FanDuel and DraftKings announced Friday that they have agreed to merge, ending months of speculation over the fates of the two largest players in the daily fantasy sports industry.
Both sites have faced recent legal challenges that center on the question of whether their contests, in which people create and bet on fantasy teams of professional athletes, amount to games of skill or gambling. NPR’s Nathan Rott has reported on the legal questions, which you can read about here.
A Q&A on DraftKings’ site hints that reducing legal costs was a factor in the decision to join forces. “By combining and streamlining resources, FanDuel and DraftKings can work more efficiently and economically with state government officials to develop a standard regulatory framework for the industry,” it reads.
DraftKings and FanDuel have had to “defend themselves as well as lobby for legislation to make the games legal in several states that have declared them illegal gambling operations,” as Reuters reported. They recently reached a “$12 million settlement over false advertising claims with the New York Attorney General.”
Joining forces, the companies said in a statement, will “help the combined company accelerate its path to profitability” and drive “more variety in contest formats, loyalty programs, enhanced social functionality and ancillary sports-oriented content and experiences” as well as promote industry growth.
“Being able to combine DraftKings and FanDuel presents a tremendous opportunity for us to further innovate and disrupt the sports industry,” FanDuel CEO Nigel Eccles said.
The merger requires federal approval before it is final, and the companies did not release the financial terms of the deal. Some analysts are asking whether the deal could potentially violate antitrust laws, The Associated Press reported, because the two sites “represent about 90 percent of the daily fantasy sports market.”
FanDuel and DraftKings will operate under their own names “for the foreseeable future,” and “both platforms will remain separate and operational through the 2017 NFL season while the deal is finalized,” the companies said. The combined operation will be headquartered in New York and Boston.
The daily fantasy sites added that the deal is expected to close in 2017. DraftKings CEO Jason Robins will be CEO of the new company, with Eccles as chairman of the board.