DraftKings Wraps Up Golden Nugget Online Gaming Purchase

      Comments Off on DraftKings Wraps Up Golden Nugget Online Gaming Purchase

DraftKings Wraps Up Golden Nugget Online Gaming Purchase

After months of tumbling share prices, DraftKings (NASDAQ:DKNG) has completed its acquisition of Tilman Fertitta’s Golden Nugget Online Gaming (GNOG).

DraftKings announced a $1.56 billion all-stock offer for GNOG last August, when the target was trading around $12. The target’s shares nearly doubled over the next several weeks. But the wind came out of the sales of online casino and sports betting equities soon thereafter, sparking concern on the fate of the deal. Underscoring the lengthy weakness for digital gaming stocks, GNOG shares closed at $5.78 on May 4 – the stock’s final trading day.

That means GNOG investors aren’t earning as much compensation for their equity as was expected when the transaction was revealed. It also means DraftKings may be getting a better deal than originally expected.

There will be multiple channels for cost savings by, among other things, recognizing enhanced returns on advertising spending through marketing efficiencies, eliminating platform costs from migrating Golden Nugget Online Gaming’s current technology to DraftKings’ in-house proprietary platform, and reducing G&A costs, such as vendor services and duplicative overhead,” according to a statement.

DraftKings is forecasting $300 million in cost efficiencies as the deal matures — a potentially favorable point at a time when analysts and investors are clamoring for the gaming company to cut expenses and shore up profitability efforts.

Other Benefits for DraftKings

DraftKings sees revenue increasing by way of cross-promotion opportunities attained through the GNOG deal. While GNOG offers online sports betting, its bread and butter is internet casinos, and it’s already profitable in some states on that front.

Boston-based DraftKings reports first-quarter results Friday before the open of US markets, and it’s likely the company will offer more commentary on the GNOG transaction, potentially including updates to its 2022 outlook.

“By deploying a multi-brand strategy and accessing Golden Nugget Online Gaming’s built-in iGaming-first customer, DraftKings expects to recognize increased returns on advertising spending and greater LTV to CAC ratios,” according to the statement.

It’s also possible that buying GNOG provides DraftKings with a long awaited avenue for entering Nevada. Fertitta’s Fertitta Entertainment is the owner of the land-based Golden Nugget Casinos, which controls five Golden Nugget gaming venues, including one in downtown Las Vegas and another in Laughlin, Nevada. The company is also in the process of buying a Colorado casino.

“DraftKings and Fertitta Entertainment expect to rebrand certain current and future retail sportsbook locations at Fertitta Entertainment-owned Golden Nugget properties into DraftKings sportsbooks,” the parties said in the statement.

Fertitta Optimistic

While GNOG’s closing price was nowhere close to where the stock traded when DraftKings made its offer, Fertitta is enthusiastic about the long-term prospects.

In a recent interview with CNBC, he said DraftKings has the potential to be a storied growth stock when it becomes a profitable company.

He’s becoming one of DraftKings’ largest investors following the acquisition, and expressed long-term commitment to the stock.

The post DraftKings Wraps Up Golden Nugget Online Gaming Purchase appeared first on Casino.org.

Source: DraftKings Wraps Up Golden Nugget Online Gaming Purchase

The short URL of the present article is: https://pokerone.info/HfkkM