DraftKings and FanDuel Ready to Merge
DraftKings and FanDuel, the two biggest names in daily fantasy sports (DFS) have agreed to merge their business operations. If approved, the deal would create a DFS behemoth that controls a full 80 percent of the US market.
The deal, which was announced late last week, is a desperate bid for survival by two companies that have been engaged in a massive legal fight since the US-facing DFS industry imploded last year. But there are plenty of roadblocks still standing in the way.
If approved, the DraftKings and FanDuel would join forces with each company holding three seats on the board of directors with an independent seventh party joining as the seventh member. (Presumably to act as a tiebreaker.)
In the e-suite, current DraftKings CEO Jason Robins would act as CEO of the new company, while FanDuel CEO Nigel Eccles would act as chairman of the board. As of this writing, there’s no word on what the new company would be called.
The reasoning behind the proposed merger is simple; since both companies are fighting the same legal battles in nearly every US State, the savings in legal expenses alone will justify the merger.
Of course that’s not what the official line out of the DFS giants’ public relations machines. In a statement to the press, as reported on by ESPN.com, DraftKings CEO Jason Robins said:
Joining forces will allow us to truly realize the potential of our vision, and as a combined company we will be able to accelerate the pace of innovation and bring a richer experience to our customers than we ever could have done separately.
Their ability to do all these things hinges on approval from the Federal Trade Commission (FTC) and that could be difficult to obtain. After all, the two companies control a total of 80 percent of the US DFS market. According to ESPN, the two companies are prepared to argue that their merger will actually be a benefit to consumers.
Whatever happens with the proposed merger isn’t likely to happen soon. Both companies plan on operating independently at least through the 2017 NFL season.