Com­bined FanDuel, DraftKings would cut costs

Boston Herald - - OPIN­ION - By JOR­DAN GRA­HAM — jor­dan.gra­ham@boston­her­

Daily fan­tasy sports giants FanDuel and DraftKings are on the verge of com­plet­ing a megamerger, ac­cord­ing to mul­ti­ple re­ports, that would cut the com­pa­nies’ re­dun­dant le­gal, reg­u­la­tory and mar­ket­ing costs, but would likely draw the at­ten­tion of an­titrust reg­u­la­tors, ex­perts say.

“It will al­low both com­pa­nies to pare back, to elim­i­nate du­pli­ca­tion in both of their com­pa­nies,” said Daniel Wal­lach, a gam­ing at­tor­ney. “They’re fight­ing mul­ti­ple bat­tles in state­houses across the coun­try, other civil lit­i­ga­tion ... They’re ba­si­cally com­pet­ing with each other for the same cus­tomer base.”

A merger be­tween Bos­ton­based DraftKings and New York’s FanDuel could be an­nounced as soon as this week, ac­cord­ing to re­ports from Bloomberg, ESPN, the Wall Street Jour­nal and oth­ers.

The merger talks, re­port­edly pushed by in­vestors of both com­pa­nies, have heated up as the two com­pa­nies con­tinue to fight the same le­gal cases and reg­u­la­tory bat­tles in states across the coun­try.

And while they’re both spend­ing money on the same side, the com­pa­nies have their sights — and mar­ket­ing dol­lars — trained squarely on each other’s users. “The lob­by­ing and lit­i­ga­tion ex­penses on a na­tional ba­sis have di­verted a sig­nif­i­cant amount from their bud­get,” Wal­lach said. Still, the com­pa­nies have been work­ing to­gether re­cently. In the Bay State, where daily fan­tasy was le­gal­ized and reg­u­lated by At­tor­ney Gen­eral Maura Healey, the com­pa­nies have hired the same lob­by­ists to shepherd leg­is­la­tion and reg­u­la­tions, but both have an army of lawyers to deal with a civil class-ac­tion suit.

DraftKings and FanDuel to­gether dom­i­nate the daily fan­tasy sports in­dus­try, hold­ing more than 90 per­cent of the mar­ket.

That, ex­perts said, will likely cause an­titrust reg­u­la­tors to take a close look at a merger.

“A merger be­tween the top two com­pa­nies in any mar­ket­place, there’s go­ing to be sig­nif­i­cant an­titrust scrutiny from the reg­u­la­tors,” said An­dre Bar­low, an an­titrust at­tor­ney.

Even if a deal is ap­proved, the an­titrust process could take as much as a year, mean­ing DraftKings and FanDuel would have to con­tinue com­pet­ing with each other by law.

The new com­pany would not only have to con­vince reg­u­la­tors to sign off, but fig­ure out how to put their past dif­fer­ences aside and work to­gether.

“There’s a lot of an­i­mos­ity and dis­re­spect for the other com­pany and the way they do busi­ness,” said Jeremy Levine, chief ex­ec­u­tive of Draft, a small DFS com­pany, who sold an­other DFS com­pany to DraftKings. “The com­pa­nies hate each other.”

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