DraftKings, a major player in the world of sports betting, has just announced that they will acquire Golden Nugget Online Gaming for approximately $1.6 billion. Shares of DraftKings stock traded 1.5% higher in the hours after the announcement. Golden Nugget’s stock traded nearly 50% higher, jumping from $11.90 to $18.10 immediately after the announcement.
This significant transaction could have a major impact on DraftKings’ platform as it looks to expand from sports betting and daily fantasy sports. Acquiring Golden Nugget Online Gaming could provide an opportunity to attract diverse gamblers and offer more types of internet gaming services in states that are legalizing multiple types of gambling.
The resources that are acquired in the transaction are expected to be used for cutting costs and expanding marketing efforts, according to the DraftKings CEO, Jason Robins. The official transaction likely won’t take place until early 2022, according to DraftKings representatives.
DraftKings Big and Getting Bigger
DraftKings is already recognized as a sports betting giant in the United States. They are currently offering sports betting services in nearly a dozen states, including Colorado, New Jersey, Pennsylvania, and Illinois. Daily fantasy sports games from DraftKings are also widely available across the country. There are only a few notable exceptions that include Nevada, Arizona, Oregon, Idaho, Montana, and Washington State.
DraftKings has benefited from more and more states making an effort to legalize sports betting and gambling in their respective jurisdictions. That is one of the reasons that DraftKings has placed an emphasis on making partnerships and acquiring resources to expand rapidly across the nation.
Golden Nuttet Online Gaming’s CEO, Tilman Fertitta, claimed that “DraftKings is definitely best in class.” He also acknowledged that there were some key differences between his company and DraftKings. “They are a tech company. We are a bricks and sticks company.”
Here is Tilman Fertitta’s statement regarding the $1.6 billion dollar agreement with DraftKings.
Together, we can offer value to our combined customer base that is unparalleled. 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 hopes to build some additional momentum into the near future as their platform continues to diversify across the nation. A golden age could be around the corner for sports betting providers like DraftKings, especially if populous states like California are able to legalize sports betting online in the near future.
As a result of the deal, every shareholder in Golden Nugget Online Gaming’s stock will receive 0.365 shares of DraftKings stock. The mutually beneficial agreement will provide benefits to the sports betting industry as new types of gamblers establish accounts on platforms like DraftKings.
Earlier this year, DraftKings had already announced an increase in their revenue projection for the year 2021. The bullish trajectory of DraftKings’ revenue projections likely had a significant impact on the agreement that was announced here today with Golden Nugget Online Gaming. Only time will tell if the agreement is capable of generating the types of benefits that both companies are expecting from this agreement. One thing is for certain, DraftKings continues to have its focus on dominating the American sports betting market by rapidly expanding, establishing partnerships, and joining new jurisdictions as soon as they become legalized.