DraftKings to Buy Golden Nugget Online Gaming in $1.56B Deal

DraftKings is acquiring Golden Nugget Online Gaming in an all-stock deal valued at $1.56 billion, the two gaming companies announced Monday.

The Boston-based DraftKings Casino says it will be able to use Golden Nugget’s known brand name, wealth of online casino experience and a database of more than 5 million customers for future growth, according to a news release. Golden Nugget parent company Fertitta Entertainment, Inc., led by Tilman J. Fertitta, also owns the NBA’s Houston Rockets and Landry’s restaurant chain.

The deal needs to be approved by Golden Nugget Online Casino stockholders and receive regulatory approvals. It is expected to close in the first quarter of 2022. The boards of directors of both companies have signed off on the deal. DraftKings (DKNG) and Golden Nugget Online Gaming (GNOG) are listed on Nasdaq.

DraftKings will undergo a holding company reorganization and form a new holding company — New DraftKings — that becomes the public company for DraftKings and GNOG, the release said. New DraftKings will be renamed DraftKings Inc. at closing.

It is the second major acquisition in the online sports betting, online casino, and iGaming world in less than five days. Penn National Gaming announced Thursday that it was purchasing theScore, a Toronto-based digital media and sports betting company owned by Score Media and Gaming, for around $2 billion.

DraftKings went public as part of a SPAC that was announced in December 2019. Golden Nugget also went public in a SPAC deal in February.

”Brand Synonymous with iGaming’

“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 the 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.”

On Aug. 6, DraftKings increased its revenue guidance for the year from $1.21 billion to $1.29 billion after reporting. Revenue for DraftKings in the second quarter was $298 million, up 297% year over year ($75 million). But bottom-line losses were listed by the company as more than $305 million, or a loss of 76 cents a share.

Fertitta, chairman and chief executive officer of GNOG, said the two companies are merging “into a leading global player in digital sports, entertainment and online gaming.”

“Leveraging Fertitta Entertainment’s broad entertainment offerings and extensive customer database, coupled with DraftKings’ mammoth network makes this an unbeatable partnership,” Fertitta said in the release. “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.”

Benefits for DraftKings

The GNOG acquisition should result in synergies of $300 million at maturity for DraftKings, the release said. DraftKings will be able to deliver a “multi-brand strategy which will enhance cross-sell opportunities and drive increased market share and revenue growth,” the company said.

It said there would be savings in marketing and by eliminating platform technology costs by moving Golden Nugget’s technology to DraftKings’ in-house platform, the release said, noting that the all-stock deal “preserves DraftKings’ balance sheet and aligns the long-term interests of both brands and shareholders.”

In connection with the deal, DraftKings has also reached a separate commercial partnership with Fertitta Entertainment, Inc. across its companies. That deal includes marketing integrations, sponsorship 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 be the daily fantasy sports, sports betting, and iGaming partner of the Rockets and will open a sportsbook at the Toyota Center, pending Texas legalization of sports betting sites and regulatory approvals, the release said.

DraftKings recently announced the launch of DraftKings Marketplace in the growing NFT (non-fungible tokens) market. NFTs can be bought and traded there.