DraftKings announced Monday it has entered a definitive agreement to acquire Golden Nugget Online Gaming. The all-stock transaction has an implied equity value of approximately $1.56 billion.
During a conference call, DraftKings CEO Jason Robins said the acquisition will bolster his company’s opportunities in igaming.
“Our demographics are largely male,” Robins said. “We view this as an opportunity to take another iconic brand, this time in a casino state that’s done very well (with) early market leadership in New Jersey, recent entries in other states, and Golden Nugget Online Gaming. We’re very pleased to add the team, the brand and all their expertise. We believe this will help us attain igaming market share over the long term, including being more efficient with marketing and having tremendous synergies both on the cost and revenue side.”
The acquisition gives DraftKings access to GNOG’s iGaming product experience and database of more than 5 million customers. DraftKings also has entered into a commercial agreement with Fertitta Entertainment, the parent company of the Houston Rockets, Golden Nugget, and Landry’s, and a leader in the gaming, restaurant, hospitality, and sports entertainment industry.
During the call, Fertitta called DraftKings “the Coca Cola of this industry.”
“There’s going to be a lot of consolidation in this space in the next few years,” Fertitta said. “We want to be a part of the winner, and there was no doubt this is where we wanted to be, with (DraftKings) strong balance sheet, liquidity analytics and expertise. They are building the best platform in the space to control content, and they have the best management team.”
As part of the transaction, DraftKings will undergo a company reorganization and form a holding company New DraftKings that will become the going-forward public company for both DraftKings and GNOG. The new DraftKings will be renamed DraftKings Inc. at closing.
Through the acquisition, DraftKings will be able to market to existing Golden Nugget customers through cross-selling products, in retail sportsbooks, and across Fertitta Entertainment assets. DraftKings customers also will have access to VIP and promotional opportunities, including the ability to purchase discounted rewards and secure reservations using the DraftKings VIP rewards program, subject to a pricing agreement to be determined.
Joseph Greff of J. P. Morgan said in an analyst’s statement that the deal will increase DraftKing’s igaming presence and is complementary to the company’s male-skewed customer base.
“This will give DraftKings access to more customer lists and more efficient market access rights,” Greff wrote. “Importantly, GNOG’s CEO and Chairman Tilman Fertitta will join DraftKing’s Board. It’s tough for us not to think that if Texas, at some point in the future, legalizes digital gaming, hometown-team GNOG, would not be part of it, so DraftKings has this as a potential future value driver.”
The board of directors of both companies have approved the acquisition. The transaction is subject to the approval of GNOG stockholder, and regulatory approvals, and is expected to close in the first quarter of 2022.
