Online Gaming: DraftKings, FanDuel Agree To Merger

The two companies that control the vast majority of the daily fantasy sports market agreed this week to a merger.

The value of the deal was not disclosed, but the firms—DraftKings and FanDuel—have for quite some time been considered billion-dollar businesses. Forecasting the size of the DFS market has been difficult, thanks in part to regulatory issues, but growth indicates industry-wide sales could reach several billion dollars within the next few years.

DraftKings and FanDuel called it a “strategic merger of equals.” It comes at a time when the federal government is planning to take a look at laws pertaining to sports betting and online gaming. Some lawmakers have argued that DFS is gambling. While Donald Trump in the White House is considered favorable to sports betting reform, the implications for online gaming are less clear.

“By combining and streamlining resources, DraftKings and FanDuel can accelerate work with government officials to continue to develop a standard regulatory framework,” a press release said. “This framework will not only make it easier for the combined entity to thrive in the long-term, but will provide certainty and encourage other companies to make significant investments in the fantasy sports industry.”

The deal will also allow the combined company, which hasn’t been given a name yet, to save on costs. The merger will “accelerate the pace of innovation,” they said.

DraftKings and FanDuel added that DraftKings CEO Jason Robins will become CEO of the newly combined company and FanDuel CEO Nigel Eccles will become Chairman of the Board. The company will be co-headquartered in New York and Boston.

The combined company will have an estimated 90 percent of the DFS market.

“DraftKings and FanDuel have sped up the debate on legalizing sports betting by demonstrating its popularity and mainstream nature," the American Gaming Association said in response to the merger. "Fans have a desire to be invested in games. We’re building on the momentum created by DFS to remove the federal ban on sports betting.”

The AGA is pushing for a repeal of the 1992 Professional and Amateur Sports Protection Act.

Though sports betting is almost entirely prohibited in America, fantasy sports received a carve out under federal law pertaining to internet betting.

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