Golden Nugget has revealed plans to detach its online gambling arm and list it on the Nasdaq exchange with an estimated valuation of $745 million.
The transaction is reminiscent of the one that took DraftKings public earlier this year. It will see a publicly listed special purpose acquisition company (SPAC) acquire the Golden Nugget online casino division from current operator Landry’s.
The SPAC, known as Landcadia II, will change its name to Golden Nugget Online Gaming (GNOG) Inc upon closing. The Nasdaq trading symbol will be $GNOG.
Golden Nugget is the largest pure New Jersey online casino, and its market share has only increased during the sports hiatus according to industry estimates. The division posted net income of more than $11 million in 2019.
Nugget also expects to launch online casino games in Pennsylvania and Michigan in early 2021.
Same owner, more cash
Tilman Fertitta has one hand on each side of the transaction. He’s the owner of Landry’s, while Lancadia II is co-sponsored by Fertitta Entertainment and Jefferies Financial Group.
Fertitta will remain in his role as GNOG’s Chairman and CEO. Thomas Winter, who has overseen Golden Nugget’s online gaming business since launch, will become GNOG’s President.
Ferttitta said: “Thomas and his team have done a remarkable job, are the best in the industry, and with this transaction, will have access to growth capital to allow for the rapid expansion of the business.”
The transaction is expected to close in the third quarter of this year. It values Golden Nugget Online Gaming at a hefty $745 million, or 6.1x estimated 2021 revenue of $122 million.
Fertitta will hold a controlling economic interest and a controlling voting interest in the new company.
Why the Golden Nugget deal makes sense
According to a press release, GNOG will become the second pure publicly traded online casino company in the US after GAN.
Indeed, the success of GAN’s US IPO and DraftKings’ reverse listing has encouraged other online gambling companies to look at the US public markets.
The transaction also raises funds for Feritta at a time when his land-based entities are strapped for cash thanks to COVID-19.
Given the lofty valuations applied to US-facing online gaming companies, Golden Nugget might not be the last outfit to go public this year.