DraftKings CFO Says Merger with Golden Nugget ‘Imminent,’ Shares Plan for Path to Profitability

Written By Katie Kohler on March 14, 2022 - Last Updated on March 24, 2022

During Bank of America’s Sports Betting and Online Gaming Virtual Event on March 11, DraftKings CFO Jason Park said the merger with Golden Nugget Gaming is “imminent.”

Park provided insight into DraftKings’ customer acquisition plans and path to profitability. He also gave some hints for what’s to come for DraftKings’ four main verticals:

Stock tumbles

DraftKings stock is down more than 35% so far in 2022 and 72.1% over the last 12 months. DraftKings has a current market cap of $8 billion. They reported $1.3 billion in revenue in 2021 with revenue projected to reach $1.9 billion in 2022. 

“I have said multiple times that our fixed cost will meaningfully slow down starting in 2023,” said Park.

In response to DraftKings stock woes, CEO Jason Robins tweeted:

DraftKings and Golden Nugget

DraftKings reached an agreement to acquire Golden Nugget Gaming ($GNOG) in August 2021 for $1.56 billion in an all-stock deal. The agreement was announced in early August 2021 and is expected to close in early 2022.

Bank of America analyst Shaun Kelley asked Park about the Golden Nugget agreement and what it will bring to DraftKings’ capabilities.

Park pointed out that DraftKings players trend toward the online sportsbook, or they go from the sportsbook to the online casino. They are young men who prefer table games.

“I’m super excited and closing is imminent. DraftKings has done incredibly well with iGaming.  The DraftKings brand just doesn’t resonate with that casino-first customer nearly as much as Golden Nugget does and we looked at multiple opportunities. We looked at building our own casino-first brand and we got very excited about the Golden Nugget brand. We will very likely maintain the Golden Nugget brand. It’s a brand that resonates with a different demographic that we don’t have today.”

Market share and the end of the New Jersey prototype

DraftKings Sportsbook was the first online sportsbook to launch in New Jersey when it went live in August 2018. Park spoke in depth about the “New Jersey prototype.”

DraftKings is now acquiring more customers at a faster rate when a state launches than they were a few years ago. During the first six months of going live in Arizona, DraftKings acquired 6.5% of the population. When they arrived in New Jersey, they got 1.3% of the population.

“The New Jersey prototype didn’t apply anymore. So many more people are yearning to join this product category, you’re actually acquiring more efficiently. It’s just that you’re acquiring a heck of a lot more people in those early months or quarters of a state.” 

DraftKings Social media network

DraftKings has a social media network integrated into its sports betting app. If you log in and click on the “social” tab, users can share bet slips and picks for games and also can comment. Park commented that they expect to make “great improvements” to the DraftKings Social network in 2022.

What’s next for DraftKings Sportsbook and casino in 2022

DraftKings switched its bet engine from Kambi to SBTech. The migration was completed from a rented to in-house bet engine before football season started. DraftKings users probably noticed the back-end benefits in the form of same-game parlays, faster live betting, and more player prop markets. 

“Now that we’re vertically integrated, we are really set up to just listen to the customer and bring them things that they want and bring them things that they don’t know that they want yet,” said Park.

iGaming at DraftKings has been done completely in-house and it’s given them time to build their product portfolio of DraftKings versions of standard casino games like DraftKings Blackjack.

DraftKings Rocket was built in-house and is currently available in New Jersey, Michigan in West Virginia. However, currently, you can not play DraftKings Rocket in Pennsylvania.

The game is played with a rising rocket and players must cash-out by exiting the rocket before it stops rising. The higher the rocket goes, the bigger the multiplier will be applied to your bet.

“Rocket is pretty fun and it’s very innovative,” said Park. “It’s performing extremely well. Going forward, you’ll see us bring to market more in-house games that are innovative and unique to DraftKings.

“We have a DraftKings games studio, which would be within our products and tech org and that’s all part of the fixed cost growth that we’ve experienced and we’ll continue to experience through 2022. I think coming out of 2022, they’ll be at a great spot just to churn off new titles forever.”

DraftKings marketplace and NFTs

DraftKings launched Marketplace in July 2021 to buy, sell and trade digital collectibles. It launched in partnership with Autograph, an NFT platform co-founded by Tom Brady.

Park said NFTs are the first product category in the marketplace. In the short term, DraftKings expects $70 million in revenue from Marketplace in 2022.

“Crypto and NFTs were something that our players were already engaging with. We’re seeing great cross-sell once we get them on through the marketplace. Marketplace is something that we would expect to be breakeven or profitable out of the gates.”

Lead image c/o Shutterstock.

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Katie Kohler

Katie Kohler is a Philadelphia-area based award-winning journalist and Managing Editor at PlayPennsylvania. Katie especially enjoys creating unique content and on-the-ground reporting in PA. She is focused on creating valuable, timely content about casinos and sports betting for readers. Katie has covered the legal Pennsylvania gambling industry for Catena Media since 2019.

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