DraftKings CEO Keeps Merger With FanDuel An On-going Option

September 16, 2016
DraftKings CEO Keeps Merger With FanDuel An On-going Option September 16, 2016 Fantasy Sport

DraftKingsJason Robins, the chief executive officer of DraftKings Inc, one of the biggest Daily Fantasy Sports (DFS) companies in the United States has indicated that the possibility of a merger with arch rival FanDuel is still being explored by the companies. He said that several discussions have been held on the issue over the past 18 months.

Robins clarified that a deal wasn’t likely in the near future, but added that there were many benefits to a merger between the two DFS operators, who together dominate the majority of the DFS market in the States. Robins made these comments during the TechCrunch Disrupt technology conference in San Francisco.

According to Robins, the merger will result in a larger player pool, lower legal costs and lower costs for lobbying as well as for advertising. He also observed that a merger would enable the companies to provide customers with better products at better price. Robins however noted that any deal between the two would be done only when it adds to shareholder value for both companies.

Wall Street Journal

According to Adam Krejcik, principal at research firm Eilers & Krejcik Gaming, the daily fantasy sports market is not large enough for two big companies but added that it was quite clear that a merger was not on the cards this year. Media sources had report earlier this year that the two companies were considering a merger. Investors of both companies have been supportive of the idea but the main obstacle has reportedly been the question of who would lead the merged company.

Industry experts have pointed out that anti-trust authorities might challenge the merger if it happens since the companies’ together account for around 90 percent of the daily fantasy sports market. While Robbins has been discussed the possibility of a merger on more than one occasion, FanDuel has so far remained silent on the issue and refused to release any statement on the matter.

DraftKings and FanDuel are currently lobbying extensively for changes in legal framework in states across the country as many of them have deemed daily fantasy sports to be gambling resulting in its ban. In the past few months, there have been positive changes as eight states have passed special legislative bills legalizing DFS, easing the pressure on the DFS companies.

In its latest funding drive, DraftKings said it raised $150 million which will be used for further expansion and development. Over its life of four years, it has received more than $600 million in funding and currently has around seven million customers. Both companies have estimated to have spent a combined $200 million in advertising in a bid to attract more players and capture more market share.

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