DraftKings set to buy Golden Nugget Gaming for $1.56B

DraftKings, one of the biggest sports betting apps in the country, plans to expand into the iGaming industry via its new purchase of Golden Nugget Gaming. The company announced the move on Monday morning. DraftKings plans to acquire Golden Nugget in an all-stock purchase in the first quarter of 2022. The transaction is subject to the approval of Golden Nugget shareholders, but both companies’ boards have already approved the deal.

DraftKings’ expansion into iGaming

DraftKings already leads the sports betting market. However, this purchase represents the company’s entrance into a new market. Online casino games offered by iGaming platforms are wildly popular. DraftKings hopes to absorb this business and take advantage of the “meaningful synergies” between the two. Just as many casinos offer sports betting, so too will DraftKings now. There is a significant overlap between casino-goers and sports bettors. DraftKings is banking on the fact that this will hold true on online platforms as well. DraftKings will also be able to manufacture this overlap by cross-selling across platforms. Golden Nugget Gaming brings a large consumer base to DraftKings, as the app has over five million users.

Tilman Fertitta’s role in the proceedings

Tilman Fertitta is a name that might sound familiar to some NBA fans as one of the more vocal and involved owners in the league, never hesitating to speak about his roster. He also plays a prominent role in these proceedings. Fertitta owns 46% equity in Golden Nugget Gaming and has agreed to hold his DraftKings shares issued in the buyout for at least a year. He will also join the DraftKings Board of Directors. Fertitta released a statement voicing his excitement about the transaction.

“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. 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.”

Tilman Fertitta, CEO and Chariman of Golden Nugget Online Gaming

Early market reaction

The stock market responded very positively to the news. DraftKings stock rose 3% and Golden Nugget’s by nearly 50% in pre-market trading. This overwhelmingly enthusiastic response makes sense. At first glance, the deal makes a lot of sense. The two markets go hand in hand, and two leaders of their respective industries join forces to reach a larger audience with a better product.

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