Golden Nugget Coming To Michigan With Focus On Online Casinos

Posted on July 1, 2020

While mobile sports betting options are flooding the Michigan market with announcements almost weekly, there appears to be a market void in brands focusing on Michigan casinos.

Golden Nugget Online Gaming (GNOC) and its bombastic billionaire owner Tilman Fertitta hope to fill it.

The Houston Rockets owner is bringing his online gambling business to Michigan with an undisclosed tribal casino partnership subject to regulatory approval.

The partnership was referenced on a pre-recorded audio release this week, where Golden Nugget executives detailed their plans to go public on the Nasdaq market.

“We’re just primed to be the best iGaming company in America,” Fertitta said. “We’ll be very strong in sports, but we’re in the iGaming business. That’s where the money is, that’s where the customer is more valuable, and that’s where the big money is going to be made going forward.”

Michigan launch among reasons for public offering

Golden Nugget is part of the No. 1 online casino group in New Jersey.

The online company is one of four brands that combined for more than $29 million in May online gaming revenue, nearly double any competing group.

Golden Nugget has high hopes for upcoming launches in Michigan and Pennsylvania.

With those launches, and big plans to spend, comes a need for an influx in cash.

Fertitta said Golden Nugget would spend $4 million to enter the Michigan market with a projected $13 million of spending in the first two years, and a big net loss expected.

Paired with $8 million to enter the Pennsylvania market and about $15 million of spending the first two years there, there is an obvious need.

“That’s why you’ve got to go public at this point or take an equity partner,” Fertitta said. “Because there’s so much opportunity out there, as you can see what we’ve done with New Jersey. It’s amazing what we’ll be generating in Pennsylvania and Michigan — just three states in years to come.”

Details of Golden Nugget’s move to Nasdaq market

Officially, Landcadia Holdings II Inc. (LCA) is acquiring Golden Nugget Online Gaming in the move.

But it’s actually just a shuffling of the deck of Fertitta companies.

Fertitta is spinning off the Golden Nugget online division to LCA, a publicly traded special purpose acquisition company co-sponsored by Fertitta Entertainment Inc. and Jefferies Financial Group Inc.

The deal should be completed in the third quarter. LCA will then change its name to Golden Nugget Online Gaming Inc., or GNOG for trading purposes.

The company approximates a market value of $745 million, more than six times its estimated 2021 revenue of $122 million.

GNOG will be worth tracking on Nasdaq

With the success of the DraftKings (DKNG) stock, the gambling industry has been keeping a close eye on the markets. GAN (GameAccount Network) is also among the publicly traded online casino companies.

According to Eilers & Krejcik Gaming on Wednesday, GAN stock was up 63% year to date, and DraftKings was up 91% since it debuted on Nasdaq in late April.

Golden Nugget is an innovative company and was the first to launch online live dealer games in the US.

It’s one of the world’s most recognizable casino brands. Opening in 1946, Golden Nugget Las Vegas is a Fremont Street mainstay.

Fertitta bought the Rockets in 2017 and owns Landry’s Inc., one of the nation’s largest restaurant corporations featuring chains such as Joe’s Crab Shack, Morton’s The Steakhouse and Rainforest Cafe.

When will online casinos be live in Michigan?

The latest prediction estimates online gambling in Michigan launching by October, with earlier timelines forecasting early 2021.

Fertitta and GNOG President Thomas Winter both referenced an early 2021 launch for Golden Nugget in Michigan.

Online casinos are live in only three states: Delaware, New Jersey and Pennsylvania. With the COVID-19 pandemic cutting into public tax revenue, Fertitta forecasts a boom for the industry.

“The runway is so long and the opportunities are going to keep coming up every single year,” Fertitta said. “But what’s best about this is, you get to play from home. You don’t have to go in the casino. And iGaming customers are so much more valuable.”

Fertitta: iGaming players 7x more valuable vs. sports

Fertitta said online casino customers are seven times more valuable than sports betting customers.

“They play longer, and they generate a higher hold for the operator,” he said.

Because of this, Fertitta emphasized the company’s focus is online casinos, adding it will also offer online sports betting.

Fertitta said 51% of land-based casino players are women, and 45% of online casino players are women.

That’s nothing compared to the fall-off of women in sports betting though, which Fertitta said is just 5% of the market.

“You’re basically losing half the population when it becomes online sports and not iGaming,” he said. “This gives us a huge advantage to grow our business.

“There’s a reason that only 5% of our casino floor is sportsbook and 95% of floor is tables and slots.”

Michigan has several online sports betting brands set to enter the market, including: Barstool, BetMGM, BetRivers, DraftKings, FanDuel, Fox Bet, Parx, PointsBet and William Hill.

Who is Golden Nugget partnering with in Michigan?

Details of a Golden Nugget partnership in Michigan have not yet been announced.

On the call, Winter said the company has a tribal partnership that is subject to regulatory approval.

Kambi announced a partnership Wednesday with Four Winds Casinos to operate sports betting operations online and at its three locations in southwest Michigan.

In addition, in announcing its online gaming and sports betting partnership with GAN in April, Kewadin Casinos suggested there’s more to the story.

The release noted “an existing major US casino operator client of GAN (“partner”) who has requested anonymity pending certain regulatory approvals.”

A handful of other potential tribal partners remain in Michigan.

For instance, the Keweenaw Bay Indian Community and the Hannahville Indian Community in the Upper Peninsula have not yet announced partnerships.

Winter told PlayMichigan on Wednesday that he expects the deal to be announced next week.

Matt Schoch Avatar
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Matt Schoch

A Michigan native, Matt has worked at newspapers in Michigan, Missouri and the Virgin Islands. A versatile sports reporter, Matt has covered sailing on the Great Lakes, cricket in the Caribbean, high school and pro playoffs, and the Olympics in Rio. He's also the host of the Locked On Pistons Podcast and producer of a documentary on Emoni Bates. A former blackjack dealer, Matt has studied the industry from all sides.

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