FanDuel and DraftKings Merger Confirmed (But Never Happened)

FanDuel and DraftKings have finally confirmed the rumors that have been circulating for months: a merger between the two companies is imminent. Today’s news comes straight from the horses’ mouths via e-mails sent out by both companies.

The e-mail from FanDuel reads in part:

“We have some exciting news to share with you. Today, FanDuel and DraftKings announced they entered into a merger agreement. We believe that this deal will allow us to combine the best of both companies to better serve the fantasy sports community and provide you, our customers, an even better user experience.

…

1) With NFL, NBA, and NHL seasons well underway, both sites will remain operational through the conclusion of the current seasons, and you can continue to play on FanDuel as you have always done. As we look forward to future seasons and beyond, we plan to bring together the best of each platform to better serve you.

2) This deal will not have an impact on our contests, prizes, and offerings. We will continue to provide you with the same quality of contests you’ve become accustomed to.

3) Our live events will go on as planned. Our World Fantasy Football Championship is just around the corner and we will still be hosting our annual Playboy Football Championship. For those that have not yet participated in these events, this is your year. Check them out at www.fanduel.com/wffc or www.fanduel.com/playboy-football.

We will keep you updated with developments as they become available and thank you for your continued support.”

Multiple sources are reporting that DraftKings CEO Jason Robins will be the CEO of the new entity while FanDuel CEO Nigel Eccles will take over as chairman. This arrangement should work well as it will allow Robins to run the company on a day-to-day basis, but still, leave Nigel Eccles with plenty of influence as the CEO reports to the board.

One of the questions that have long accompanied merger speculation involves whether or not the feds will approve the merger. FanDuel and DraftKings together dominate the daily fantasy market in the US. Fears of anti-trust laws (which encourage competitive markets) being invoked the prevent the merger has been raised by many ahead of this merger.

Although FanDuel and DraftKings are the two biggest fantasy sports companies by a long shot, they still only account for roughly 5 million of the 57 million people who participate in fantasy sports.

Sports and gambling attorney Daniel Wallach gave his opinion on the matter. He stated that while he does expect some scrutiny from the Department of Justice and Federal Trade Commission, he ultimately believes the merger will be approved. There are still “hundreds” of companies involved in daily fantasy sports.

A merger between FanDuel and DraftKings makes sense on two fronts. First, the two companies offer a near-identical product. The differences between the two are minor. Merging will be relatively painless given that. Second, a merger will allow them to stop committing so much money competing with one another and instead redirect their resources to fighting regulatory battles in states that still do not permit real money fantasy sports.

DraftKings states that both companies will continue to operate under their respective brand names “for the foreseeable future.” Both companies have also stated that they will continue with the 2016/2017 NFL season as usual. Little will change immediately from the players’ point of view.

DraftKings expects the deal to close sometime in 2017 once it has received regulatory approval. In the meantime, you can continue playing as normal with no interruptions in service. They have also pledged not to raise commissions (make it more expensive to play) as both companies are well aware that players can easily switch to a different platform if the new entity becomes significantly more expensive than the competition.