DraftKings could eventually operate retail and online sportsbooks in Nevada after the Boston-based company’s planned $1.56 billion acquisition of Golden Nugget Online Gaming, a business owned by billionaire Tilman Fertitta.

On Monday, DraftKings unveiled the all-stock transaction, which includes a commercial agreement with Fertitta Entertainment, the Texas mogul’s holding company that controls businesses across gaming, lodging, dining and entertainment sectors, including Golden Nugget casinos in downtown Las Vegas, Laughlin and three other states.

Fertitta owns 46 percent of Golden Nugget Online Gaming and will join the DraftKings board.

“Let’s be honest, they are the market leader. They are the brand,” Fertitta said of DraftKings on an early morning conference call to discuss the deal. “There is going to be a lot of consolidation in this space. We want to be part of somebody bigger. I only wanted stock so we can ride this up with them.”

Fertitta is a cousin of Red Rock Resorts CEO Frank Fertitta III and Vice Chairman Lorenzo Fertitta and is not involved in the company that controls locals gaming operator Station Casinos.  

DraftKings has grown in the past three years from a daily fantasy sports provider into a sports betting giant currently operating retail and online sportsbooks in 14 states. The company is considered either the No. 1 or No. 2 sports betting provider in those markets.

Nevada is not one of DraftKings’ markets.

However, one of the benefits listed in the investor presentation provided with the announcement was the rebranding of retail sportsbooks under the DraftKings name “at current and future Golden Nugget casinos.”

A DraftKings spokesman said in an email he couldn’t “elaborate any further” on the potential for a DraftKings sportsbook in Las Vegas. He said the investor presentation offered “very high-level touches” on market access.

During the call, Fertitta said the deal with DraftKings would remove a regulatory stipulation that prohibits Golden Nugget sportsbooks from accepting wagers on games involving the NBA’s Houston Rockets. The team is owned by Fertitta Entertainment.

“This is something that has been an issue for us being a major sports team owner,” Fertitta said. “Not being able to take bets on an iconic team like the Houston Rockets is extremely difficult anytime we enter a market. Getting rid of that problem is important to us.”

A spokesman for the Gaming Control Board said DraftKings had not filed an application for a gaming license covering the two casinos as of Monday morning. The deal between DraftKings and Golden Nugget Online Gaming is expected to close in the first three months of 2022.

“As sports betting continues to grow across the country, there are still several operators that have been looking at Nevada from the outside trying to find access,” Global Market Advisors partner Brendan Bussmann. “DraftKings may have found their way into the market through the Golden Nugget but will face some challenges with its limited location over other operators like Caesars, MGM, and Station Casinos that already have strong market access.”

Eilers & Krejcik gaming analyst Chris Grove also thought DraftKings would have a tough time gaining market share in Nevada, “where the company will be competing against deeply entrenched brands.”

DraftKings CEO Jason Robins did not address a Nevada sportsbook during the conference call. He also did not take questions. Robins said the deal expands the company’s consumer reach to include members of loyalty programs from the Golden Nugget casinos and Landry’s multiple restaurant chains and entertainment attractions. The combined programs cover more than 5.5 million members.

Robins said Fertitta would “take an active role in helping me shape the company.”

The deal gives DraftKings market access with the Rockets, including building a sportsbook at the team’s arena in Houston should Texas legalize sports betting.

Other Las Vegas ventures for DraftKings

In 2015, Nevada gaming regulators told DraftKings, FanDuel and other daily fantasy companies they had to be licensed as sports betting operators if they wanted to continue to offer daily fantasy sports in the state.

Grove suggested DraftKings lost a “key competitive advantage” in Nevada by not operating daily fantasy in the state during the past six years. 

“Therefore (the company) hasn't built the same sort of player database that has been a major contributor to DraftKings' sports betting success,” Grove said.

DraftKings never filed a license application. However, in 2020, DraftKings opened a large office presence in the Town Square complex on south Las Vegas Boulevard for its growing nationwide back-of-the-house support services. That same year, the company signed a multiyear agreement with UNLV to become a primary sponsor of its Center for Gaming Innovation, inside the university’s International Gaming Institute.

DraftKings co-founder Matt Kalish, who serves as the company’s North America president, said in a 2020 interview that Nevada “is the ground zero for sports betting, and we need to be a part of that market.”

Grove said DraftKings, despite its sports betting presence, “badly needed” access to casino player databases. He said the company may be feeling the heat from other online gaming and sports betting competitors.

Grove said MGM Resorts International’s BetMGM “appears to have found a way to tap into (MGM’s) database of land-based casino customers.” Also, Caesars Entertainment said last week it would spend $1 billion to market and promote its sports betting brand to its casino player database over the next two years.

“A DraftKings-Golden Nugget online casino pairing will be immediately game-changing,” Grove said. “We see this pairing as a longer-term defensive hedge against the ascendancy of BetMGM, Caesars, and even Penn National, which has barely begun to scratch the surface of its online casino capabilities.”

Boyd Gaming owns 5 percent of DraftKings’ rival FanDuel, which operates sports betting and online gaming at several of the company’s regional casinos outside Nevada.

In April, Boyd CEO Keith Smith was noncommittal concerning a potential move into Nevada for FanDuel in connection with the company’s casinos in the Las Vegas Valley and downtown.

DraftKings, FanDuel and Caesars were named in April as the official sports betting partners of the National Football League.

Golden Nugget’s online casino and sports betting business currently has market access for nine states but is only active in two markets — New Jersey and Michigan. Nevada is one of five states with online gaming, but it is a poker-only market.

“While the merits of this deal are surely visible, so are the question marks around it,” said Deutsche Bank gaming analyst Carlo Santarelli. “We believe it will be some time until one can measure the ultimate success of the transaction fairly, and in the interim, we expect the market climate to determine investor perception.”

Updated at 2:15 p.m. on Aug. 10, 2021, to reflect DraftKings' licensing status in Nevada.