DraftKings Purchases Golden Nugget for $1.56 Billion
DraftKings Purchases Golden Nugget for $1.56 Billion
DraftKings is continuing to establish itself as the gold standard for sports betting in the United States. The company purchased Golden Nugget Online Gaming for $1.56 billion recently.
The announcement from DraftKings caused Golden Nugget’s stock price to rise by 50%. DraftKings’ consumption of Golden Nugget will help the sportsbook separate itself from other gaming conglomerates like FanDuel and BetMGM.
DraftKings Fills Void Within Business
DraftKings dished out a lot of money to make this acquisition possible. However, it’s expected to pay dividends with states frequently legalizing sports betting and online casino play. The country is moving towards unanimous legal sports betting, which is amazing considering the industry was just legalized in 2018.
DraftKings is still not profitable in 2021 because of expenditures and the COVID-19 pandemic. Nevertheless, the sportsbook is trending upwards because of moves like buying Golden Nugget. The second-quarter revenue in 2021 was 300% higher than the same period from 2020.
DraftKings will use Golden Nugget to enhance its online casino brand, which is an area where DraftKings struggles relative to sports betting.
After the acquisition, CEO Jason Robins said,
“Buying Golden Nugget Online Gaming will help increase the company’s customer base and “fills a meaningful hole for us. The Golden Nugget brand resonates more than DraftKings for the casino audience.”
Additionally, Robins said there is a strategy to transition casino gamblers to sports betting once they experience the DraftKings platform.
DraftKings Purchases Golden Nugget: The Details
Golden Nugget is owned by Tilman Fertitta, the billionaire owner of the Houston Rockets. Fertitta also has business ventures in a variety of other industries. He owns Landry’s Restaurants and the Golden Nugget properties in Las Vegas and Atlantic City.
DraftKings is going to become closely tied with these businesses as well because of the acquisition. One example already planned is a DraftKings retail sportsbook to be built inside the Toyota Center, home of the Rockets, once Texas legalizes betting. Texas is not close to legalization, but there have been many serious discussions in the legislature.
The entire exchange was made through DraftKings stock. Fertitta has agreed not to sell the stock for one year following the closing of the deal. The acquisition is expected to be finalized in the next four to six months.
Fertitta agreeing to an all-stock deal should be a boost of confidence for DraftKings that they are the aggressor in the sports betting industry. The legal wagering market in the United States is loaded with excellent operators, but Fertitta believes DraftKings’ value will rise.
Cash would be a safer transaction for the Rockets’ owner, but it will not pay dividends like stock in the long run. There is room for multiple top-tier operators in the United States. Although innovation is key in the space, so eventually, the top operators will separate themselves from the pack.
DraftKings purchasing Golden Nugget is one way for the company to innovate in the betting and online casino industries, which should add interest to the platform.
