Just a few days after Penn National signed a market access deal with Rivers Casino New York, Golden Nugget Online Gaming (GNOG) did the same with Tioga Downs. The partnership will give GNOG access to the New York State market, which would enable the operator to launch an online casino if the state decides to legalize internet gaming.
The two companies have entered a 20-year agreement, according to which GNOG will pay Tioga Downs a percentage of its net gaming revenue.
GNOG Expects $2 Billion GGR in Future
Tioga Downs is one of only seven casinos that operate within the New York State borders. Located on the New York-Pennsylvania border, Tioga Downs is actually a racino, that is, a racetrack with table games, slots, and other gaming machines on the premises.
The racino is one of the most successful gaming businesses in New York. However, same as other casinos, Tioga Downs was also affected by the COVID-19 pandemic. To battle the financial decline, the company started thinking of internet gaming, which the deal with Golden Nugget can achieve.
If NY lawmakers lift the ban on online gaming, Tioga Downs will serve as the land-based partner of GNOG, which already has internet casinos in New Jersey and Michigan. Based on the experiences from those two states, GNOG is hopeful that the NY market could reach $2 billion GGR (Gross Gaming Revenue) in a few years’ time.
Although GNOG is operational only in two states, the company has gained market access in six other states. Those are, namely, Illinois, Louisiana, Mississippi, Nevada, Pennsylvania, and West Virginia. Combined, all those markets are expected to bring a $10 billion GGR to GNOG at maturity.
GNOG Stocks Go Up Following the Tioga Downs Deal
With 19.45 million people, New York is the fourth-most populous state in the US. Such, the Empire State has a large potential for the online gaming business.
Online sports betting legalization will probably happen this year, and the next step could be the legalization of online casinos. If that happens, GNOG will have instant access to the NY market.
The reaction of the stock market suggests that investors believe such a scenario will play out. GNOG stocks have gone up by 8.04% following the news about the Tioga Downs deal. At the moment, the price of a GNOG stock is $16.25 on Robinhood.
Something similar happened with Penn stocks on Monday. After the company announced a deal with Rivers Casino, its stocks went up by a few percent.