- Golden Nugget Online Gaming (GNOG) has entered into a multi-year agreement with Affinity Interactive for Missouri market access.
- Affinity Interactive owns and operates the Mark Twain Casino and St. Jo Frontier Casino in Missouri.
- Affinity Interactive also owns the Daily Racing Form and their forthcoming sports betting platform DRF Sports.
Sports betting regulation is still ‘in the works’ in Missouri but that hasn’t stopped companies from seeking market access under the assumption that they’ll be able to get into the game. That’s not always a safe assumption since so many states have completely bungled sports betting by creating cronyist regulatory frameworks designed primarily to serve financial benefactors by staving off competition–with a good environment for bettors an extreme afterthought. The fact that companies are in the process of entering into market access deals bodes well. If nothing else, it gives regulators and politicians less cover to juice in companies that are beholden to them at the expense of everyone else.
The last we heard from Affinity Interactive (early January) they were announcing a partnership with Kambi Group to power their forthcoming Daily Racing Form branded sportsbook, DRF Sports. They’ve now found another revenue stream in the form of market access agreements for Missouri. Affinity Interactive has entered into a multi-year deal with Golden Nugget Online Gaming (GNOG) for Missouri market access. There is, of course, the usual disclaimer that it is all subject to ‘legislation and regulatory approvals permitting’. The terms are fairly standard for partnerships of this sort–Golden Nugget will pay Affinity a percentage of net gaming revenues subject to specified minimum royalty payments.
Not mentioned in the press release is an impending acquisition of Golden Nugget Online Gaming by Draft Kings. Draft Kings has agreed to acquire GNOG in an all-stock deal valued at approximately $1.56 billion–once again ‘subject to the required regulatory approvals’. It’s unclear what DraftKings will do with GNOG once the deal closes in Q1 2022. GNOG is live in Michigan, New Jersey, Virginia and West Virginia with additional market access agreements in the pipeline. At last check, they were preparing to enter the Arizona market in partnership with the Hualapai Tribe. In August 2021, GNOG announced a market access deal for Ohio–another state in the process of setting up sports betting regulations. Ohio is the 7th largest US state by population (11,714,618) and should be a very lucrative gaming market–as always ‘subject to regulators and politicians not completely screwing it up’. Same deal in Missouri–with 6,169,038 residents they’re slightly larger than Colorado and Maryland and slightly smaller than Indiana. All three states have vibrant sports betting markets. DraftKings definitely wants GNOG’s 5 million customer plus database–they said as much in the press release announcing the deal. At the time the deal was announced (August 2021) it sure sounded like they planned to keep the Golden Nugget brand viable:
The acquisition will enable DraftKings to leverage Golden Nugget’s well-known brand, iGaming product experience and existing combined database of more than 5 million customers. In connection with the acquisition, DraftKings has entered into a commercial agreement with Fertitta Entertainment, Inc., the parent company of the Houston Rockets, Golden Nugget, LLC and Landry’s LLC, and a leader in the gaming, restaurant, hospitality, and sports entertainment industry.
The acquisition of Golden Nugget Online Gaming will deliver significant strategic benefits to DraftKings as well as expected synergies of $300mm at maturity. DraftKings will deploy a multi-brand strategy which will enhance cross-sell opportunities and drive increased market share and revenue growth. In addition, there will be multiple channels for cost savings by, among other things, eliminating platform costs as a result of migrating Golden Nugget’s current technology to DraftKings’ in-house proprietary platform, recognizing enhanced returns on advertising spend through marketing efficiencies, and reducing G&A costs such as duplicative corporate overhead. The commercial deal will also reduce DraftKings’ market access rates through preferred pricing with Golden Nugget-owned properties and an exclusive commercial deal across daily fantasy sports, sportsbook and iGaming with the Houston Rockets which further solidifies the deep partnership between DraftKings and Fertitta Entertainment. Additionally, the all-stock deal preserves DraftKings’ balance sheet and aligns the long-term interests of both brands and shareholders.
They intimate to some degree that they’ll use the Golden Nugget brand for iGaming from which I’d infer that they’d reserve the DraftKings brand for sports betting, DFS, etc. That makes sense–‘DraftKings’ isn’t a great fit for casino games (not that it’s a great fit for sports betting either) and it’s likely worth it to invest in a well known brand instead of dealing with the challenges of establishing their own nameplate. The market access agreements in Ohio and now Missouri could be of interest to DraftKings though it’s not like they’ve had any trouble with that. DraftKings also has a similar market access agreement with BHCMC LCC to enter Kansas once sports betting goes live there. GNOG had earlier announced that they’re withdrawing a licensing application in Virginia and will re-submit it once the pending acquisition closes.
The deal with Affinity Interactive attracted ‘short and sweet’ quotes from executives representing both companies. Thomas Winter, GNOG President, is happy to get market access in Missouri on the cusp of the acquisition by DraftKings:
“We are thrilled to announce this agreement with Affinity Interactive ahead of highly anticipated online gaming legislation in Missouri. We look forward to a successful partnership with AI as we continue to expand access to our leading online gaming products across North America.”
Mary Beth Higgins, CEO of Affinity Interactive, spoke in terms of how the deal will benefit customers at the company’s two Missouri gaming properties:
“We are excited that this new partnership will add to Affinity Interactive’s incredible offerings at Mark Twain Casino and St. Jo Frontier Casino in the state of Missouri. Golden Nugget Online Gaming has demonstrated its leadership in online gaming, and we’re confident that once online gaming is legalized for Missouri players, GNOG will deliver a spectacular product for our customers.”
James Zenni, Chairman of Affinity Interactive, took a more macro perspective:
“This is a very exciting time for our industry with the continued growth of sports wagering in new markets. As we grow AI’s combined casino and online offerings, we are delighted to partner with Golden Nugget Online Gaming to provide high-quality online gaming and sports betting offerings for customers in Missouri, pending the state’s anticipated approvals.”
GNOG CEO Tilman Fertitta is a very sharp guy though he hasn’t had much ‘hands on’ with the interactive gaming division. He also owns Landry’s which has more than 600 restaurants in 36 states and 15 countries as well as the land based Golden Nugget gaming properties. He’s also the owner of the NBA Houston Rockets.