Before legalized sports betting became a borderline standard in the United States, the company DraftKings endeared itself to sports fans with the introduction of daily fantasy events. Fast forward to now, and a lot has changed. That "Sport Betting Giant DraftKings Buys Golden Nugget Online" even registers as a present-day headline is surreal.
And yet, here we are.
Impact of DraftKings Buying Golden Nugget Online
Fantasy sports began predominantly with the NFL and then, as the daily fantasy trend gained steam, spilled over into pretty much every other professional team sport.
Daily fantasy sports eventually became an exception to sports betting before it went mainstream in the U.S. Certain places legalized it independently of casino-style gambling.
Naturally, as the legalization of sports betting has spread, DraftKings has branched out and created its own full-fledged sports in hopes of keeping pace with the top online sportsbooks that have been full service long before them. The venture has by and large been a success, too.
Not only is DraftKings a preferred option for many built-in customers who already used them for daily fantasy, but the company has signed a sponsorship and exclusive usage deals with major sports leagues and won bids to become one of the official operators in states that allow sports betting, like Illinois.
Back in 2020, when many other companies were reeling from the global pandemic, DraftKings went public amid all-time high business. They were given an initial valuation of over $6 billion and have seen their market cap and reach only grow since then.
As they continue to try and solidify their place near the top of the sports betting industry, their move to purchase Golden Nuggets Online makes sense—and qualifies as one of their more unique opportunities to date.
How Much Did Golden Nugget Online Cost?
Golden Nugget Online, the subsidiary of Golden Nugget Inc., a casino and gambling company owned by Tilman Fertitta, has been a staple in the betting world for years. DraftKings paid handsomely to acquire that reputation—a whopping $1.56 billion, according to the companies.
With the acquisition, DraftKings adds another 5 million customers to its already-growing iGaming portfolio while increasing its business opportunities in a sector of the market they've yet to fully enter.
The relationship between them and Golden Nugget Inc. is also expected to be symbiotic, stretching from their online presence to the Golden Nuggets on-site locations.
Why Did DraftKings Buy Golden Nugget Online
This on-site partnership is the biggest factor in DraftKings' purchase of Golden Nugget Online.
Yes, adding millions of online customers is obviously a huge coup for any sports-gambling operation. To this point, though, DraftKings has been solely known as an online sportsbook with the occasional pop-up stand at the stadiums and arenas of professional teams with which it partners.
Buying Golden Nugget Online suggests they are interested in joining the actual casino business. While the transaction only gives them control over the Golden Nugget's online purview, it paves the way for cross-promotions at every one of the Golden Nugget's five casino resorts across the country. That in turn gives DraftKings a foothold in physical casinos in Las Vegas and Atlantic City, among other places, which is a niche that it has yet to entirely crack.
Who knows, one day we might even see DraftKings open its own casino resort, replete with a sportsbook, slots, table games, entertainment, dining, hotel rooms, the whole nine. And if that's on the table for them, you better believe it could mark a change in the casino business at large.
A New Standard For Casino Conglomerates?
The first impulse here might be to suggest other sportsbooks will look to turn themselves into fully functioning on-site casinos that service customers beyond their sports-betting needs. That's certainly possible—it is for DraftKings—but so many of the most popular online sportsbooks remain off-shore and are unable to wedge their way into domestic physical locations. DraftKings is more of an exception than the rule.
At the same time, this could open the door for a new trend: Casino subsidiaries selling online presences to online sportsbooks.
Physical casinos are tasked with so many responsibilities. Sportsbooks are often secondary. They have more pressing concerns, such as maintaining foot traffic in a world that's increasingly moving to digital experiences—and that's on top of doing everything else that comes with being in the hospitality industry (hotels, dining, entertainment, etc.).
Online Sportsbook fell by the wayside
Because the casino industry is so predicated on the in-person experience, the online sportsbook aspect has in particular fallen by the wayside. Just consider how off-to-the-side many on-site sportsbooks are at casinos. It clearly isn't their biggest priority. It is only fitting that the online sportsbook is an even smaller focus.
By selling an ownership stake to already up and running sportsbooks, though, casinos are able to create additional cash flow while essentially passing off the responsibility of operating the online sportsbook associated with their name. They may actually have to give up naming rights in the process, but they're still getting a large upfront cost, in addition to a cut of on-site business that the sportsbooks would gain from their cross-promotions.
Some casinos might even strictly consider selling the operating rights of their online sportsbook without getting rid of the name or permitting on-site presences. Think along the lines of "Planet Hollywood Online Sportsbook, Brought to You By DraftKings" as a potential example.
If there's only one thing you take away from DraftKings' purchase of Golden Nugget Online, it should be this: Online sportsbooks and on-site casinos are no longer going to exist so independent of one another. Online sportsbooks without casinos will look to expand their footprint, and casinos with limited reach online will no doubt try to follow Golden Nugget's decision to sell off its internet subsidiary.
In short, the world of online sports betting and on-site gambling seem like they're about to collide more often than ever.
In case you cannot make it to an on-site casino or sportsbook, check out this list of the top online sportsbooks so you can decide which one to use for all your betting:
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