DraftKings and FanDuel Looking To Merge OperationsNovember 1, 2016 10:56 am
Once bitter rivals, the world’s two biggest daily fantasy sports companies, DraftKings and FanDuel, are now on the brink of merging to form an industry giant that would control at least 90% of the global market.
DraftKings and FanDuel have apparently been discussing merging their operations since January, as the amount of money the companies spend out-marketing each other has weighed heavily on their individual revenues. The situation then came to a head last year after they spent a combined $500 million on advertising, including $200 million on television alone. Being bombarded by 60,000 commercials over the space of the year caused a backlash against the companies, and their activities were subsequently probed by a number of state attorney generals, with some accusing them of violating state gambling laws.
DraftKings and FanDuel now face a number of charges ranging from consumer fraud to false advertising, with one such high-profile case brought against the companies by the New York AG’s office at the end of 2015. The charges were then settled a few days ago for a combined $12 million, thus freeing DraftKings and FanDuel to move forward with their merger talks. If the merger does go ahead, DraftKings co-founder Jason Robins will reportedly be the new firm’s CEO, while FanDuel co-founder Nigel Eccles is expected to chair a board consisting of an even number of members from both companies.
One obstacle that may stand in the way of progress, however, would be a potential veto by the Federal Trade Commission (FTC), which may want to prevent one super company dominating the whole of the daily fantasy sports market. Commenting on the issue, online gaming attorney Jeff Ifrah, said:
“There are of course good arguments about why such a merger is in fact in the interest of the consumer: pooled liquidity, higher prize pools, etcetera. But that has not always been enough to shut down FTC scrutiny.”