DraftKings Goes Back to the Debt Market to Retire Its Convertible Notes

DraftKings is going back to the leveraged loan market, this time to start unwinding the convertible debt it sold at the height of the pandemic-era sports betting boom. The Boston-based operator announced on August 17, 2026 that it has launched syndication of a proposed $600 million senior secured term loan B and secured commitments for a new $750 million revolving credit facility maturing in 2031, which will replace its existing $500 million revolver.

The proceeds are earmarked in large part for buying back a portion of DraftKings’ convertible notes due 2028, subject to availability and market conditions, with the remainder going to general corporate purposes. The new revolver will sit substantially undrawn at closing, the company said, existing as liquidity rather than spending money. Both transactions remain subject to market and other conditions, so the launch of syndication is the opening move rather than a done deal.

Why DraftKings Wants the 2028 Convertible Notes Off Its Books

The convertible notes targeted here are DraftKings’ existing Convertible Notes due 2028, which sat on the balance sheet at $1.26 billion net of issuance costs as of June 30, 2026. The trade-off for a zero coupon is equity dilution: the notes convert into stock, and they sit on the balance sheet as a long-dated claim against shareholders. As of June 30, 2026, DraftKings’ balance sheet carried convertible notes of $1.26 billion net of issuance costs, alongside $574.6 million of term loan B debt, against $983.9 million in cash and cash equivalents, per its second-quarter 2026 report.

Swapping convertible debt for a term loan changes the character of that claim. A term loan B is secured, institutional debt sold into the leveraged loan market: it carries a floating interest rate, ranks senior to the converts, and never converts into equity. For a company now guiding to $700 million to $900 million of adjusted EBITDA for fiscal 2026, taking on cash-pay secured debt to retire zero-coupon convertible debt is a bet that the interest cost is worth more than the dilution and refinancing risk the notes carry into 2028.

This is the second term loan B in the company’s history. The first closed on March 4, 2025, also at $600 million, upsized from an announced $500 million after what the company described as strong demand. That loan matures in March 2032 and priced at SOFR plus 1.75%, with proceeds used for general corporate purposes. DraftKings repaid $3 million of principal on it in the first half of 2026, in line with the loan’s 1% annual amortization requirement.

The Revolver Gets Bigger and Longer-Dated

The revolving credit side of the transaction is a straight upgrade of the facility DraftKings put in place less than two years ago. The existing $500 million revolver was signed on November 7, 2024, with Morgan Stanley (MS ) Senior Funding as administrative agent, and replaced a $125 million facility dating to December 2022, per the company’s SEC filing at the time. It matures November 7, 2029. The replacement adds $250 million of capacity and pushes the maturity out two more years to 2031.

That 2024 agreement prices borrowings at SOFR plus a margin of 1.75% to 2.25% depending on the company’s net first lien leverage ratio, with a commitment fee of 0.25% to 0.375% on the undrawn portion. It also carries a maintenance test: if DraftKings draws more than 40% of the revolver, its net first lien leverage must stay at or below 4.5 times, secured by a first-priority claim on substantially all company assets. Pricing and covenant terms for the new $750 million facility will be set in syndication.

By the Numbers

• $600 million: proposed size of the new term loan B
• $750 million: commitments secured for the new revolving credit facility, maturing 2031
• $500 million: the existing revolver it replaces, maturing November 7, 2029
• $1.26 billion: convertible notes on the balance sheet, net of issuance costs, as of June 30, 2026
• $574.6 million: existing term loan B balance, net of issuance costs, as of June 30, 2026
• $983.9 million: cash and cash equivalents as of June 30, 2026
• $6.5 billion to $6.9 billion: maintained fiscal 2026 revenue guidance, alongside $700 million to $900 million of adjusted EBITDA

What Has to Happen Before the Deal Closes

Nothing here is final until the syndication completes. The term loan B is proposed, not funded: arrangers will market it to institutional loan investors over the coming weeks, and the company has flagged that completion depends on market and other conditions, with no closing date announced. The March 2025 transaction shows how that process can move, with demand pushing the final size $100 million above the initial ask between announcement and close.

The note repurchases are conditional in the same way. DraftKings said any buyback of the 2028 convertible notes depends on availability and market conditions, and the announcement itself is structured so as not to constitute an offer to purchase the notes. How much of the $600 million ultimately goes to noteholders, and at what price, will only become visible as the company executes. Whatever portion is repurchased shrinks the 2028 maturity ahead of schedule; whatever is not remains on the balance sheet alongside the new secured debt.

The financing lands as DraftKings continues to spend on growth, including the launch of its Predictions event-contracts business in December 2025 and a second quarter in which revenue dipped 5% to $1.44 billion on customer-friendly sports results even as handle grew 15% to $13.1 billion. With the new revolver expected to sit undrawn and cash of nearly $1 billion already on hand, the package reads as balance-sheet management rather than a hunt for operating funds: extending maturities, enlarging the liquidity backstop, and beginning to clear out the convertible debt that predates the company’s profitability.