DraftKings will be purchasing Golden Nugget Online Gaming (NASDAQ: GNOG) in a $1.56 billion all-stock deal.
“Our acquisition of Golden Nugget Online Gaming, a brand synonymous with iGaming and entertainment, will enhance our ability to instantly reach a broader consumer base, including Golden Nugget’s loyal ‘iGaming-first’ customers,” Jason Robins, DraftKings’ CEO and chairman of the board, said in Monday morning press release. “This deal creates meaningful synergies such as increased combined company revenues driven by additional cross-sell opportunities, loyalty integrations, and tech-driven product expansion as well as technology optimization and greater marketing efficiencies. We look forward to Tilman being an active member of our board and one of our largest shareholders.”
The “Tilman” in this case being Tilman Fertitta, owner of the NBA’s Houston Rockets and Landry’s restaurant group, in addition to being the chairman and CEO of Golden Nugget Online Gaming.
“This transaction will add great value to the shareholders as two market leaders merge into a leading global player in digital sports, entertainment, and online gaming,” Fertitta said in the release. “Leveraging Fertitta Entertainment’s broad entertainment offerings and extensive customer database, coupled with DraftKings’ mammoth network, makes this an unbeatable partnership. Together, we can offer value to our combined customer base that is unparalleled. We believe that DraftKings is one of the leading players in this burgeoning space and couldn’t be more excited to lock arms with Jason and the DraftKings family across our entire portfolio of assets, including the Houston Rockets, the Golden Nugget casinos, and Landry’s vast portfolio of restaurants. This is a strong commercial agreement for both companies.”
Golden has been platinum in NJ
Golden Nugget Online Casino has long been a dominant force in the New Jersey online gaming marketplace, routinely finishing in the top spot in monthly revenue, although the company took a backseat to Borgata in June, with online gaming revenue of $27.6 million compared to Borgata’s $34.3 million.
Golden Nugget also operates an online casino in Michigan, where it has steadily — albeit slowly — grown, finishing in fifth place for the month of June with $4.3 million in online gaming profit. And while the company is certainly growing in Michigan, it was still badly trailing BetMGM, the market leader, which finished the month with $33.7 million in gross receipts.
And while much has been made over the years about Golden Nugget’s massive success in New Jersey, a noted NJ-based gambler and watcher of the space who publicly goes by the pseudonym Captain Jack Andrews pointed out Golden Nugget’s numbers in New Jersey have long been juiced a bit, as they include skin deals with a handful of other casinos.
The DK/GNOG acquisition could trigger a shuffle in NJ online casino skins.
Those lofty online casino numbers that everyone points to from GN each month include skin deals with FanDuel’s Stardust and FanDuel casino as well as Sugarhouse Casino in NJ.
— Captain Jack Andrews (@capjack2000) August 9, 2021
Whither the Rockets?
In the press release announcing the deal, DraftKings noted cost savings will happen due in part to Golden Nugget now using DraftKings in-house technology to run the operation. Golden Nugget currently uses Scientific Games as its technology partner.
Additionally, DraftKings is entering into a “deep partnership” between the company and Fertitta Entertainment. The release notes DraftKings agreement with Fertitta Entertainment will include “marketing integrations, sponsorship assets with the Houston Rockets, an expanded retail sportsbook presence, and the optionality to obtain market access on favorable terms through certain Golden Nugget casinos. DraftKings will also become the exclusive daily fantasy sports, sports betting, and iGaming partner of the Houston Rockets and intends to open a sportsbook at the Toyota Center, pending state legalization and regulatory approvals.”
Furthermore, this deal will see DraftKings undergo a holding company reorganization to form a new company called “New DraftKings” which will become the going-forward public company for both DraftKings and GNOG. Once everything is said and done, the company will be renamed DraftKings Inc.
One interesting wrinkle about all this is where New Jersey gaming regulators and the legislature will stand when it comes to New Jersey residents being able to wager on the Houston Rockets. As it stands currently, New Jersey bettors cannot bet on Rockets games via the Golden Nugget sports betting app. It’s unclear at this point if DraftKings users will be able to bet on the Rockets.
In pre-market trading, GNOG was up $6.45 to $18.72. DraftKings (DKNG) stock was up as well, trading at $53.37, a 3.5% bump from Friday’s close.