What the Golden Nugget Merger Means for DraftKings Casino Position in Pennsylvania

Written By Hill Kerby on May 10, 2022 - Last Updated on May 11, 2022
DraftKingsGoldenNugget

DraftKings has officially acquired Golden Nugget Online Gaming (GNOG) as of May 5, 2022. The company announced the news amidst its Q1 earnings report the following day. 

DraftKings reported $417 million in Q1 revenue, exceeding its midpoint of guidance by $7 million, fueled primarily by a 44% increase in B2C segment revenue over the prior year’s period. It also resulted in the company raising its fiscal year 2022 revenue guidance from $1.925 billion to $1.975 billion, a year-over-year growth of 49% to 56%.

DraftKings completed Golden Nugget merger

The deal between DraftKings and GNOG was initially announced in August 2021. Fast forward to March 2022, and DraftKings CFO Jason Park said the merger was “imminent.” Less than two months passed before imminent became official.  

Now, DraftKings is ready to move forward with the Golden Nugget brand by its side. DraftKings CEO Jason Robins said during its Q1 earnings call that both companies are well prepared to integrate their respective businesses.

What the GNOG merger means for DraftKings

In acquiring GNOG, DraftKings gains access to its 5.5 million users throughout Golden Nugget and Landry’s databases, adding to its already-existing user base of more than 20 million. DraftKings also recently announced in its Q1 earnings that its Monthly Unique Payers (“MUP”) increased to 2 million and its Average Revenue per MUP (“ARPMUP”) increased 11% to $67. 

These metrics come due to DraftKings’ history in daily fantasy sports. 

DraftKings will also look to leverage the GNOG brand to broaden its reach and appeal to the casino-first customer. Additionally, DraftKings will look to utilize GNOG’s established position within iGaming, especially when it comes to GNOG’s live dealer capabilities.

$DKNG stock still crashing

Even with the recent news, DraftKings stock has continued to plummet. It is now down more than 59% year to date and 75% over the last 12 months. 

More recently, $DKNG is down more than 23% in the past five days, dropping below an $11 share price for the first time since January 2020.

But, DraftKings announced that it expects Q2 revenue to increase further, with Q3 building on that as the NFL season begins. Q4 will only grow from there as the company benefits from higher seasonal revenue.

DraftKings PA Sportsbook holds strong, could double its presence in thriving casino market

DraftKings held the No. 2 position among all PA online sportsbooks in March 2022, with its $166 million handle second only to FanDuel’s $269 million. The total was good for nearly one-quarter of all sports betting action as sportsbooks received $715 million in wagers for the month, the highest ever recorded total outside of the NFL season.

Despite Pennsylvania’s sports betting success, online casinos were even more profitable, setting records for becoming the first state in history to record more than $140 million in monthly gross online casino revenue. 

Of the $142.7 million total revenue, over $55 million was generated by the Hollywood Penn National licensee, which includes online brands Hollywood, DraftKings, BetMGM and Barstool. 

Meanwhile, GNOG’s application status is still pending approval from the PA Gaming Control Board. When it can open its doors for business, DraftKings will likely operate both online casinos as separate entities within the Keystone State rather than merge the two into one brand.

More expansion plans are in the works

In addition to the GNOG acquisition, DraftKings is eyeing expansion into Ontario, Canada. The largest province in Canada, Ontario is home to roughly 40% of the country’s population. It would be the fifth-largest state in the United States. 

Other states and territories on the expansion horizon include Maryland, Ohio and Puerto Rico, with the possibility of California entering that conversation in 2023 should any initiatives pass on the upcoming November 2022 ballot. California would become an immediate focus. It represents 12% of the domestic population.

DraftKings expects its acquisition of GNOG and expansion into Ontario to add another combined $130-$150 million in revenue for 2023. 

Lead image c/o Shutterstock

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Hill Kerby

Hill Kerby comes from a background of poker, sports and psychology. He brings all of these areas into his writing, where he feels fortunate to be able to create value in the growing, legalized betting industry.

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