DraftKings acquires Golden Nugget Online Gaming for US$1.56 billion

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Gaming Industry Update

The American fantasy sports company DraftKings has agreed to acquire Golden Nugget Online Gaming in an all-stock transaction of US$1.56 billion, and its valuation has more than doubled since it went public through a special purpose acquisition company last year.

According to the two companies, the transaction will allow DraftKings to reach more than 5 million customers of the online casino operator and is expected to generate $300 million in synergies.

DraftKings will create a new holding company in which GNOG shareholders will receive 0.365 shares for every common share they own. DraftKings also reached a separate commercial agreement with Fertitta Entertainment, which is the parent company of the Gold Nuggets and basketball team Houston Rockets, which is owned by billionaire Tilman Fertitta.

After the transaction was announced, GNOG’s stock price rose by more than 47%.

Fertitta divested GNOG through the Spac transaction with Landcadia Holdings II last year. He served as co-chairman and CEO in the transaction and valued the company at $745 million. He still owns approximately 46% of GNOG and agrees to hold DraftKings stock for at least one year after the transaction is completed.

As companies seek ways to maximize their brand exposure while reducing customer acquisition costs, cooperation between companies targeting the rapidly growing US sports betting market has increased.

There are several deals with media startups, such as Penn National’s acquisition of Canadian sports media companies Score Media and Gaming for US$2 billion last week. DraftKings has also established a partnership with Turner Sports, AT&T’s sports subsidiary.

Operators with online experience have also become attractive targets for land-based casino companies, with the fastest growing sports betting being mobile betting in legal states. In several states, pure online companies are forced to work with physical operators to obtain licenses.

In March of this year, casino company Bally’s said it plans to acquire a British online gaming operator Game system In a $2 billion transaction. MGM is also expected to make a second offer to the gambling company Entain, which has partnered with Entain to create the sports betting and online gaming platform BetMGM. be rejected The previous offer was £8 billion.

DraftKings was originally a fantasy sports company, and later expanded into sports betting services, which was considered Space boom This started at the end of 2019 and set a record high between the end of 2020 and the beginning of 2021.

Since its listing in April 2020, DraftKings’ stock price has risen by more than 200%. Part of the reason for its success is that more and more states in the United States have relaxed online gambling rules.

The Boston-based company recently stated that it has been subpoenaed by the U.S. Securities and Exchange Commission. The following allegations The short seller Hindenburg Research pointed out that half of the revenue of DraftKings’ technology department comes from the illegal gambling market.

DraftKings said last week that it “based on currently available information does not believe that the outcome of the lawsuit will have a material adverse effect on DraftKings’ financial condition, although the results may have a material impact on DraftKings’ operating results in any given period.”

Last week DraftKings raised its full-year revenue forecast from US$1.05 billion to US$1.15 billion to US$1.21 billion to US$1.29 billion.

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