Golden Nugget’s online casino brand is the key player in the casino operator’s dominance of the New Jersey market, and that has led to a deal.
On Monday, Tilman Fertitta, the Houston-based billionaire with a far-flung entertainment empire, announced that the company’s online casino sector is being spun off into its own public company called Golden Nugget Online Gaming with a value of $745 million.
While New Jersey currently is the only active market, Golden Nugget is expected to launch similar online casino operations in Pennsylvania and Michigan in 2021.
The complicated spinoff, expected to close this fall, will leave Fertitta maintaining a controlling interest in the new company, Landcadia II, a so-called “blank check company” that will pay off $300 million of debt owed by Golden Nugget Online Gaming.
Thomas Winter, who has been credited with much of Golden Nugget’s online casino success, will remain as the company’s president.
“Golden Nugget is one of the most time-honored brands in the gaming business today,” Fertitta said in a statement. “When customers hear the name Golden Nugget, they know they are dealing with a trusted online gaming business. Thomas and his team have done a remarkable job, are the best in the industry, and with this transaction, will have access to growth capital to allow for the rapid expansion of the business.”
Golden Nugget’s broad portfolio
Golden Nugget, the parent company, owns casinos in Nevada, Louisiana, and Mississippi as well as New Jersey.
Fertitta may be best known as the owner of the NBA’s Houston Rockets, but his holdings include more than 600 restaurants in the Landry’s family.
Golden Nugget and several competitors launched online casino gaming in 2013 as New Jersey and Delaware became the U.S. pioneers in such offerings.
In May, Golden Nugget’s online gaming revenue of $29.1 million served as more than one-third of the Atlantic City casino industry’s online total. The company was chosen as the winner of the EGR North America Top Operator award for the past three years.
The online casino segment first became profitable in 2016, with a net income of $11 million last year.
The online casino “Live Dealer” offering is seen in the industry as a market-separator. Golden Nugget also maintains BetFair Casino and PlaySugarHouse as sister online casino brands in New Jersey.
Badly needed cash for Fertitta
The business move, with the new company trading on NASDAQ as GNOG, is seen as a way for Fertitta to tap into a lucrative sector of the company as the brick-and-mortar casinos struggle during closures in the COVID-19 worldwide pandemic.
Fertitta laid off 40,000 workers in late March.
“GNOG is one of the best-positioned companies to capitalize on this massive online gaming opportunity in the US,” said Rich Handler, co-chairman of Landcadia II and CEO of Jefferies LLC. “We at Jefferies couldn’t be more thrilled to partner with Tilman and bring this great opportunity to the public markets.”
Chad Beynon, a Macquarie Securities gaming analyst, pointed to Golden Nugget’s five-year deal with Scientific Games, a leading technology provider, as an indication of potential growth for the brand.
“U.S. iGaming and sports betting have been a hot market since the wave of legalization following the repeal of [the Professional and Amateur Sports Protection Act in 2018] and increased demand from stay-at-home orders,” Beynon said in a research note on Monday.
The Golden Nugget online casino spinoff will be only the second in the U.S., joining GAN.