DraftKings and Gold Nugget logos
Source: DraftKings/Golden Nugget

Golden Nugget Has Bright Stock Forecast After DraftKings Announcement

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Aug. 9 2021, Published 2:35 p.m. ET

The forecast for Golden Nugget Online Gaming (GNOG) stock looks bright. Shares of GNOG were up almost 50 percent on Aug. 9 after competitor DraftKings (DKNG) announced that it's acquiring the company in an all-stock transaction.

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Under the about $1.56 billion deal, GNOG stockholders will receive 0.365 shares of DraftKings for each share that they hold. The acquisition is expected to close in the first quarter of 2022.

As of 12:42 p.m. ET on Aug. 9, GNOG shares were trading at around $18.28. DraftKings shares also saw a small increase to trade at $51.70 per share.

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golden nugget
Source: Getty Images

“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,” said Tilman Fertitta, the chairman and CEO of GNOG.

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Fertitta, who owns about 46 percent of the equity in GNOG, will hold the DraftKings shares issued to him in the merger for a minimum of one year after the transaction closes.

DraftKings hopes to reach more customers with the acquisition.

The acquisition helps DraftKings instantly reach a broader consumer base, said Jason Robins, DraftKings’ CEO and chairman, in a statement.

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DraftKings is looking to leverage Golden Nugget’s well-known iGaming product and its existing database of more than 5 million customers.

As part of the deal, DraftKings also entered into a commercial agreement with Fertitta Entertainment, Inc., the parent company of the Houston Rockets, Golden Nugget, LLC, and Landry’s LLC. The commercial agreement will give DraftKings marketing and sponsorship assets with the Houston Rockets, an expanded retail sportsbook presence, and the option to obtain market access to certain Golden Nugget casinos.

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DraftKings will also become the exclusive daily fantasy sports, sports betting, and iGaming partner of the Houston Rockets. The company intends to open a sportsbook at the Toyota Center pending state legalization and regulatory approvals.

The transaction is subject to approval by Golden Nugget Online Gaming stockholders and other regulatory approvals.

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Golden Nugget Online Gaming revenue grew in 2021.

A market leader in online gaming, Golden Nugget Online Gaming was the first to bring Live Dealer and Live Casino Floor to the market. In the first quarter of 2021, the company reported earnings of $26.7 million—a 54 percent increase of the same period in 2020. Currently, it operates in 12 states.

Source: Twitter
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DraftKings Q2 earnings are up by 320 percent.

News of the acquisition came the same day DraftKings’ reported a 320 percent increase in its revenues for the second quarter of 2021 compared to last year.

The Boston-based digital sports entertainment and gaming company, which provides sports betting in at least 14 U.S. states and seven countries around the world, reported revenues of $298 million for the second quarter of 2021, which is a big jump from the $71 million in revenue reported for the same period in 2020.

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The increase in revenues is mainly due to DraftKings’ move to go public last year through a merger with international sports gaming provider SBTech (Global) Limited and the blank-check company Diamond Eagle Acquisition Corp.

“We believe these expansion opportunities will enable us to further grow our customer base and generate additional revenues through cross-selling to our existing players,” Robins said.

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