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A Google search for DraftKings pulls up results for its online sportsbook and daily fantasy sports (DFS). Golden Nugget Online Gaming (GNOG) yields slots, live dealer, casino and sports – in that order. By finalizing its acquisition of GNOG for $1.56 billion, Boston-based DraftKings is hoping to amend that perception.
After all, DraftKings Casino is live in five of the legal online casino states. Not even BetMGM, the US online casino market leader, can say that.
DraftKings’ announcement today about completing the GNOG acquisition it announced in August 2021 said:
“DraftKings expects revenue to increase from additional cross-promotion opportunities, which would be expected to complementarily grow DraftKings’ customer base by engaging existing Golden Nugget Online Gaming’s iGaming-first customers. Additional anticipated revenue synergies include potential technology and game expansion, such as Live Dealer offerings.”
Deal completion comes a day before DraftKing’s Q1 2022 earnings call.
At the moment, it’s not looking as though the market is receiving the news well. DraftKings stock dropped more than 8% today.
Granted, the Nasdaq plunged 5%.
Investors are reacting to yesterday’s rate hike from the US Federal Reserve System.
Still, DraftKings stock is faring better today than it did immediately after its Q4 2021 earnings call, when it plummeted 22%.
What GNOG does for DraftKings
The GNOG acquisition brings an iGaming-first brand in-house. Plus, it may make DraftKings players happy because they’ll have “access to expanded product offerings and features, including in-house live dealer and proprietary games, as well as an overall improvement in the customer experience.”
Meanwhile, investors who were upset about marketing and promotion costs during the Q4 2021 earnings call may also be pleased by today’s news.
DraftKings says acquiring Houston-based GNOG will result in “marketing efficiencies.” Those include higher ROI and customer lifetime value vs. customer acquisition cost.
In other words, online casino gamblers yield more revenue.
Plus, DraftKings will move GNOG to its in-house platform, eliminating the cost of a third-party technology provider.
Even though the announcement says this:
“The GNOG Acquisition does not include brick and mortar Golden Nugget casinos, which will continue to be owned by Fertitta Entertainment.”
DraftKings adds that the Golden Nugget retail casinos will rebrand its retail sportsbooks to DraftKings Sportsbook.
GNOG’s popularity is difficult to decipher
Bettors seem to like Golden Nugget Casino‘s promotions, user-friendly navigation and hundreds of games. While most of the online casino games are slots, the operator offers many other products. For instance, DraftKings highlighted GNOG’s live dealer offerings today.
However, it’s unclear why GNOG calls itself “New Jersey’s No. 1 online casino.” Borgata Casino and Borgata Poker make that claim, too.
If it’s based on revenue, that’s difficult to pin down.
For example in New Jersey, the Golden Nugget Atlantic City Hotel, Casino and Marina reports online casino revenue for operators using its license. That license’s revenue is a Garden State market leader. However, Golden Nugget Casino is joined on that license by five other operators, including powerhouse FanDuel Casino.
In terms of online sports betting, Golden Nugget Sports shares the retail casino license in Atlantic City with Betway and TwinSpires Sportsbook.
However, DraftKings has faith in GNOG.
DraftKings said today:
“The GNOG Acquisition will deliver significant benefits to DraftKings as well as expected synergies of $300 million at maturity.”
Indeed, GNOG investors also believed in the company.
In November 2021, Peter Wong and other minority investors filed a lawsuit with the US District Court for the Southern District of New York. He claimed shareholders were getting an “unfair price” for GNOG.
Wong voluntarily dismissed the case in January. His attorney, Evan J. Smith of Brodsky and Smith in Mineola, NY, didn’t reply to Online Poker Report‘s request for information about any settlements.
DraftKings was already in the GNOG states
DraftKings Sportsbook is present in 18 states, either in online or retail form.
Golden Nugget Casino is active in three online casino states:
- Michigan
- New Jersey
- West Virginia
GNOG also operates online sportsbooks in those states.
In Arizona, Golden Nugget Sports is flying solo. That state doesn’t offer legal online casino betting.
Therefore, DraftKings will be adding GNOG online casino games for bettors in Connecticut and Pennsylvania.
As noted earlier, BetMGM isn’t in Connecticut. That state’s two tribal casinos chose DraftKings and FanDuel as their online operators.
Now that DraftKings smelted Golden Nugget Online Gaming into its crown, the online gambling industry will see if it results in an iGaming reign.