Two of the biggest daily fantasy sports websites have announced a merger.
DraftKings and FanDuel will become one entity. The companies said that the merger will allow a greater investment in “growth opportunities and an accelerated path to profitability.”
“We have always been passionate about providing the best possible experience for our customers and this merger will help advance our goal of building a transformational global sports entertainment platform,” DraftKings CEO Jason 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.”
Robins will be CEO of the new company and FanDuel CEO Nigel Eccles will be chairman. Eccles had this to say about the merger:
Being able to combine DraftKings and FanDuel presents a tremendous opportunity for us to further innovate and disrupt the sports industry. 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.
Previously, the two CEOs haven’t seen eye-to-eye, but they have put their differences aside to create the biggest sports daily fantasy website in the history of mankind.
In October, New York Attorney General Eric T. Schneiderman announced a $12 million settlement agreement with the two companies. This was for $6 million each because of false advertising. An investigation found their advertisements on both sites to “consistently misled consumers”:
Today’s settlements make it clear that no company has a right to deceive New Yorkers for its own profit. DraftKings and FanDuel will now be required to operate with greater transparency and disclosure and to permanently end the misrepresentations they made to millions of consumers. These agreements will help ensure that both companies operate, honestly and lawfully in the future.
It was a long road for these two companies to overcome and they may still have a few barriers ahead of them. Back in June, Michael McCann of Sports Illustrated, spoke about their possible merger breaking antitrust laws:
While a merger between FanDuel and DraftKings would offer certain business advantages, it could also raise concerns from a legal standpoint. The most relevant area of law implicated by a merger would be antitrust law. This is the area of law that regulates competition between businesses and ensures consumers are not adversely impacted by anti-competitive business behavior on the part of competitors. Generally, antitrust law is skeptical of coordinated commercial activity by competing businesses if that coordination is likely to raise prices or diminish the degree of innovation normally found when competitors are forced to compete.
Only time will tell what will happen with these two giants.