DraftKings, FanDuel an­nounce merger plans

Daily Freeman (Kingston, NY) - - SPORTS - By Philip Marcelo

Daily fan­tasy sports ri­vals DraftKings and FanDuel agree to merge af­ter months of spec­u­la­tion and in­creas­ing reg­u­la­tory scru­tiny. The com­pa­nies said the com­bined or­ga­ni­za­tion would be able to re­duce costs.

Daily fan­tasy sports ri­vals DraftKings and FanDuel have agreed to merge af­ter months of spec­u­la­tion and in­creas­ing reg­u­la­tory scru­tiny.

The two com­pa­nies made the an­nounce­ment Fri­day, say­ing the com­bined or­ga­ni­za­tion would be able to re­duce costs as they work to be­come prof­itable and bat­tle with reg­u­la­tors across the coun­try to re­main le­gal.

The com­pa­nies have each raised mil­lions of dol­lars through in­vestors and spon­sor­ship deals, but state at­tor­neys gen­eral, law­mak­ers and reg­u­la­tors have ques­tioned whether their on­line games — in which play­ers pick teams of real life ath­letes and vie for cash and other prizes based on how those ath­letes do in ac­tual games — amount to il­le­gal sports bet­ting.

The com­pa­nies said in their state­ment that the merger, which still re­quires fed­eral ap­proval, would help them more ef­fi­ciently lobby pol­i­cy­mak­ers for a “stan­dard reg­u­la­tory frame­work” for the rel­a­tively new in­dus­try, which grew out of the tra­di­tional sea­son­long fan­tasy sports com­pe­ti­tions played by mil­lions of Americans.

DraftKings CEO Ja­son Robins, who would take over as chief ex­ec­u­tive of the new com­pany, said the merger also would help the com­pa­nies de­velop a bet­ter prod­uct — like of­fer­ing more var­ied con­tests, de­vel­op­ing loy­alty pro­grams and im­prov­ing their web­site fea­tures.

“Be­ing able to com­bine DraftKings and FanDuel presents a tremen­dous op­por­tu­nity for us to fur­ther in­no­vate and dis­rupt the sports in­dus­try,” said FanDuel CEO Nigel Ec­cles, who would be­come the com­bined com­pany’s board chair­man.

The deal, which has been ru­mored for months, has raised ques­tions among an­a­lysts about whether the merg­ing of two com­pa­nies that rep­re­sent about 90 per­cent of the daily fan­tasy sports mar­ket would vi­o­late fed­eral anti-trust laws. Larger com­pa­nies like Ya­hoo, ESPN and CBS Sports dom­i­nate the broader fan­tasy in­dus­try, but are rel­a­tively small play­ers in daily fan­tasy.

The com­pa­nies didn’t ad­dress reg­u­la­tory con­cerns in their an­nounce­ment.

It’s also not yet clear how the merger will work on a prac­ti­cal level.

Fi­nan­cial terms were not dis­closed Fri­day and the com­pa­nies will main­tain their sep­a­rate brand names and op­er­a­tions un­til the deal is fi­nal­ized, likely later in 2017.

The com­bined com­pany is ex­pected to be co-head­quar­tered in New York and Bos­ton un­der the agree­ment. DraftKings is cur­rently based in Bos­ton and FanDuel in New York.

And seats on the board of di­rec­tors would be split evenly be­tween the two com­pa­nies, with three di­rec­tors from DraftKings, three di­rec­tors from FanDuel and one in­de­pen­dent di­rec­tor.

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