Pending the necessary stockholders’ and regulatory agency approval, look for a big change to take place in the online gambling scene as of early next year. Two leading NJ and US online gambling operators will soon become one. DraftKings announced last week that it has entered into an agreement to acquire Golden Nugget Online Gaming (GNOG).
The deal will cost DraftKings $1.56 billion in stock transfers. However, DraftKings CEO Jason Robins apparently feels that with the enormous combined database, it will be worth every penny.
DraftKings’ acquisition of Golden Nugget should benefit both parties
Year after year, Golden Nugget has been one of the strongest performing NJ online casinos. In fact, until March 2021, it was the NJ online gambling revenue leader. Now that honor belongs to Borgata (and its affiliate BetMGM), and Golden Nugget has been relegated to second place. But these two industry giants are still running neck and neck and are solidly in front of the competition. Meanwhile, Golden Nugget’s competitors continue to look to it as one of the top NJ gambling websites and as a model of what an online casino should be.
Given Golden Nugget’s secure position in both the NJ and national online gambling market, combined with DraftKings’ presence as one of the country’s leading sports betting operators, the advantages of a merger are clear.
Each can benefit from the expertise and experience of the other. DraftKings not only offers full-service sports betting along with fantasy sports but an online casino as well. Golden Nugget offers online sports betting to go along with its vast casino games platform. However, each party recognizes the need for improvement in the area it is not primarily known for in order to build on and solidify its presence as one of the top NJ and US online gambling operators.
Bigger is better has always been Golden Nugget’s motto, and it clearly is DraftKings’ as well.
What DraftKings hopes to gain from the deal
Besides providing ready access to a well-known, highly experienced, and highly respected brand, the acquisition will increase the DraftKings database to more than 5 million customers.
Robins issued the following statement about what the acquisition will mean for the future of the company:
“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.”
“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.”
What Golden Nugget hopes to gain from the deal
Tilman Fertitta, CEO of Golden Nugget, was equally excited about what the combination of assets with DraftKings would mean for his company as well. This is what he had to say on the subject.
“This transaction will add great value to the shareholders as two market leaders merge into a leading global player in digital sports, entertainment, and online gaming,” said Fertitta. “Leveraging Fertitta Entertainment’s broad entertainment offerings and extensive customer database, coupled with DraftKings’ mammoth network makes this an unbeatable partnership.
“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.”
How the planned DraftKings-Golden Nugget merger will work
During the transition phase, DraftKings will create a temporary public holding company, which will include both parties and be called New DraftKings. However, closing is not anticipated to take place until the first quarter of 2022. At that time, the company will be renamed DraftKings, Inc.
The acquisition will benefit GNOG shareholders, who will receive a fixed ratio of 0.365 shares of DraftKings” Class A common stock for each share they own of GNOG. However, as an additional part of the agreement, Fertitta, who owns 46 percent of the equity in GNOG, will continue to hold the DraftKings shares he receives from the merger for at least one year after the closing date
The newly formed enlarged merged company, DraftKings, Inc. plans to apply a multi-brand strategy, utilizing enhanced cross-selling opportunities to further increase revenue growth.
Multiple cost-saving measures should help to drive profits up significantly as well. For example, by transferring Golden Nugget’s current online and mobile technology to DraftKings’ in-house proprietary platform, DraftKings, Inc. will eliminate separate platform costs. The new company will also look for enhanced returns on advertising expenditures by using efficient marketing strategies, In addition, it will eliminate other unnecessary costs such as duplicate corporate overhead costs.
Related deal with Fertitta Entertainment
A separate but related agreement between DraftKings and Golden Nugget will allow DraftKings to integrate other Golden Nugget assets into its offerings. Because Fertitta owns the Houston Rockets, DraftKings will become the exclusive daily fantasy sports, sports betting, and iGaming partner of that NBA team.
However, it is not clear how this change will affect NBA bettors who placed bets last season with the Golden Nugget or DraftKings NJ sportsbooks. Previously, Golden Nugget Sportsbook could not accept bets on any games involving the Houston Rockets.
Otherwise, DraftKings plans to expand its retail sportsbook offerings. Pending state legalization and regulatory approval, it will open a new sportsbook at the Toyota Center stadium in Houston. This is where the Rockets play their home games. Having a sportsbook right on the premises would allow fans attending the games to make in-person bets before and during those games on those games or any other games of their choice.
When will the expected changes at DraftKings take place and how will they affect Golden Nugget and DraftKings customers in New Jersey?
All of the stipulated terms of the agreement between DraftKings and Golden Nugget Online Gaming require GNOG and regulatory agency approval. Stockholder approval is expected to come via written consent from Fertitta.
DraftKings and Golden Nugget registered players in New Jersey should not expect to see any immediate changes in offerings and policies. However, assuming the deal goes through, as announced, in addition to providing even more betting options, consider integration of players’ rewards a strong possibility.
Personally, I hope that DraftKings doesn’t scrap the excellent format of Golden Nugget Online Casino. This outstanding NJ gambling website provides a detailed description of every game, including RTP, volatility rules, and bet range. You also get the option to sample any game except live dealer games in demo mode (even if you’re not a registered customer) instead of having to commit to real money immediately. Too many other NJ gambling websites don’t give you that option or the extensive information about each game that Golden Nugget offers. I find this site to be much more user-friendly than DraftKings. Therefore, I hope DraftKings doesn’t take away Golden Nugget Online Casino’s most outstanding features.
As with all important new online gambling developments, NJ Online Casino will follow this story closely and continue to report on the latest news.
Lead image credit: AP Photo/Charles Krupa