DraftKings buying Golden Nugget Online Gaming, with big NJ presence, for $1.56B

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Online sports betting giant DraftKings is buying the internet gambling arm of Golden Nugget for $1.56 billion, the two jointly announced Aug. 9.

Under the agreement, DraftKings is buying Golden Nugget Online Gaming for $1.56 billion in an all-stock transaction, and both will be managed by the newly formed holding company New DraftKings.

The two said the acquisition will enable DraftKings to leverage the product experience and database of more than 5 million customers that were using the Golden Nugget product, called iGaming.

Golden Nugget is currently owned by Fertitta Entertainment, which also owns the Houston Rockets basketball team, and Laundry LLC.

“Leveraging Fertitta Entertainment’s broad entertainment offerings and extensive customer database, coupled with DraftKings’ mammoth network makes this an unbeatable partnership,” reads a statement from Tilman Fertitta, the chair and chief executive officer for GNOG.

Both anticipate $300 million of cost cuts and other savings as the deal is rolled out, with DraftKings aiming to cut out GNOG’s “third-party platform costs,” slashing vendor costs.

DraftKings would have a much broader reach to those markets under the agreement, including an “exclusive commercial deal across the daily fantasy sports, sportsbook and iGaming with the Houston Rockets,” reads the joint statement.

“Our acquisition of Golden Nugget Online Gaming, a brand synonymous with iGaming and entertainment, will enhance our ability to instantly reach a broader consumer base, including Golden Nugget’s loyal ‘iGaming-first’ customers,” DraftKings CEO Jason Robins said in his statement.

GNOG was first rolled out in New Jersey at the start of January this year, and as of June brought in nearly $182 million, according to the latest figures from the New Jersey Division of Gaming Enforcement. July numbers compiled and published by the NJDGE will be released later this month.

Last year, Golden Nugget in Atlantic City made nearly $319 million in online gaming, at a time when casinos spent months with their brick and mortar establishments entirely shuttered amid the worst of the COVID-19 pandemic.

New Jersey’s nine casinos, all in Atlantic City, closed between March and July, only opened at reduced capacity for the rest of the year starting this May.

Even before the pandemic, the lion’s share of the sports wagers were made via online and mobile apps, rather than at the state’s brick and mortar casino locations.

During COVID-19 closures and restrictions, online and mobile products served as a lifeboat for the state’s casino industry as it rode the vicious financial woes of the pandemic.

Internet gaming win doubled from $483 million in 2019 to $970 million in 2020, while winnings on the casino floors nearly halved from $2.6 billion in 2019 to $1.5 billion in 2020. DraftKings currently operates just one brick-and-mortar sportsbook in the state, located at Resorts Casino Hotel.