DraftKings seals GNOG acquisition and looks to $300m of synergies including live dealer suite
DraftKings has completed the all-stock acquisition of Golden Nugget Online Gaming (GNOG), nearly nine months after the initial agreement was announced in August of 2021.
At that time, DraftKings stock was trading at $52 per share, which valued the transaction at $1.5bn. Since then, DraftKings’ share price has dropped like a stone.
It closed at $15.73 yesterday (4 May), meaning the total compensation for GNOG shareholders is now closer to $365m.
DraftKings eventually expects to deliver $300m worth of synergies resulting from the purchase, which will also substantially strengthen its iGaming online casino offering.
These synergies will be achieved by cross-sell between both businesses and verticals, as well as marketing efficiencies and reduced platform costs. GNOG will be migrated onto DraftKings’ proprietary technology platform in due course.
The company said in a statement: “DraftKings expects revenue to increase from additional cross-promotion opportunities, which would be expected to complementarily grow DraftKings’ customer base by engaging existing Golden Nugget Online Gaming’s iGaming-first customers.
“Additional anticipated revenue synergies include potential technology and game expansion, such as live dealer offerings.”
GNOG was the first company to launch a live dealer studio in the US, according to its investor relations website.
DraftKings has increased its long-term market share outlook for iGaming to between 20% and 25% by adding its existing market share together with Golden Nugget’s.
GNOG chairman Tilman Fertitta: “This will be an alliance unlike any other in the digital sports, entertainment and online gaming industry.”
DraftKings management also said the deal will reduce the burden of supplier costs and overhead duplication, while current and future retail sportsbook locations at Fertitta Entertainment-owned Golden Nugget properties will be turned into DraftKings sportsbooks.
The acquisition does not include Golden Nugget’s retail casinos.
DraftKings CEO Jason Robins said: “We anticipate that this acquisition will provide meaningful revenue uplift by utilising our data-driven marketing capabilities and a dual-brand iGaming strategy, gross margin improvement opportunities, and cost savings across external marketing. I am proud to welcome the GNOG team to the DraftKings family.”
DraftKings will integrate GNOG employees across its business, including president Thomas Winter, who will now become general manager of North America for iGaming at DraftKings.
GNOG reported a 40.7% revenue rise to $128.2m for full-year 2021 amid an annual operating loss of $30m.
“This will be an alliance unlike any other in the digital sports, entertainment and online gaming industry,” said Tilman Fertitta, chairman and CEO of GNOG.
“Now that the acquisition is completed, I look forward to what the future will bring for our combined company and I am confident this relationship will be a huge success.”
Fertitta also owns NBA franchise the Houston Rockets, which should grant DraftKings market access and branding opportunities in the state of Texas, if or when it regulates.
Raine Group served as exclusive financial advisers to DraftKings, while Jefferies served as lead financial advisers to Golden Nugget Online Gaming.
Speaking to Bank of America in March, DraftKings CFO Jason Park said: “The DraftKings brand just doesn’t resonate with that casino-first customer nearly as much as Golden Nugget does and we looked at multiple opportunities.
“We looked at building our own casino-first brand and we got very excited about the Golden Nugget brand. It’s a brand that resonates with a different demographic that we don’t have today,” he added.