After months of speculation, reports now say DraftKings and FanDuel—the two largest daily fantasy sports companies—are planning to merge.
Bloomberg News cited unnamed sources in saying the merger was imminent and that the new company would be run under DraftKing’s CEO and co-founder Jason Robins. FanDuel co-founder Nigel Eccles would be chairman of the board for the merged company. The board itself would draw evenly from both companies, Bloomberg said.
ESPN news also confirmed the discussions. The deal is said to be “imminent.”
The two companies offer almost identical fantasy sports contests and investors in both companies have been urging a merger for months, the report said.
The companies would also be able to unify their efforts to have DFS contests legalized in U.S. states. The two companies have been fighting a state-by-state battle for regulatory approval and legislation in more than 30 U.S. states for more than a year.
According to Bloomberg, one major stumbling block for the merger has been which of the two company’s CEOs would run the merged company. No reason was given for Robins being chosen and sources told the news service the deal leaves open the possibility of hiring an outside executive to lead the companies.
After a merge, the new company will likely start another round looking for new investors.
However, a merge would mean the new company controls about 90 percent of the DFS market, which could raise more regulatory concerns about the industry. Sources told the news service that the companies are preparing to respond to those concerns.
Neither company confirmed the merger talks.
“As we have stated previously, a potential combination would be interesting to consider,” a DraftKings spokesperson told ESPN. “However, as a matter of policy, we don’t comment on rumors or speculation, and there can be no assurances at this time that any discussion about a combination would result in an agreement or merger.”
In 2015, both companies were raising money from investors in sports, media and venture capital at valuations over $1 billion each. Investors in DraftKings include Madison Square Garden Co. and the Kraft Group, which owns the New England Patriots. FanDuel is backed by KKR & Co. and Time Warner Inc., among others, according to Bloomberg.
However, an advertising blitz at the start of the 2015 NFL season by both companies brought the attention of regulators throughout the country. That was followed by an “insider trading” scandal where a DraftKings employee was suspected of using insider information to win a substantial prize at FanDuel. Both companies have since blocked employees from the other site from playing on their site.
Still, regulators in several states began looking at the DFS industry. Most notable was New York Attorney General Eric Schneiderman, who ordered the sites shut down in his state. New York eventually passed legislation legalizing DFS contests and a false advertising suit brought by Schneiderman against the two sites was recently settled.
ESPN said that the settlement of that suit—which was announced last week—cleared a major hurdle for the impending merger. Both sites agreed to pay New York $6 million in the settlement.
