US fantasy and sports betting company DraftKings today announced that it has reached an agreement to acquire Golden Nugget Online Gaming in an all-stock deal worth $1.56 billion, following Friday’s news of a Securities and Exchange Commission (SEC) investigation.
The GNOG deal was struck with Fertitta Entertainment, parent company of the Golden Nugget hotels, casino and restaurant company, the Houston Rockets of North American basketball’s NBA, and dining, hospitality, entertainment and gaming brand Landry’s.
As part of the agreement, DraftKings has struck an exclusive commercial deal across daily fantasy sports, sportsbook and igaming with the Houston Rockets.
However, in less positive news, DraftKings’ quarterly 10-Q filing on Friday revealed that the SEC is investigating the company’s acquisition of SBTech, an international betting and gaming technology company, from late 2020.
The GNOG acquisition is expected to deliver synergies of $300 million for DraftKings, as well as strategic benefits including cross-selling opportunities, increased market share and revenue growth.
DraftKings will make use of the Golden Nugget brand, its iGaming product experience and its database of more than five million customers.
Jason Robins, chief executive of DraftKings and chairman of the company’s board, said: “Our acquisition of GNOG, a brand synonymous with igaming and entertainment, will enhance our ability to instantly reach a broader consumer base, including Golden Nugget’s loyal ‘iGaming-first’ customers.
“This deal creates meaningful synergies such as increased combined company revenues driven by additional cross-sell opportunities, loyalty integrations and tech-driven product expansion as well as technology optimization and greater marketing efficiencies."
Tilman Fertitta, chairman and chief executive of GNOG, added: “This transaction will add great value to the shareholders as two market leaders merge into a leading global player in digital sports, entertainment and online gaming. Leveraging Fertitta Entertainment’s broad entertainment offerings and extensive customer database, coupled with DraftKings’ mammoth network makes this an unbeatable partnership.
“Together, we can offer value to our combined customer base that is unparalleled. We believe that DraftKings is one of the leading players in this burgeoning space… This is a strong commercial agreement for both companies.”
Regarding the SBTech acquisition, DraftKings first received a subpoena for documents from the SEC on 9 July.
It bought SBTech in December last year as part of a three-way merger that also included Diamond Eagle Acquisition, a publicly traded special purpose acquisition company.
The federal investigation follows allegations made by Hindenburg Research, an investment research firm, about the involvement of SBTech in black-market gaming, money laundering and organized crime.
A DraftKings spokesperson is quoted by ESPN as saying: “It is not uncommon for the SEC to investigate allegations in short-seller reports. The SEC inquiry does not suggest any wrongdoing or agreement with the short-seller allegations, and we intend to cooperate with the SEC inquiry.”
The company has also said it does not believe the outcome of the investigation will have a significant impact on its financials.