A deal worth $1.56 billion will help the fantasy-sports giant establish an even bigger presence in the online gambling market.
Build Your Ecosystem
Being the king of U.S. sports betting means you already have a sizable slice of the online gaming pie. It also means you have enough money for a hefty expansion, leading to the addition of 5 million casino playing customers into the ever growing DraftKings’ ecosystem.
Valuable iGaming Customers
The all-stock deal is expected to close in the first quarter of 2022 and as sports betting continues to gain traction across the U.S., this is a power move by DraftKings.
Having access to the 5 million Golden Nugget casino players is critical to future revenue growth. After all, according to industry statistics, iGaming customers are worth seven times the value of a sports betting customer.
Saving $300 Million in Costs
After making the merger official, the plan for DraftKings is to take full advantage of the combined resources to boost both sales and market shares. Clearly there will be a massive amount of cross-selling opportunities.
By bringing platforms and technology in house, DraftKings anticipates around $300 million in cost savings through the deal. Lowering marketing costs and cutting out third-party providers fees will be the biggest contributor.
A Long Term Winning Partner
Golden Nugget Billionaire owner Tilman Fertitta, took the company public last year and says he chose DraftKings as a partner because he expects it to be a long-term winner.
“DraftKings is definitely best in class,” Fertitta said in an interview Monday. “They’re a tech company. We’re a bricks and sticks company.”
The deal includes promotions with the Houston Rockets basketball team, also owned by Fertitta, and possibly a sportsbook at the Toyota Center arena in Houston, should such wagers become legal in Texas.
A Huge Part Of the Future American Economy
“There’s a reason I wanted it to be an all-stock deal,” said Fertitta, adding: “This is going to be a huge part of the American economy, online sports betting and gaming, in the years to come.”
Struggled On the Casino Side
DraftKings admit having struggled to win customers to its casino platform but with this deal, the company should become less dependent on sports seasons.
“We definitely feel in the iGaming segment that we do better with people who are sports fans, that we can cross-sell, and we’ve been working hard to try to extend our brand and extend our reach into the non-sports fan iGaming audience,” said DraftKings CEO Jason Robins.
After the announcement, shares of Golden Nugget jumped as much as 52% while DraftKings rose almost 2% before retreating.