DraftKings and FanDuel merger expected to free up more funds for advertising and marketing

The ongoing legal battles have forced DraftKings and FanDuel to cut back on advertising

Fantasy sports sites DraftKings and FanDuel have set aside their rivalry and agreed a merger as the two companies prepare to face down regulatory and legal challenges to their businesses which has impacted on their marketing capabilities.

Following months of speculation over a possible merger, the two companies confirmed the deal pending approval from regulators which is expected in the second half of 2017.

DraftKings chief executive, Jason Robins, is set for the same role at the new company, while FanDuel chief Nigel Eccles will take up the role of chairman. The headquarters of the new company will be divided between the New York and Boston offices.

Robins said in a statement: “Joining forces will allow us to truly realize the potential of our vision, and as a combined company, we will be able to accelerate the pace of innovation and bring a richer experience to our customers than we ever could have done separately.”

Eccles added: “While both companies have accomplished much already this transaction will create a business that can offer a greater variety of offerings, appealing to new users, including the tens of millions of season-long fantasy players that haven’t yet tried our products.”

Combining the companies will free up funds for ongoing legal defences and lobbying to change legislation which has forced the pair to pull out of several states that ruled that the sites were violating state gambling laws.

The cost of ongoing lobbying to convince state legislatures to explicitly legalise their business has also forced both companies to cut back on their marketing campaigns.

Last year DraftKings, which has investments from 21st Century Fox, and FanDuel, backed by Comcast Corp, spent a combined $500 million on advertising and the cuts created a ripple effect across the sports media industry.

Executives at Walt Disney Co. recently told investors that a “significant” decrease in advertising from fantasy firms during the quarter ended (ended Oct 1) contributed to a 13% decline in ESPN’s ad revenue.

No decision has been taken with regards to the branding of the new company, leaving open the possibility that both could continue to run as separate brands when the deal closes.

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