With it’s purchasing online-casino-centric Golden Nugget Online Gaming (GNOG), DraftKings just plugged a glaring hole in its suite of online gambling offerings. The move also puts the rest of the industry on watch, as one of the preeminent US sports betting operators just added one of the preeminent US online casino operators.

The acquisition, expected to close in Q1 2022, feels like a perfect fit. Even the usually cynical analysts are struggling to find something to critique. Combining the Golden Nugget Online Casino business with DraftKings sports betting enterprise is the best of both worlds, as the main strength of each company is the others’ main weakness.

The principals are also entirely on board, considering the price tag of $1.56 billion will be paid in shares (GNOG will own 6.6% of DraftKings). As GNOG’s Tillman Fertitta put it, “I wanted only stock… We will be one of largest shareholders of DraftKings. We want to be a part of it and see what DraftKings does for years to come.”

Winners and Losers

Winner – Golden Nugget. The little engine that could (see the following header) will finally have the assets to put together a championship team.  GNOG has been severely disadvantaged in a post-PASPA world where sports betting is driving everything. Despite lacking a competitive sportsbook, GNOG’s online casino is still punching well above its weight, and we’ll soon see just how strong it can be when it can cross-sell with the DraftKings sportsbook.

Winner – DraftKings. DraftKings is adding a casino-first company to its growing list of assets and can now leverage Golden Nugget’s five-million-strong database of high-value online casino players (that is 50% female according to Earnings+More) along with the company’s online casino know-how. As Robins said during , “we’ve been working hard to try to extend our brand and extend our reach into the non-sports fan iGaming audience… I think that’s probably the biggest opportunity for us now in terms of consumer segments that we’re just not penetrating at the moment.”

Loser – Scientific Games. After migrating from Bally Tech, Golden Nugget has been operating on the NYX/Scientific Games platform since 2015, but the deal will almost certainly result in the Golden Nugget online casino migrating to DraftKings’ in-house tech stack.

Loser – Resorts Casino. Resorts’ online gambling revenue has been bolstered by DraftKings, but with a reshuffling of the deck coming (and DraftKings likely switching to Golden Nugget’s New Jersey license), Resorts will lose a significant revenue generator, even if it’s just a sub-brand.

Loser – FanDuel/Stardust, PlaySugarHouse, and BetAmerica. The reshuffling could also impact Golden Nugget’s sub-brands. The online skins operating under Golden Nugget’s master license in New Jersey may need a new home, which means having to negotiate a new deal.

Winner – DraftKings (again). The arrangement also provides DraftKings with market access in select states (including Texas) and the capability to develop retail sports betting options at select Golden Nugget properties. That access could be a selling point for VIP players and help DraftKings develop major contests in destination locales.

Putting Golden Nugget’s Success into Perspective

If I had written in November 2013 that Golden Nugget’s online gambling business would be spun-off and fetch a $1.5 billion selling price, I would have been looking for another line of work. Not that I, or anyone for that matter, had the foresight to see that day coming in 2013, but .

The Golden Nugget brand had an inauspicious start, as it was the only platform that didn’t pass muster during the five-day field test of New Jersey online gambling in November 2013. As such, Golden Nugget’s online casino platform launched a month after its peers. The delay proved to be a blessing in disguise, but outside of that happy accident, Golden Nugget has executed its strategy perfectly.

Golden Nugget consistently offered more game choices than its competitors. As the first-mover on live dealer games (one of the calculated risks that propelled Golden Nugget to the front of the pack), the company acted as a pace-setter of sorts and set a pace none of its competitors could overtake until the PASPA floodgates were opened, and sports betting was added to the online mix.