After failing with an ambitious attempt to acquire UK iGaming conglomerate Entain last year, US sportsbook DraftKings have finally made a splash in the market, having completed the purchase of Golden Nugget Online Gaming – the digital arm of Golden Nugget, owned by Fertitta Entertainment.
In what can be seen as a serious signal of intent to expand aggressively in the thriving US iGaming market, this $1.56 billion all-stock deal is a move that can have a number of advantages for the acquirer.
Substantial returns eyed
Following the completion of this deal, the Boston-based sportsbook has given itself a great chance to compete further with its key rivals, such as BetMGM and Flutter Entertainment-owned FanDuel for a bigger market share in key states.
Of course, there are multiple benefits for DraftKings, as outlined in a company statement, which explained: “There will be multiple channels for cost savings by, among other things, recognizing enhanced returns on advertising spending through marketing efficiencies, eliminating 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.”
This deal is also expected to be the start of mutual business relationship between the two firms who have plans to rebrand certain elements of their service offerings. Due to the acquisition, it can help DraftKings to gain entry into Nevada, with Fertitta Entertainment owning five different land-based casinos.
It is expected that DraftKings will utilise these locations to integrate its sportsbook offering into the state, with the official company statement going on to reveal: “DraftKings and Fertitta Entertainment expect to rebrand certain current and future retail sportsbook locations at Fertitta Entertainment-owned Golden Nugget properties into DraftKings sportsbooks,”
“By deploying a multi-brand strategy and accessing Golden Nugget Online Gaming’s built-in iGaming-first customer, DraftKings expects to recognize increased returns on advertising spending and greater LTV to CAC ratios.”
Stock price to rebound?
At the end of the last quarter, DraftKings’ stock price plummeted, with the CEO Jason Robbins stating that investors would regret selling shares in the company – was this some veiled message?
Already in the days since the acquisition was completed, shares in the sportsbook have began to gradually increase, with stakeholder confidence returning and Nevada could play a significant part in this.
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