After months of tumbling deal prices, DraftKings (NASDAQ:DKNG) has completed its acquisition of Tilman Fertitta’s Golden Nugget Online Gaming (GNOG).
DraftKings proclaimed a $1.56 1000000000 all-stock tender for GNOG cobbler's last August, when the direct was trading around $12. The target’s shares nearly doubled over the next several weeks. But the wrap came out of the sales of online casinos and sports betting equities soon thereafter, sparking headache on the fate of the deal. Underscoring the lengthy weakness for digital gaming stocks, GNOG shares shut at $5.78 on May 4 – the stock’s final trading day.
That means GNOG investors aren’t earning as a great deal compensation for their equity as was expected when the dealings was revealed. It also means DraftKings may be getting a meliorate trade than originally expected.
There will follow multiple channels for cost nest egg by, among other things, recognizing enhanced returns on advertising outlay through marketing efficiencies, eliminating weapons platform costs from migrating Golden Nugget Online Gaming’s current technology to DraftKings’ in-house proprietary platform, and reducing G&A costs, such as vendor services and duplicative overhead,” according to a statement.
DraftKings is forecasting $300 trillion in be efficiencies as the deal matures — a potentially favorable pointedness at a clip when analysts and investors are clamoring for the gaming companion to track expenses and shoring up profitability efforts.
Other Benefits for DraftKings
DraftKings sees revenue increasing past right smart of cross-promotion opportunities attained through and through the GNOG deal. While GNOG offers online sports betting, its bread and butter is internet casinos, and it’s already profitable inward some states on that front.
Boston-based DraftKings reports first-quarter results Friday before the opening night of US markets, and it’s likely the companion will offering to a greater extent commentary on the GNOG transaction, potentially including updates to its 2022 outlook.
“By deploying a multi-brand strategy and accessing Golden Nugget Online Gaming’s built-in iGaming-first customer, DraftKings expects to realize increased returns on publicizing outlay and greater LTV to CAC ratios,” according to the statement.
It’s also possible that purchasing GNOG provides DraftKings with a long awaited avenue for entering Nevada. Fertitta’s Fertitta Entertainment is the possessor of the land-based Golden Nugget Casinos, which controls 5 Golden Nugget gaming venues, including ane inwards downtown Las Vegas and another inward Laughlin, Nevada. The accompany is also in the cognitive operation of buying a Colorado River casino.
“DraftKings and Fertitta Entertainment await to rebrand certain stream and time to come retail sportsbook locations at Fertitta Entertainment-owned Golden Nugget properties into DraftKings sportsbooks,” the parties said inwards the statement.
Fertitta Optimistic
While GNOG’s closing damage was nowhere come together to where the gunstock traded when DraftKings made its offer, Fertitta is enthusiastic almost the long-term prospects.
In a recent interview with CNBC, he said DraftKings has the potential to be a storied maturation buy in when it becomes a profitable company.
He’s seemly unity of DraftKings’ largest investors next the acquisition, and expressed long-term allegiance to the stock.