DraftKings and FanDuel show signs of movement towards finalized merger
The two largest fantasy sports companies DraftKings Inc. and FanDuel Inc. have shown indications of completing a merger that has been teased for many months.
Financial journalist Dan Primack reported Wednesday that a deal was supposed to be announced in the upcoming weeks, according to three anonymous sources.
According to Primack’s analysis and per documents that were allegedly given to company investors, DraftKings CEO Jason Robins will be CEO of the combined company, while FanDuel CEO Nigel Eccles will serve as chairman.
Legally, this merger between the obvious No. 1 and No. 2 companies would be challenging under the Hart Scott Rodino Antitrust Improvements Act of 1976 as the joint company would control about 90% of the market. Basically, that act requires that they must filed with the US Federal Trade Commission and Department of Justice, who must decide that the transaction will not adversely affect US commerce.
Yahoo is the third largest fantasy sports provider, but lacks the professional league relationships that both DraftKings Inc. and FanDuel Inc. have developed over the years, as well as the customer base as of yet.
In late October, ESPN described the deal as “imminent” while the two companies were dealing with the New York attorney general’s office around regulatory issues. New York attorney general Eric Schneiderman was a proponent for regulation and the companies agreed to $6m settlements respectively, which according to the attorney general, was restitution for deceptive and misleading advertising charges.
Boston-based DraftKings and New York-based FanDuel were facing regulatory issues in nine other states, as well as New York, that blocked the companies from operating, citing illegal gambling.
DraftKings counts Fox Sports, Major League Baseball, New England Patriots ownership, Kraft Group, ESPN and Madison Square Garden as investors or partners. FanDuel has Comcast Ventures, Google Capital, Time Warner the National Basketball Association (NBA) and several individual NBA and National Football League (NFL) teams are either investors or partners.