DraftKings Acquisition Of Golden Nugget Positions Well In PA

As of May 5, 2022, DraftKings (DKNG) officially acquired Golden Nugget Online Gaming (GNOG). The news was announced during the DraftKings Q1 earnings report the next day. The deal was initially announced in August of 2021 for DraftKings to purchase Golden Nugget Online Gaming. Just a few months later in March of 2022, Jason Park, the DraftKings CFO, defined the merger as imminent. Finally, less than two months later, the deal went from imminent to official. During the same Q1 earnings call where the deal was officially announced, DraftKings CEO Jason Robins said that both companies are prepared to work side by side and integrate their respective businesses together.

In the same call, DraftKings reported $417 million for Q1 revenue which exceeded its midpoint guidance by $7 million. This was primarily led by a 44% increase in Business to Consumer (B2C) segmented revenue over the prior year. This also brought about DraftKings raising the 2022 revenue guidance from $1.925 billion to $1.975 billion. This shows a year-to-year growth from 49% to 56%. During the Q1 earnings calls, DraftKings announced that their Monthly Unique Players (MUP) increased to 2 million. Additionally, their Average Revenue per MUP increased to $67 (up 11%). Through the acquisition of Golden Nugget Online Casino, DraftKings obtains access to 5.5 million Golden Nugget users through the Golden Nugget and Landry database. This is in addition to the already existing DraftKings users which are greater than 20 million players. DraftKings also hopes that the Golden Nugget Online Casino brand name will help expand its reach to the casino-focused players. As most believe that DraftKings is a sports-first product, the hope is that Golden Nugget will bring in those that prefer the casino side of the gambling industry. DraftKings would also like to use Golden Nugget’s positioning in iGaming, specifically related to their live dealer options.  

DraftKing Stock Issues

Despite the news of the acquisition of Golden Nugget by DraftKings, the DraftKings stock continues to see falling prices. Year over year, the stock value is down 59% and down 75% in the past 12 months. More granularly, the past week has seen the stock value go down 23% which drops the share price to below $11. The last time it was that low was January of 2020. DraftKings is not deterred by this as they predict that Q2 revenue will continue to increase and only go up in Q3 with the start of the 2022 NFL season. Q4 also projects for revenue growth with higher seasonal revenue.

Standing In Pennsylvania

In March of 2022, DraftKings held the second-highest position for Pennsylvania online sportsbooks with a $166 million handle. First was FanDuel with $269 million in handle. With the Golden Nugget acquisition, DraftKings could double its presence in Pennsylvania with a continually growing casino market. While sports betting has been wildly successful in Pennsylvania, online casinos performed even better, setting records for the state and becoming the first to have more than $140 million ($142.7 million) in a month in gross online casino revenue.  Over $55 million, or around 38% of the $142.7 million in revenue, was made by Hollywood Penn National operators. These include brands like DraftKings, Hollywood, Barstool, and BetMGM. However, Golden Nugget’s application status is still awaiting approval from the Pennsylvania Gaming Control Board. When it does get approved, it is ultimately believed that DraftKings will run both online casinos as separate operators as opposed to merging into one operator.

DraftKings Continued Expansion

Now that the dust is starting to settle on the Golden Nugget acquisition, DraftKings’ next venture is looking to expand in Ontario, Canada. The province of Ontario is the largest in Canada, housing about 40% of the total population of Canada. If Ontario was a state in the United States, it would be the fifth-largest in population. On a more local scale. DraftKings is also looking at states like Maryland, Ohio, and potentially California should the legislature pass on the November 2022 ballot. Puerto Rico has also been explored as another location for expansion. With an expansion into Ontario on top of the acquisition of Golden Nugget, DraftKings projects an additional $130 to $150 million in revenue for 2023 alone.