- Golden Nugget Online Gaming (GNOG) plans to launch in Iowa, Colorado and Louisiana along with Ontario during 2022.
- GNOG recently launched in Arizona and has market access in a total of 14 US states.
- GNOG is in the process of being acquired by DraftKings though no firm closing date was given in DKNG’s recent earnings update.
We haven’t talked much about Golden Nugget Online Gaming (GNOG) lately–the company is in the process of being acquired by DraftKings for $1.56 billion USD in an all stock deal. The deal is still coming together and was addressed in DKNG’s February 18, 2022 earnings call (Q4 2021). With this backdrop the future plans of GNOG weren’t clear but it’s now apparent that DraftKings will continue to run Golden Nugget as an independent brand for the immediate future. Meanwhile, GNOG has given some guidance on their 2022 new market expansion plans.
We’ll start with the status of the DraftKings acquisition. There has been little guidance as to when the deal might close and nothing changed that coming out of the DKNG call. There had been some resistance by some minority GNOG investors as to the price being paid for the company–notably Peter Wong, who has initiated legal action. This not withstanding, DraftKings Co-Founder, Chief Executive Officer, and Chairman Jason Robins said that everything was still coming together near the end of a lengthy overview of the company’s Q4 2021 performance:
I’d also like to provide an update on our acquisition of Golden Nugget Online Gaming. In Q4, we made significant progress toward closing the acquisition. And upon closing, we are prepared to integrate the business and capture the synergies we outlined when we announced the transaction in August. We’re excited to deploy a multi-brand strategy while accessing the millions of loyal Golden Nugget Online Gaming and Fertitta Entertainment customers.
We anticipate multiple channels for cost savings by, among other things, recognizing enhanced returns on advertising spend through marketing efficiencies and eliminating platform costs by migrating to DraftKings’ in-house technology
Later in the call, CFO Jason Park indicated that the GNOG deal ‘should close this quarter’ though didn’t elaborate:
Robins clearly articulates a ‘multi-brand strategy’ and that coincides with some increased activity by Golden Nugget Online Gaming concerning their 2022 market launch plans. GNOG is currently live in five states–Arizona, Michigan, New Jersey, Virginia and West Virginia. You’ve no doubt notice the absence of several highly competitive states and that will begin to be addressed by GNOG in 2022. The company’s Q1 2021 earnings call (May 2021) had their 2022 launches as Colorado, Louisiana and Iowa. These states are still a perfect fit for GNOG’s sportsbook platform:
That said, you’ll note that they indicated plans to enter Pennsylvania and Illinois in Q4 of 2021 which hasn’t happened. Note that Pennsylvania (along with New York) is an ‘iGaming Only’ market. My hunch is that Pennsylvania and Illinois are on the back burner (for now at least) due to their fee and tax structure. Colorado, Iowa and Louisiana have far more reasonable regulatory ‘overhead’ and that sure seems to be more conducive for DraftKings to run multiple brands profitably. Earlier guidance from GNOG (11/21) indicated that they had withdrawn their licensing application for iGaming in Pennsylvania but plan to reintroduce it after the DraftKings purchase closes.
The same report document lists 12 states where GNOG has market access in place. They’ve since added two more:
GNOG is also planning to launch in Ontario, which by the end of 2022 could be ‘pound for pound’ the best sports betting jurisdiction in North America (if not the world). It’s not clear if this would be an iGaming only launch or if they’d also include sports betting.
There’s an alternate scenario–once the deal with DraftKings closes you could see Golden Nugget Online Gaming become their iGaming marquee. In turn, they could migrate the GNOG sports betting clients to DraftKings. If you read through the transcript of GNOG’s 5/21 earnings call it’s very clear that the company’s priority is iGaming. In fact, they all but say that sports betting is a ‘means to an end’ for legal iGaming. Here’s a blurb from GNOG President Thomas Winter:
In terms of the economics of new states, the first thing is that you really need to look at iGaming states versus sports in new states differently. One, because when you offer a new sports, it’s extremely difficult to get to profitability, the real profitability comes when you add iGaming to that. So when we have the opportunity to operate in an iGaming state, as this is really where we want to focus our marketing investments, because this is where we will get the higher return on investment. In states that our offering only sports at least at staff because we definitely believe that eventually, most if not all sports betting states will offer iGaming, it more for us a way to — together presenting the state to start increasing our brand awareness, to build the player base.
Ultimately, you have to think that nothing of any significance will happen out of GNOG until the acquisition by DraftKings is done. Once it does, there’s no guarantee that the game plan won’t change quickly and significantly. Remember when Caesars Entertainment bought William Hill? They made clear from the get-go that they only wanted the US assets and they sold the European component of the business. No surprise there. Prior to the closing of the deal, however, they also indicated that the William Hill name would ‘live on’ through branding for third party sportsbooks.
Since then, they’ve done everything possible to bury the William Hill branding as quickly and completely as possible. You can still find William Hill sportsbooks at a number of properties in Nevada that are holdovers from their one time ubiquitous third party business but I’d imagine that won’t be the case for long. We saw the Tuscany Suites and Casino transition from William Hill to Circa Sports in March 2021 and you’ll be seeing much more of that going forward. There’s still a few books in Mississippi that are no longer operating under the William Hill name–at least on the top line. Instead, they use their own name ‘powered by William Hill’ such as the Treasure Bay Casino Sportsbook ‘powered by William Hill’. Outside of Nevada, you’re hard pressed to find a full blown William Hill sportsbook.
The moral of the story? Who knows what will happen?