial information for the acquisition has not been presented because the impact of this acquisition was immaterial to our consolidated financial statements.
Preliminary Purchase Price Accounting for the Railbird Transaction

On the Railbird Acquisition Date, the Company acquired 100% of the equity interests of Railbird pursuant to the Railbird Merger Agreement. The following is a summary of the consideration issued or paid on the Railbird Acquisition Date:

Cash consideration$18,296 
Equity consideration (1)
28,708 
Contingent consideration (2)
37,785 
Total consideration$84,789 

(1)Includes the issuance of approximately 0.9 million shares of DraftKings Inc.’s Class A common stock issued at $33.62 per share.
(2)The Company recorded a fair value estimate of the contingent consideration, as disclosed in “Note 6 – Fair Value Measurements”. Contingent payments have a maximum value of up to $200 million, 47.5% of which will be contingent consideration and 52.5% of which will be recorded as compensation under ASC 805, Business Combinations. The payments will be settled, at the Company’s option, in shares of the Company’s Class A common stock or in a combination of shares of the Company’s Class A common stock and cash; provided that, for each Railbird equityholder that is an accredited investor, shares of the Company’s Class A common stock will represent at least 70% of the contingent consideration such equityholder receives. The Company’s Class A common stock to be issued as contingent payment will be valued on the basis of a 30-day volume-weighted average price of the Company’s Class A common stock determined at or around the issuance thereof based on certain post-closing performance metrics.

The purchase price allocation for Railbird set forth herein is preliminary and subject to change within the measurement period, which will not extend beyond one year from the Railbird Acquisition Date. Measurement period adjustments will be recognized in the reporting period in which the adjustment amounts are determined and may include adjustments pertaining to intangible assets acquired and tax liabilities assumed, including the calculation of deferred tax assets and liabilities. Any such adjustments may be material.
The following table summarizes the preliminary fair value of the assets acquired and liabilities assumed in connection with the consummation of the Railbird Transaction on the Railbird Acquisition Date. The values set forth below are preliminary, pending finalization of valuation analyses:
Assets acquired:
Cash and cash equivalents$181 
Restricted cash1,734 
Intangible assets58,090 
Deposits and other non-current assets6 
Total identifiable assets acquired60,011 
Liabilities assumed:
Accounts payable and accrued expenses52 
Other long-term liabilities15,365 
Total liabilities assumed15,417 
Net assets acquired (a)44,594 
Purchase consideration (b)$84,789 
Goodwill (b) – (a)$40,195 
Goodwill represents the excess of the gross consideration transferred over the difference between the fair value of the underlying net assets acquired and the underlying liabilities assumed. Qualitative factors that contribute to the recognition of goodwill include certain intangible assets that are not recognized as separate identifiable intangible assets apart from goodwill. Intangible assets not recognized apart from goodwill consist primarily of benefits from securing buyer-specific synergies that increase revenue and profits and are not otherwise available to a market participant, as well as acquiring a talented workforce and cost savings opportunities. Goodwill recognized is not deductible for tax purposes. Goodwill associated with the Railbird Transaction is assigned as of the Railbird Acquisition Date to the Company’s prediction markets reporting unit, which was established in 2025 as a result of the launch of our Prediction Markets offering.
The Company recorded an intangible asset for an operating license of $58.1 million that will be amortized over four years. We valued the operating license by using the income approach, specifically the with-and-without method, which isolates the cash flows attributable to the asset. The process for estimating the fair values of identifiable intangible assets requires the use of significant estimates and assumptions, including revenue growth rates and discount rates. We amortize definite-lived assets based on the pattern over which we expect to receive the economic benefit from these assets.
Transaction Costs
For the year ended December 31, 2025, the Company incurred $5.5 million in advisory, legal, accounting and management fees in connection with the Railbird Transaction, which were included in general and administrative expenses on the Company’s consolidated statements of operations. We did not incur any such costs in the three and six months ended June 30, 2026 or June 30, 2025.