Casinos are, for the most part, fully open once again in the U.S. after the coronavirus pandemic forced closures. Now, with the delta variant rearing its head and rumors swirling about additional shutdowns before the end of summer, the opening of casinos could’ve just been a flash in the pan. These worries are pushing online gambling services to prepare for another wave of pandemic popularity. Golden Nugget (NASDAQ:GNOG) is one such online gambling service, and with its new merger, GNOG stock is already soaring high today.
DraftKings (NASDAQ:DKNG) is a company that’s obviously paying attention to the looming concerns of the virus. The mobile sports-betting company is taking measures to better establish itself outside of the sports-sphere. One way it’s doing that is through its acquisition of Golden Nugget.
This morning is seeing the companies announce the details of DraftKing’s acquisition of Golden Nugget, a transaction worth $1.56 billion. The acquisition will be an all-stock one, with 0.365 DKNG shares for every 1 share of GNOG stock.
GNOG Stock Wins Big on DraftKings Acquisition News
DraftKings sees the benefits to this transaction as threefold. The company says the acquisition will up revenue, bulk up DraftKings technology by eliminating third-party platforms, and create marketing efficiencies. These efficiencies come from a commercial agreement between DraftKings and Fertitta Entertainment, owned by Golden Nugget CEO Tilman Fertitta. Fertitta owns the Houston Rockets NBA franchise; the commercial deal will see DraftKings gain sponsorship assets with the team.
The acquisition is also doing well to distract from some less fun news for DraftKings investors. The company is reportedly under investigation by the Securities and Exchange Commission (SEC) for its business dealings with another sports-betting tech company, SBTech. According to Hindenburg Research, SBTech is involved in various black market activities, including money laundering and organized crime. DraftKings bought SBTech in 2019.
Regardless of DraftKings’ own woes, the news is spelling success for GNOG stock. The play was up over 47% in pre-market trading when the initial news broke. In the opening moments of trading, the stock is up 50%. So far, 20.1 million shares of GNOG stock are changing hands, already far surpassing the daily average volume of one million.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.