DraftKings CEO reveals post-Golden Nugget Online Gaming acquisition roadmap

DraftKings CEO Jason Robins has confirmed the next steps for the newly acquired Golden Nugget Online Gaming (GNOG) business following its $1.5bn acquisition by the US sportsbook operator last month.

Speaking as part of the Goldman Sachs 2022 Travel and Leisure Conference, Robins suggested plans to integrate GNOG employees and technology into the business had already begun.

“The first step for us was to look at the headcount and make sure that the duplicate roles were synergized, that people were allocated into the right parts of the organization, and that it’s set up in a way where we’re integrated from a people standpoint,” Robins explained.

“The other big integration point is technology.

“That’s going to take a little longer but we are going to migrate all of Golden Nugget’s tech stack onto our own proprietary platforms, which should both generate incremental revenue and retention but also save money because they don’t have to pay a third party anymore for those,” he added.

The DraftKings CEO continued: “Some of those are longer-term contracts, so it’s not going to create a synergy right away, but over the next couple of years, we should start to see some real cost synergies on the platform side even if we migrate and see some revenue synergies earlier.”

Robins also suggested GNOG would enable DraftKings to more efficiently market to igaming customers, something it had historically failed to do so on a cost-effective basis through its own brand, a boon which suggested would lead to customer acquisition cost savings.

“The hypothesis with Golden Nugget, based on our due diligence which showed they are reaching a different audience, more female players, more slots players, older average age etc, is that we can run the same types of marketing programs we are trying to run with the DraftKings brand, but acquire them on the Golden Nugget for less cost and more efficiently,” he explained.

Robins continued: “I think we had enough due diligence to feel pretty confident in saying that and that’s really been a big part, plus the synergies targets, part of which is marketing that we’ve set for the team on the integration.

“That’s really going to allow us to increase our focus on broadening to the entire igaming market as opposed to maybe the 50% that we were reaching well and then doing just okay with the other 50%,” he added.

At the same conference, and alluding to previously controversial comments regarding DraftKings’ stance on bettors who look to manipulate the sports betting ecosystem, Robins reiterated his position on favoring recreational players over more professional profit-hunting sports bettors.

“What we’re not looking to do are things like taking money from people by forcing them into bets they don’t want or trying to direct them there,” the DraftKings CEO explained.

“What we are doing is trying to get smart at eliminating the sharp action or limiting at least what we don’t want as much and then also making sure that we have a high parlay mix because people do like that.”

Robins continued: “That’s been something we’ve been pushing on a lot since we migrated still really early because we’re only about eight months or so nine months since we migrated. But every quarter, the parlay as a percentage of total debt mix goes up. So it’s just how you do it.

“We did the same thing in DFS. In DFS, our margins got substantially higher as the market matured because we just decided to make them higher and you can do that. I think the tricky part is how do you do that at the right time and in the right way.

“When I say the right way, I mean in a way where it’s not degrading from the customer experience, it’s just using data that you have to say, hey, it could take a little more margin here, and it’s not going to reduce the customer experience or cause any attrition or anything like that,” Robins concluded.