DraftKings Completes Acquisition of Golden Nugget Online Gaming

On Thursday, DraftKings (DKNG) officially completed its acquisition of Golden Nugget Online Gaming (GNOG). Golden Nugget will benefit DraftKings as it will help the company reach iGaming customers who don’t necessarily wager on sports. Last year, DraftKings CEO Jason Robins specified that the company’s clientele is “mainly male and focused on sports,” and the GNOG deal will help it reach a broader audience.

Transaction Delayed Almost 9 Months

The DraftKings purchase of Golden Nugget was first announced in August of last year with DraftKings expecting $300 million in synergies at maturity. There was initially a target deadline of the end of the first quarter of 2022, but that was pushed off to May 31, 2022.

The transaction was set to be worth $1.5 billion when first agreed, but DraftKings stock has declined by almost 75% since then, so the final compensation is worth around $365 million. Under the deal, GNOG shareholders will receive 0.365 shares of DKNG stock for each share of GNOG.

Expected Benefits of Partnership

In addition to helping DraftKings reach a broader audience, GNOG will offer the sports betting company several synergies to reduce overhead costs. DraftKings will be able to eliminate platform costs by migrating GNOG’s current technology to DraftKings’ in-house proprietary platform.

In addition, DraftKings will reduce G&A expenses such as vendor services and duplicative overhead. DraftKings expects to be able to increase returns on advertising spending and boost its LTV to CAC ratios through the partnership.

DraftKings will likely be rebranding current and future sportsbook locations at Golden Nugget properties into DraftKings sportsbooks, and that brand recognition will surely boost traffic to Golden Nugget casinos.

Tilman Fertitta Confident in DraftKings

GNOG chairman Tilman Fertitta, who is also the owner of the NBA’s Houston Rockets, has remained steadfast in his bullishness on the DraftKings stock, as he has called it a “long term hold” that will “turn the corner like all tech companies and become profitable.”

Fertitta owns about 46% of GNOG and has agreed to hold his DraftKings shares for at least a year following the purchase. He said that he wanted the stock because “this is the best management team in the space” and he has confidence that the stock can reach $50 or $100.

Fertitta Entertainment and DraftKings Partnership

In addition to the GNOG acquisition, DraftKings also has agreed to a partnership with Fertitta Entertainment to become the exclusive Daily Fantasy Sports (DFS), sports betting, and iGaming partner of the Houston Rockets. Additionally, DraftKings will open a sportsbook at the Rockets’ Toyota Center if sports betting becomes legal in Texas.

DraftKings Moving into Las Vegas?

When asked in a call with shareholders, Robins said that his company is “certainly interested in Nevada” and actively looking into it. DraftKings purchased Vegas Sports Information Network (VSiN) in 2021 and later opened a Las Vegas office with 1,000+ companies.

DraftKings doesn’t currently offer Daily Fantasy Sports (DFS) in Nevada, but there is an expectation that it could open a Vegas sportsbook in the future. Golden Nugget’s Las Vegas casino currently has its own sportsbook, and DraftKings could ultimately rebrand that sportsbook under its own brand.

By www.lineups.com