Deal over the line
DraftKings has completed the acquisition of Golden Nugget Online Gaming (GNOG). With the deal, DraftKings is looking to leverage the established Golden Nugget brand in order to enter new customer segments, as well as enhance DraftKings’ existing iGaming products.
help it reach iGaming customers who might not bet on sports
One of the big areas of expertise that GNOG has, in particular, is in the live dealer space. DraftKings believes that the deal will help it reach iGaming customers who might not bet on sports. No land-based Golden Nugget casinos are a part of the deal; Fertitta Entertainment continues to own these properties.
Existing GNOG employees will integrate into the DraftKings business. This includes former GNOG president Thomas Winter, who will become the new DraftKings general manager of North America iGaming.
DraftKings estimates that there will be about $300m in synergies upon maturity as a result of the acquisition. The company will follow a multi-brand approach with GNOG, looking at cross-selling opportunities and boosting revenue growth.
Other cost-saving opportunities exist in areas such as marketing efficiencies and eliminating platform costs through the migration of GNOG’s existing technology to proprietary in-house DraftKings technology. Another key part of the acquisition is that Fertitta Entertainment is set to rebrand some of its existing and future retail sportsbooks to DraftKings-branded sportsbooks.
DraftKings CEO and chairman Jason Robins welcomed the finalization of the acquisition on Thursday, saying: “We anticipate that this acquisition will provide meaningful revenue uplift by utilizing our data-driven marketing capabilities and a dual brand iGaming strategy, gross margin improvement opportunities, and cost savings.”
will be an alliance unlike any other
GNOG CEO and chairman Tilman Fertitta believes that the deal with DraftKings “will be an alliance unlike any other in the digital sports, entertainment and online gaming industry.”
Not the same level of value
The original announcement of DraftKings’ acquisition of GNOG came in August 2021. At the time, the deal was reported to be worth about $1.56bn, but it now appears that the final deal price of the all-stock transaction will be worth significantly less than that.
The DraftKings’ share price has struggled so far in 2022 and GNOG shareholders will be getting 0.365 shares of DraftKings stock in exchange for each of their GNOG shares. In August, the DraftKings share price was around $52 per share, compared to just $15.60 per share on Thursday morning.
Tilman Fertitta is still bullish about the long-term potential of DraftKings. He believes that when DraftKings “turn(s) the corner like all tech companies and become(s) profitable, they become really profitable. I saw that for myself running GNOG.” Fertitta is one of the company’s biggest shareholders following the acquisition, as he owned 46% of GNOG. He has committed to holding onto his DraftKings shares for at least one year.