(Bloomberg) -- A stalled initial public offering, a failed merger, and one pandemic later, DraftKings Inc. is public.

The Boston-based sports-betting company jumped as much as 18% on its first trading day after completing a reverse merger with Diamond Eagle Acquisition Corp., a special purpose acquisition company. The $3.3 billion deal combining DraftKings and the gaming technology firm SBTech was approved Thursday.

Its shares were trading 7% higher at $18.68 on 11:01 a.m. in New York, giving the company a market value of $5.8 billion.

The DraftKings debut shows the continuing lure of both sports and public markets, even as both have been hit by the coronavirus pandemic like a 300-pound NFL lineman. And the company took plenty of hits on its road to victory.

In 2015, the company was in talks with investment banks about a potential IPO only to face a market selloff that quashed its plans. After flooding the market with advertising, it became the target of regulators and investigations that shuttered its business in many states. Two years later, it tried to merge with rival FanDuel Inc. but the transaction fell apart after pressure from the U.S. Federal Trade Commission.

From the beginning, DraftKings, along with FanDuel, also faced state regulators’ questions about the legality of their pay-to-play games.

Legal sports betting was always DraftKings’ long-term plan, though, and victory came with a 2018 U.S. Supreme Court ruling striking down a 1992 law that barred commercial sports betting in most states. DraftKings was well positioned to capitalize on the new market as states moved to allow sports gambling. In New Jersey alone, DraftKings took in almost $80 million in sports-betting revenue last year.

Going SPAC

After last year’s rise and fall of IPOs by tech unicorns led by Uber Technologies Inc., SPACs took on a new sheen. Special purpose acquisition companies, once a last resort for owners looking to exit an investment, become a popular choice for private companies spooked by the swings in the regular IPO market. Richard Branson’s Virgin Galactic Holdings Inc.’s merger with one so-called blank-check company set up by venture capitalist Chamath Palihapitiya was a high-profile example.

Diamond Eagle, founded by former Hollywood executive Jeff Sagansky and Eli Baker, raised $400 million in an IPO in May. In December, it announced a deal to buy DraftKings, with funds managed by Capital Research and Management Co., Wellington Management Co. and Franklin Templeton committed to a private investment of $304 million. Before the deal could close, the pandemic hit, putting major sports in the U.S. and around the world in limbo as well as throwing equity markets into a panic.

The decision to pursue a reverse merger with a SPAC instead of a traditional IPO may have been the clutch play that put DraftKings across the public company goal line despite this year’s stock market rout.

Chief Executive Officer Jason Robins said that when they discussed potential avenues for going public, his team talked about the possibility of a downturn in the market. The discussion didn’t include prospects for a global pandemic. Still, at the time the market had been on an 11-year bull run, and with the 2020 U.S. presidential election approaching, some were projecting an economic dip.

‘Pretty Big Deal’

“Now, looking at this in hindsight, that’s a pretty big deal,” Robins said. “Had we chosen a traditional IPO structure, odds are we wouldn’t be closing it right now.”

The DraftKings debut might encourage other companies to follow in its footsteps.

“The reason people invest in SPACs is that they have full downside protection and optionality on the upside,” said Niron Stabinsky, head of SPACs at Credit Suisse Group AG. “There’s no question that a lot of companies out there that want to and need to go public now want to look at if there’re other ways to do it that’s less risky.”

Credit Suisse, along with Goldman Sachs Group Inc., Raine Group LLC and Stifel Financial Corp., advised on the reverse merger.

Robins said it’s too early to know how or if the coronavirus pandemic will affect the company’s long-term future. He said the economic downturn could spur more states to accelerate their legalization of sports betting and online casino games, which would expand the company’s market. Consumer behavior around betting and discretionary spending could also change, which would be bad for the company if that includes tightening household purse strings.

DraftKings was founded in 2011 by Robins, Matt Kalish and Paul Liberman, all of whom will remain in its senior management.

Patriots, Cowboys

DraftKings’ list of investors was, at one time, full of sports leagues and prominent team owners. Some, like Major League Baseball have unloaded their equity. Others, including New England Patriots owner Robert Kraft and Dallas Cowboys owner Jerry Jones have kept their stakes. The company’s stakeholders also include Walt Disney Co., which acquired its interest through its $71 billion 20th Century Fox deal completed last year that covered an array of assets.

The combined company was projected to have $540 million in revenue this year, with $400 million of that coming from DraftKings and $140 million from SBTech, Robins said last year. Robins said that was expected to grow to $700 million in 2021, with $550 million coming from DraftKings.

DraftKings shares are trading on the Nasdaq Global Select Market under the symbol DKNG.

(Updates with share move in second paragraph)

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