FanDuel And DraftKings Reportedly In Merger Talks
Last November we reported on the rumors of a merger between the biggest DFS companies in the market, DraftKings and FanDuel. At the time FanDuel CEO Nigel Eccles was adamant to Bloomberg magazine that that was not an option and went on to say ,” If we merge, we take on those deals that we turned down. That doesn’t improve our economics, it makes it worse, I can see why it would be attractive to them. I don’t know why they think it would be attractive to us.”
We all know that the stronger the denial of rumors the more likely they are to be true, this was clear when Amaya was rumored to be purchasing PokerStars.
It now has come out from Bloomberg again that DraftKings and FanDuel are in merger talks according to someone who is “familiar with the situation”.
Whether they have been discussing a merger for the last few months or more recently is not clear but there is no doubt that the legal and economic challenges the DFS industry have had to deal with in the last 6 months make it a sensible option for both companies. Not too long ago their rivalry was amongst the fiercest around but their common enemies have forced them to combine forces to battle legal challenges that have threatened to bring this lucrative industry down.
The situation as it stands now is that DraftKings have already shutdown real money paid entries in nine US states and FanDuel have done so in ten states. Financially the merger deal would make sense as both companies are essentially offering the same product yet are spending millions on competitive advertising. A joint company would be a massive force in the gaming world as their joint resources would be free to concentrate on their player base and not outspending each other on marketing campaigns.
As of now both DraftKings and FanDuel have declined comment by e-mail according to Bloomberg. Both companies were valued at around a billion dollars each only a year ago and have since lost at least half of their value due to the legal uncertainty facing the industry. If the merger talks are successful this could be the game changer that return both companies to their pre Ethan Haskell-scandal status.