DraftKings, one of the top-rated sportsbooks in the country, is slated to close its live dealer studio in New Jersey. This will lead to over 100 layoffs.
Layoffs Loom
In 2019, DraftKings opened its live online dealer studio located at the Hard Rock Casino Atlantic City. It boasted availability 24 hours a day, seven days per week. Developed in conjunction with Evolution, the studio housed six tables, with five reserved for blackjack. Those tables were available to DraftKings’ online casino gambling customers to provide them with an authentic casino experience.
According to its website, “DraftKings has the only fully dedicated 24-hour Live Dealer Studio in New Jersey. When you sit at a DraftKings table, you’ll be playing at an exclusive table made just for our players.”
However, much has transpired since then. DraftKings subsequently acquired the company that pioneered live dealer online gambling, Golden Nugget Online Gaming (GNOG), in 2021 for $1.56 billion in stock. Now that DraftKings has fully integrated with GNOG, it has decided to consolidate its online operations by shutting down its own studio in New Jersey and using a third party that also happens to be located in the Garden State.
GNOG Integration Impact
The decision to terminate 101 of its employees came via the 60-day New Jersey WARN Act notice, which must alert employees when layoffs are looming. A DraftKings’ spokesperson stated, “As we finalize our GNOG integration, effective January 31, 2025, DraftKings will transition its in-house Live Dealer operations to third-party studios in Atlantic City.
“We are supporting impacted employees to offer a smooth transition for as many as possible. Our Live Dealer offerings will remain uninterrupted.” The transition is expected on January 31, 2025, and service will be uninterrupted.
Golden Nugget Provides Synergy
The acquisition of Golden Nugget Online Gaming was an important step towards giving the Boston-based gaming company a recognizable brand in the world of casino gambling.
“We’ve made some progress but have not yet deeply penetrated the very large audience that is non-sports fan iGamers,” DraftKings chief executive Jason Robins said during a conference call at the time of the purchase. “Really, we believe this will help us to attain much greater iGaming market share over the long term, including being more efficient with marketing and having tremendous synergies both on the cost and revenue side.”
The deal was closed in May 2022. It included only Golden Nugget Online Gaming and not any brick-and-mortar Golden Nugget casinos. DraftKings cited three primary advantages of acquiring the Golden Nugget brand.
- Combined company revenues
DraftKings expects revenue to increase from additional cross-promotion opportunities. This would be expected to complementarily grow DraftKings’ customer base by engaging existing Golden Nugget Online Gaming’s iGaming-first customers. Additional anticipated revenue synergies include potential technology and game expansion, such as Live Dealer offerings.
- Marketing efficiencies
This will allow the deployment of a multi-brand strategy and access Golden Nugget Online Gaming’s built-in iGaming-first customer. DraftKings expects to recognize increased returns on advertising spending and greater LTV to CAC ratios.
- Technology optimization
DraftKings plans to bring Golden Nugget Online Gaming onto its in-house technology. This is expected to deliver cost savings by reducing Golden Nugget Online Gaming’s third-party platform costs, operating expenses, and vendor costs.
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