DraftKings plans to buy Golden Nugget Online Gaming — letting it tap into the internet gambling company’s database of more than 5 million users — in an all-stock deal worth an estimated $1.56 billion.
With the acquisition, DraftKings can “instantly reach a broader consumer base” of online-gaming fans, said DraftKings chairman CEO Jason Robins. “This deal creates meaningful synergies such as increased combined company revenues driven by additional cross-sell opportunities, loyalty integrations and tech-driven product expansion as well as technology optimization and greater marketing efficiencies.”
Under the agreement Tilman Fertitta, chairman and CEO of Fertitta Entertainment, parent company of the Houston Rockets, Golden Nugget and Landry’s LLC, will join the DraftKings board and become one of DraftKings’ biggest shareholders. The deal is expected to close in the first quarter of 2022.
DraftKings, further expanding beyond its sports gaming roots, also is entering into a commercial agreement with Fertitta Entertainment that will include marketing integrations including sponsorship assets with the Houston Rockets and gives DraftKings an expanded retail sportsbook presence. In addition, DraftKings has the option to obtain market access on “favorable terms” through certain Golden Nugget casinos. Furthermore, DraftKings will become the exclusive daily fantasy sports and sports betting partner of the Houston Rockets and intends to open a sportsbook at Houston’s Toyota Center arena.
“This transaction will add great value to the shareholders as two market leaders merge into a leading global player in digital sports, entertainment and online gaming,” Fertitta said in a statement. “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.”
Currently, Golden Nugget Online Casino operates in two states — Michigan and New Jersey — with approvals for additional states pending. DraftKings plans to migrate Golden Nugget’s current online gaming system to DraftKings’ in-house proprietary platform, which will provide marketing efficiencies and reduce duplicative operational and corporate overhead costs.
The boards of directors of DraftKings and Golden Nugget Online Gaming approved the deal, which remains subject to approval by Golden Nugget Online Gaming stockholders as well as clearance by regulators.
For DraftKings, Raine Group is serving as exclusive financial adviser and Sullivan & Cromwell LLP is serving as legal counsel. Jefferies is serving as lead financial advisor and White & Case LLP is serving as legal counsel to Golden Nugget Online Gaming.