A law firm will look into how Golden Nugget Online Gaming’s Board of Directors handled the company sale to DraftKings.
Law Firm to Seek Whether Fiduciary Duties Have Been Met
Just a day after DraftKings announced that it would acquire Golden Nugget Online Gaming (GNOG) in an all-stock deal valued at $1.56 billion, the law office of Brodsky & Smith has announced that it is carrying out an investigation into the matter. Specifically, the law office is investigating potential claims against GNOG’s Board of Directors, who may have possibly breached fiduciary duty and other violations pertaining to state and federal regulation.
The alleged breaches have to do with whether the Board of Directors agreed to the acquisition after careful investigation and whether the purchase price may have been intentionally undervalued. As per the deal, GNOG shareholders will be entitled to 0.365 shares of DraftKings Class A Common Stock, which will be issued to cover the transaction.
The law office is looking into whether this arrangement fails to consider a fair price for GNOG shares.
Consolidation in the Gaming and Sports Industries Only Starting
The purchase of GNOG by DraftKings marks another landmark development in the sports and casino gambling landscapes. This has prompted Oppenheimer analyst Jed Kelly to issue a note to clients, arguing that the consolidation of the iGaming and sports gambling sectors is only getting started.
With DraftKings set to close the deal in the second quarter of 2022 as the company continues to rake up new important assets in the space. DraftKings proceed with the acquisition of the Vegas Sports Information Network (VSiN) in March, and it followed that one up with the purchase of BlueRibbon, a tech company.
With this in mind, DraftKings is quickly scaling up on all fronts. It’s already making a giant leap in blockchain space with the launch of its NFT marketplace, and it will be adding some 5.5 million customers with the acquisition of GNOG.
The consolidation of the sector comes amid heightened activity. Just days before DraftKings said it would move in on GNOG, Penn National Interactive revealed the acquisition of Score Media and Gaming, a Canadian tech and sports giant, in a $2 billion deal.
According to Kelly, those moves signal a greater appetite for consolidations in the gambling industry. He also predicts that there may be more consolidations in the sector, with some of the more tempting targets on the horizon fuboTV, which just posted another beat-all-expectations quarterly result, and Rush Street Interactive, which just added Mike Ditka as the official NFL ambassador for its BetRivers.com brand.
Earlier this year, MGM Resorts International made a sudden bid for Entain Plc, a company with which MGM is working on BetMGM, which is now ranking as the third strongest sportsbook in the United States. The bid was rejected as Entain said the value underplayed the company’s value, and MGM Resorts made no subsequent bids. However, there is still a lingering feeling that MGM Resorts may try again.