Apps & Software

FanDuel and DraftKings to merge

In an attempt to consolidate costs, streamline ongoing litigation, and muscle-through the ongoing pushback from congress, Fantasy sports technology companies DraftKings and FanDuel officially announced that they have entered into a merger agreement. The transaction is expected to close in 2017.

The merger of FanDuel and DraftKings will bring together two of the largest fantasy sports leagues on the market. Merging the two companies together will cut operational costs, and will allow the companies to focus on developing new products and features, as well as fight against some state’s stricter gambling laws that have prevented it from operating. The companies also hope to bring new contest formats, loyalty programs, enhanced social functionality and “ancillary sports-oriented content and experiences” to their customers. “The merger will also help the combined company accelerate its path to profitability,” according to joint-statement released today.

“We have always been passionate about providing the best possible experience for our customers and this merger will help advance our goal of building a transformational global sports entertainment platform,” said DraftKings CEO Jason Robins. “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.”

While Fantasy Sports aren’t new, FanDuel and DraftKings were only launched in the last few years. The merger will allow both companies to combining and streamlining their resources, which is important for anyone that can’t currently use the service because of local gambling laws. With DraftKings and FanDuel working as one company, it will certainly have more weight to throw around in the State Legislature, and without the competition, will reduce advertising and promotional costs. The singular company will also be able to continue to develop a standard regulatory framework, which currently doesn’t exist in many states.

This framework will not only make it easier for the combined entity to thrive in the long-term, but the two company’s state that it “will provide certainty and encourage other companies to make significant investments in the fantasy sports industry.” At least that will be their pitch to regulatory committees, who might see the merger of the two largest Fantasy Sports sites as a monopoly on the market. Emerging fantasy sports categories like daily fantasy sports are just one component of a broader industry that has significant potential for sustained growth. Currently, there are 228 million fans of major sports in the U.S. and 57 million fantasy players.

“Being able to combine DraftKings and FanDuel presents a tremendous opportunity for us to further innovate and disrupt the sports industry,” said FanDuel CEO Nigel Eccles. “While both companies have accomplished much already, this transaction will create a business that can offer a greater variety of offerings, appealing to new users, including the tens of millions of season-long fantasy players that haven’t yet tried our products.”

At closing, DraftKings CEO Jason Robins will become CEO of the newly combined company and FanDuel CEO Nigel Eccles will become Chairman of the Board. In addition to the Chairman and CEO, the Board will be composed of three directors from DraftKings, three directors from FanDuel and one independent director. The company will be co-headquartered in New York and Boston. The transaction is subject to customary closing conditions and regulatory approvals.