DraftKings Completes Deal To Acquire Golden Nugget Online Gaming
DraftKings expanded its online gambling footprint in completing a deal forged last year to acquire Golden Nugget Online, DraftKings announced Thursday.
Some aspects of the online gambling landscape have changed substantially since the acquisition was first announced — namely, stock prices of some publicly traded real money online gaming companies have plummeted in the last six months or so.
The DraftKings-Golden Nugget deal that was first announced last August was an all-stock transaction “that has an implied equity value of approximately $1.56 billion,” DraftKings said at the time. In August 2021, DraftKings was trading at around $50 a share. Lately, the stock’s share price has been around $15.
Tilman Fertitta’s Take on Deal
Houston billionaire and Golden Nugget Online chairman Tilman Fertitta, whose extensive business interests include restaurants, casinos and the NBA’s Houston Rockets, recently expressed he’s still confident about the deal in an interview with CNBC.
Fertitta said he’s still getting the same number of shares but they are certainly worth less than the $1.56 billion calculated last summer. Fertitta said what has happened with DraftKings in the stock market has happened to “every other online gaming company out there, it’s universal.”
“It is what it is,” Fertitta said. “I’m looking at this as a long-term hold.”
He said he’ll be one of the largest shareholders in DraftKings and emphasized that DraftKings is a “tech company” and, Fertitta said, when tech companies turn the corner to profitability, they become “real profitable.”
He added that he’s also fine with letting DraftKings “fund the losses for the next few years.”
Not included in the DraftKings-Golden Nugget Online deal are the Golden Nugget brick-and-mortar casinos, such as the ones in Atlantic City, Las Vegas and Biloxi, Mississippi.
What DraftKings Gets Out of GNOG
For its part, DraftKings Casino gets an asset in the online gaming space that carries a recognizable brand name as well as a customer base that might be distinct from DraftKings’ traditional sports betting customers.
Though online casino gambling has been legalized in far fewer jurisdictions than online sports gambling (just six so far), iGaming has proven to be far more profitable and provides operators with a revenue stream that typically is less volatile.
“Acquiring Golden Nugget Online Gaming gives us synergies across our business,” Jason Robins, Chairman and CEO of DraftKings, said in a news release.
Potential Cost Savings in Agreement
The acquisition should certainly provide cost savings in marketing, advertising and vendor services. Plus, with Golden Nugget Casino already operating its own internet games, start-up tech costs are hugely reduced.
“This will be an alliance unlike any other in the digital sports, entertainment and online gaming industry,” Fertitta said.
From the gambling customer’s perspective, this will be a multi-brand approach that will feature cross-selling between sports betting and iCasino. In addition, it is expected that some or all of Fertitta’s brick-and-mortar Golden Nugget casinos will rebrand their retail sportsbooks as DraftKings sportsbooks.
A longtime reporter and editor who began writing on casinos and gaming shortly after Atlantic City’s first gambling halls opened, Bill covered the world Series of Poker and wrote a syndicated column on travel to casino destinations for a decade.