FanDuel and DraftKings confirm "merger of equals"
Deal expected to close in H2 2017, although likely to face anti-trust review
FanDuel and DraftKings have announced a “merger of equals”as the two DFS market leaders look to overcome regulatory hurdles and recent cashflow problems.
DraftKings CEO Jason Robins will become CEO of the newly combined company and FanDuel CEO Nigel Eccles will become chairman of the board.
The company’s board will be composed of those two plus three directors from DraftKings, three directors from FanDuel and one independent director.
Both DraftKings and FanDuel will continue to operate under their respective brand names for the “foreseeable future”, with the deal expected to close in the second half of 2017.
The firms said the cost efficiencies from the deal would allow for further growth and innovation in the industry, with their enlarged scale enabling more investment in UX and new products and features.
They also said the tie up would help them consolidate lobbying spend, as they push toward a standard regulatory framework for the industry across the US.
“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,”said DraftKings CEO Jason Robins.
“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.”
The operators also played down anti-trust fears ÛÒ widely touted as the main obstacle to the completion of a merger ÛÒ saying they intend to keep fees “competitive”.
“The merger will not affect our obvious incentive to continue growing the DFS space through guaranteed prize pools and attractive commission levels”, the firms added.
An anti-trust review could come from the Federal Trade Commission or the Department of Justice, although the merged firm could try and claim that DFS is one of just a dozen options under ‘sports gaming,’ alongside season-long fantasy leagues, according to sports law professor Ryan M. Rodenberg.
The company will be co-headquartered in New York and Boston.