DraftKings made a huge splash in the world of gaming on Monday when it announced it had agreed to buy Golden Nugget Online for the equivalent of $1.56 billion dollars in shares of Golden Nugget.
The deal marks the biggest of DraftKings history so far.
What’s in the deal?
As part of the deal, DraftKings will get access to Golden Nugget Online’s vast casino resources, which includes a database of 5 million casino players. DraftKings, whose business is currently heavily weighted into sports betting, will now have the opportunity to further its position in the online casino gambling world.
A DraftKings online casino is currently available to many sports bettors, depending on their location. The casino is available in four states and has been successful, but up until this point has mostly attracted its existing online sportsbooks customers.
The deal also works well for Golden Nugget. Although the brand has a dominant position in New Jersey as one of the biggest online casinos in the state, it has not seen the same success elsewhere. In addition, Golden Nugget Online has also put most of its focus in online versus the lower margin world of online sports betting.
Merging marketing muscle will also be a prominent part of the deal. The owner of Golden Nugget Online Gaming, Fertitta Entertainment, also owns Landry’s LLC — a portfolio of restaurants — and the Houston Rockets.
Golden Nugget Online Gaming chairman Tilman Fertitta said the following of the deal:
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
DraftKings’ existing users will not notice much change with the deal, especially right away. Users who are located in states where online casino wagering is also legalized will likely see an improved and robust casino product as well as additional integration with the online sportsbook.
Golden Nugget shareholders rejoice
The agreement comes in the form of DraftKings stock. Shareholders will receive 0.356 DraftKings shares for every Golden Nugget share (ticker symbol: GNOG), which was a 53% premium over Friday’s close. As a result, shares in GNOG skyrocketed from $12.21 on Friday to a close of $18.49 on Monday after the news.
DraftKings stock (ticker symbol: DKNG), on the other hand, has been much more stable on the news with share prices increasing just slightly. By the end of day on Wednesday, shares were sitting at $52.18.