DraftKings: a $21B SPAC betting it can hide its black market operations

If I broke into the homes of millions of people to fleece them of their life savings I'd never be seeing the outside of a prison but these guys do it via a confidence scam and the internet and never see the inside of a prison. Then they become CEO of another company and start all over agin.

I stop believing in democracy when I read stories like these.

Not related to your main point, but I was reading about historical bucket shops on wikipedia yesterday. It's my understanding that they are inherently a scam. They are basically people betting on the movement of stocks without ever taking a position in the stock market. They were outlawed in the US in the 20s.

Are you using the same definition I am, and in practice are modern bucket shops basically always a vehicle for fraud? (I mean, why wouldn't you just buy the stock if you are legit. The barrier in 2021 is so low.)

Steamboat Willie was created in 1928. It won't enter public domain until 2024 (assuming Disney isn't successful in extending copyright yet again...)

Disney raided the public domain to build it's animated films empire, then pulled up the drawbridge to the magic kingdom behind themselves.

[1] https://www.pastemagazine.com/politics/walt-disney/walt-the-...

The US does seem to have a lot of puritan hang-ups not helped by local gambling monopolys.

Surprised that draft kings don't go with one of the UK online gaming firms.

It looks like TFA author is correct that they structured the transfer specifically to avoid Meckenzie or the trust falling within the definition of “beneficial ownership” that would trigger a 13D reporting obligation and since they transferred 0.7% of outstanding shares (less than 1% with a bit of wiggle room for market movement) I’m assuming the shares were transferred to an irrevocable trust so they’d be outside the scope of Form 4 unless he’s serving as trustee which is unlikely (although, not entirely impossible) judging by the way the disclosure is phrased in his SEC filing:

> On May 26, 2021, Mr. Meckenzie transferred his beneficial interest in 19,075,875 shares of Common Stock (the “Shares”) for no consideration to a trust for the benefit of his spouse and children and remoter issue and for which an independent trustee has been appointed (the “Trust”), and the Trust immediately transferred the Shares to a company (the “Company”) wholly-owned by the Trust (the “Transfers”). Mr. Meckenzie does not exercise voting or dispositive power over the Shares or have a right to reacquire the Shares. As a result of the Transfers, Mr. Meckenzie no longer has or shares, directly or indirectly, voting or investment power over the Shares.

If he’s acting as co-trustee alongside an independent trustee and phrasing it in such a way to insinuate he’s not at all involved that would be very shady indeed.

It frequently happens with short-focused groups. There are dramatically fewer hits to be had on the short side of the sort like Nikola, than there are hits to be had on the long side (you could have practically closed your eyes and tossed darts at cloud stocks and hit homerun after homerun after homerun for the past decade). Inevitably short groups get desperate and overreach, constantly walking the line between revealing something legitimately suspicious and conjuring a fake short tale (they do that through blending the story, one part something bad, three or four parts bull, and the one bad thing is meant to fool people into believing it's all super bad). Which isn't to suggest that shorts are any worse than lying pumpers / bulls that blast positive propaganda all over the Internet, rather, it's that there are always far fewer short homeruns to be had inherently (outside of comprehensive black swan events like the banking & housing crisis). As such the shorts are stuck in a far more difficult segment with fewer legitimate targets, and I think it pushes them toward desperation more often than almost anywhere else (perhaps outside of penny stock pumpers).

One thing I have learned is that a SPAC or any company with a low stock price may have low liquidity, particularly for longer-dated options. This risks making a short position dramatically less profitable. So SPACs end up not being the gold mine for shorts that you might expect.

For me a short position is not about speculating but instead about being strategically "long volatility". Which means you can actually make money when the rest of your stocks (which are "short volatility") are tanking and provide a better return for your portfolio. So I now try to always have PUTs open (along with CALLs that balance each other out).

Don't buy your short position with margin: that introduces short volatility to what should be a long volatility position.

This seems really risky without any institutional backing. If the market is volatile or "irrational" (WSB + GME for example), you can be margin called and lose a lot of money even if you're eventually right. Unlike a normal equity you can't just hold your short through volatility.