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DraftKings & FanDuel Daily Fantasy Sports Merger

Daily Fantasy Sports are a huge deal throughout the United States, with more than 50 million regular players. Back in late September there was news that DraftKings were in talks over a possible merger with a then unnamed competitor. Well it has now emerged that the potential merger could be with FanDuel. The DFS is industry is worth multiple billions of dollars, and between them, DraftKings and FanDuel control the majority of the market, if they were to merge, they would dominate it. The understanding is that the new merged brand would maintain two headquarters, FanDuel would keep theirs in New York while DraftKings would continue in Boston, Massachussetts.

It has been reported that the merger will be 50/50, similar to Ladbrokes and Coral in the UK, although the process is expected to be lengthy and take the majority of 2017 to reach a conclusion. In the meantime, both brands will continue to operate separately for the foreseeable future, and both brands remain focused on the rest of the NFL season (that provides their biggest market) which finishes with the Super Bowl in February.

Some fans may be left scratching their heads at this merger as both companies are believed to be financially stable. The merger between the companies would make them a lot more efficient and could significantly reduce their operating costs. Furthermore, there has been a number of legal issues in regards to the regulation of the DFS industry. DraftKings and FanDuel may well believe that there is safety in numbers when it comes to tackling the legality of their business.

Eric Schneiderman, state attorney general of New York,  has been one of the most major attorneys who has targeted both of the major DFS brands and attempted to prohibit them from offering cash based games. His main argument was that he believed the games to be illegal as they have more in common with gambling based casino games, he later obtained the legal framework to get his bill approved.

As a result, DraftKings and FanDuel have both immediately ceased to offer their services in ten different states, this is sure to a number of legal expenses they have already been forced to pay out, and they’re naturally keen to avoid more. A combined $12 million has already been paid by both companies due to the accusation of false advertising practices. The fine is currently being paid in instalments.

It is believed that both brands are very excited about the potential opportunities that a merger would offer. They are keen to remain focused on providing an outstanding service for all their customers and provide a richer experience. Once the deal is finalised, it is believed that Jason Robins, current CEO of DraftKings, will remain as Chief Executive of the new brand, while Nigel Eccles, CEO of FanDuel, will assume the position as Chairman of the board.