DraftKings To Acquire Golden Nugget Online: What Investors Should Know

A leading iGaming operator is being acquired by the online sports betting company present in the most states.

What Happened: DraftKings Inc DKNG is acquiring Golden Nugget Online Gaming GNOG in an all-stock deal. Golden Nugget Online Gaming shareholders will receive 0.365 shares of DKNG for each GNOG share they own.

The deal values Golden Nugget Online at $1.56 billion based on Monday’s share price.

Tilman Fertitta owns 46% of GNOG shares and will hold the new DKNG shares for a minimum of one year. Fertitta owns 72% of the acquisition company in an updated July agreement that added additional restaurants and changed the valuation to $8.6 billion.

Fast Acquisition Corp FST is bringing the Golden Nugget casinos and Landry’s restaurants public via SPAC merger. The SPAC was set to own a controlling stake in Golden Nugget Online Gaming.

Related Link: 3 Sports Betting Stocks That Could Get Bought Out 

Why It’s Important: Golden Nugget Online Gaming has over 5 million customers. The acquisition by DraftKings follows last week’s acquisition of Score Media and Gaming Inc SCR by Penn National Gaming PENN.

DraftKings also entered into a commercial agreement with Fertitta Entertainment, the parent company of Golden Nugget Online that also owns the NBA's Houston Rockets, Golden Nugget casinos and the Landry’s restaurant group.

The companies see $300 million of synergies at maturity and have laid out a multi-brand strategy for cross-selling opportunities.

DraftKings will receive reduced market access rates and preferred pricing for Fertitta assets. DraftKings will also receive the opportunity to obtain market access on favorable terms for Golden Nugget casinos.

There are Golden Nugget physical casinos in New Jersey, Mississippi, Louisiana and Nevada.

DraftKings ended the recent quarter with online sports betting in 12 states and iGaming in four states. Golden Nugget Online could bring new customers into the DraftKings ecosystem with its focus on iGaming.

Golden Nugget Online offers online gaming in New Jersey and Michigan with more states to come. The company said it expected to be live in six states by the end of the year and has iGaming market access for 12 states. First-quarter revenue of $26.7 million was up 54% year-over-year for Golden Nugget Online Gaming.

GNOG, DKNG Price Action: Golden Nugget shares are up 49% to $18.26 Monday. DraftKings shares are up 3% to $52.93.

FST shares are up 7% to $12.38 Monday.

See also: How to Buy DraftKings, Inc. (DKNG) Stock