Who Is DraftKings Focusing on With USD1.5 Billion Golden Nugget Online Buy?

DraftKings is buying Golden Nugget Online Gaming (GNOG) in a bid to beef up its online gaming presence.

DraftKings stated Monday it was paying USD1.56 billion for GNOG in an all-stock deal. The deal is anticipated to shut within the first half of 2022.

The deal covers the net playing belongings of Golden Nugget, which have been spun out and listed as as separate enterprise final yr.

It additionally covers a database of round 5.5 million Golden Nugget clients throughout online and retail.

What’s in it for DraftKings?

DraftKings CEO Jason Robins stated the deal helped DraftKings attain iGaming clients who don’t essentially wager on sportsbook.

“We’re excellent at cross-selling sportsbook clients into iGaming, however our database is especially male and centered on sportsbook,” Robins stated. “GNOG’s database is almost 50/50 male to feminine and extra of that online casino clientele,” Robins stated.

DraftKings will retain the Golden Nugget casino model and run a multi-brand technique.

Synergy vitality

Robins stated the 2 corporations count on USD300 million in synergies at maturity.

That features:

  • The aforementioned platform financial savings
  • Advertising and marketing efficiencies
  • Cross-sell between the manufacturers
  • Loyalty scheme integrations
  • Dwell-dealer studio financial savings

Huge identify joins DraftKings board

Tilman Fertitta, who owns 45% of GNOG, will be a part of the operator’s board following the transaction. He may also develop into one of many largest DraftKings shareholders when the deal closes.

Fertitta stated he was excited to develop into a shareholder within the “clear chief” in online sportsbook betting.

“DraftKings is the Coca-Cola of the house,” Fertitta stated. “I needed solely inventory. I needed to experience this factor all the way in which up with these guys. That is one of the best administration staff within the house.”

Fertitta agreed to carry his DKNG shares for at the very least one yr after the transaction closes. With GNOG now owned by DraftKings slightly than Fertitta, Golden Nugget online sportsbooks can now take bets on NBA once more.

It was forbidden in numerous states as a result of Fertitta additionally owned the Houston Rockets.

Particulars of the transaction

GNOG shareholders obtain 0.365 shares of USDDKNG inventory for every share of GNOG. That’s the equal of c.USD18.70 per USDGNOG share, and round a 51% upside from final shut.

Golden Nugget online operations shall be migrated onto the DraftKings platform to chop third-party prices. It at the moment runs on the SG Digital platform.

GNOG is the biggest casino model in NJ.

DraftKings companions with remainder of Golden Nugget too

As a part of the transaction, DraftKings reached a separate industrial take care of Fertitta Leisure, overlaying the Houston Rockets, Landry’s and the Golden Nugget online casino portfolio.

Underneath that deal:

  • DraftKings turns into the unique daily fantasy sportsbook, sportsbook betting, and iGaming associate of the Houston Rockets.
  • The operator will open a sportsbook on the Toyota Middle, ought to Texas legalize betting and award licenses to sportsbook groups as anticipated.
  • DraftKings expands its retail sportsbook presence at Golden Nugget casinos.
  • It additionally will get optionality for market entry on favorable phrases by way of sure Golden Nugget casinos.

Robins stated DraftKings’ expanded retail footprint would assist with hospitality for prime worth clients.

How did the market react?

DKNG inventory initially jumped round 5% in pre-market buying and selling, however gave up most of these beneficial properties on the time of writing.

Regulus Companions stated the multi-brand technique made “rising sense” in a maturing market.

The analyst agency added: “Because the deal is all paper, the transaction doesn’t put any additional hard-earned capital in danger, whereas GNOG could be very simply accretive to DK at each the valuation and money stream degree.

“Not many offers are genuinely win-win and only a few US-led transactions at the moment appear all that wise. This one ticks each containers for us.”

Analysts are on board

Likewise, Eilers & Krejcik stated in a observe there was a “lot to love” concerning the deal.

Particularly, Eilers stated it might assist DraftKings shield its igaming share within the face of mounting competitors.

“We see this pairing as a long run defensive hedge towards the ascendancy of BetMGM, Caesars, and even Penn Nationwide, which has barely begun to scratch the floor of its casino capabilities,” the analysts stated.

DK has had a busy couple of days with Q2 outcomes on Friday, which additionally revealed an ongoing SEC investigation into its SBTech acquisition.