DraftKings has finished the week with the acquisition of the Golden Nugget Online Gaming (GNOG), previously owned by Tilman Fertitta. This move represents an important milestone for the company which continues to invest heavily in its full-stack igaming and betting technology platform.
Fears of Deal Falling Through Proved Unnecessary
The deal was originally announced back in August and had an askance price of $1.56 billion based on the stock price at the time. While the first weeks shortly after the deal was announced remained strong for gambling and online gaming stocks, the months that followed saw a subdued performance, partly attributed to the return of normal casino operations and depletion of demand for online gaming.
Even more importantly, the deal was announced at a trading price of $12 but the stock has since fallen to a $5.78 closing price on May 4, which means that shareholders are receiving much less for their agreement to see the acquisition through.
This is good news for DraftKings, though, as the company would save some money while at the same time acquiring a valuable asset. The company already confirmed that it expects at least $300 million in cost efficiencies. An official statement by DraftKings further shed light on what synergies will be achieved.
It’s through the addition of the Golden Nugget Online Gaming’s technology that will be integrated with DraftKings’ own development proposition that those would be realized. There is more, as DraftKings feels confident that marketing efficiencies and reducing platform costs will all come together and yield better overall performance for the company.
Combining the Power of Online Gaming and Betting
DraftKings and GNOG make a perfect match as both companies specialize in their respective area of expertise. While they are both capable of delivering on sports and igaming solutions, DraftKings excels in sports gambling and GNOG has worked long and hard to establish a notable presence in online gaming.
The company will now be able to strengthen its cross and multi-platform offer and deliver to gamers in the United States a more comprehensive experience housed under the same roof. It’s unlikely for DraftKings to try and rebrand GNOG, though as the company may want the association with the Golden Nugget Casinos commercial casinos that are still owned by Tilman Fertitta.
This could enable DraftKings to secure an entry into Las Vegas with the companies confirming that some of the GNOG sportsbooks will be rebranded as DraftKings, hoping to attract even more customers on-site. Even though the closing stock price was much lower than the anticipated one, Fertitta remains optimistic about the long-term implications of this partnership.
As one of the largest investors in DraftKings, the future for the sports gambling and igaming business is looking up.