After months of an uneasy courtship, it appears that the proposed merger of fantasy sports giants DraftKings and FanDuel is back on and nearing finalization. ESPN described the deal as “imminent” - most likely be announced as early as this coming week.
The final hurdle was the brick wall that is the New York attorney general’s office, where the two companies have faced regulatory issues. New York attorney general Eric Schneiderman was highly vocal and public about regulation, and both FanDuel and DraftKings barred residents from playing since March. Schneiderman even demanded that the two companies had to make restitution of all funds obtained from consumers and pay a fine of up to $5,000 per case.
The softening of relations between the state and the popular fantasy sites comes at the same time that FanDuel CEO Nigel Eccles and DraftKings CEO Jason Robins seem to have put their disputes behind them for the strength that can come from the merger. The combined company would cover roughly 90 to 95% of the daily fantasy market, but there still may be some legal issues to work through, according to the ESPN report.
"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," said Jeff Ifrah, a prominent gaming attorney and founding partner of Ifrah PLLC. "But that has not always been enough to shut down FTC scrutiny."
The separate companies have agreed to separate $6m settlements with Schniederman’s office over deceptive and misleading advertising charges, which the attorney general said it considered the “financial condition of the companies in determining the amount and schedule for settlement payments".
That should clear the way for the deal, which would have FanDuel, based in New York and Scotland, and Boston-based DraftKings share equally the revenue and expenses of the newly merged company.
The two companies have not commented on nor confirmed the validity of the rumors of the merger.