FanDuel and DraftKings said to consider merger with Jason Robins, co-founder of DraftKings, as CEO.
FanDuel and DraftKings are considered the top providers of daily fantasy sports wagering in the industry today. Both companies have millions of members and offer contests featuring today’s top athletes. Both companies have also struggled over the past year as they have come to face opposition from lawmakers in several states across the US. In the past, there have been talks of the two companies joining forces. Now these talks have reemerged and would probably benefit each company as money has been lost due to legal battles, with a huge settlement to be paid in New York of $12 million after a recent suit was finalized. Both companies agreed to pay $6 million each in a false advertising lawsuit filed by New York AG Eric Schneiderman.
Now it seems that both companies have plans to join forces and would do so under the leadership of Jason Robins, the Co-Founder of DraftKings. Robins will reportedly take on the role as Chief Executive Officer for the firm as a combined entity with no new name released as of yet. It seems that the co-founder of FanDuel, Nigel Eccles, will have a position on the board as Chairman with executives of both companies being named as board members.
Investors Want a Merger
For months now, investors have been encouraging the two companies to merge. Both groups have games that are basically identical and could easily join forces to create a master DFS company. Players have access to fantasy teams created from real-life athletes and will win or lose based on the performance of the individual in real life. Millions have been spent in competition when now, the two companies could work together, stop ad spending against each other, and come together as master in the industry.
The main issue with a merger is who would be the leader of the new company. Those who have commented on the merger have not stated as to why Robins is believed to be the leader over Eccles. The plan also has the option to hire someone outside of the company to lead.
The insiders with information on the merger have stated that the new company will most likely try to raise money once the merger takes place to take advantage of what investors have been trying to see happen all along. Financially, both companies have been hurt due to having to promote against each other, pay legal fees and losing business in some states within the US. If the two combined, there would be less need to compete, as both companies cover about 90% of the industry. Both FanDuel and DraftKings are not talking about a merger at this time.
In 2015, each DFS company was busy raising money from investors at more than $1 billion each. FanDuel was working with Time Warner Inc. as well as KKR & Co. DraftKings found themselves working with the Kraft Group and Madison Square Garden Co. With a merger, the investors would all be involved in one company which would provide more potential for success.
For now, all of this is just speculation as both companies deny any merger talks and this is nothing we have never heard before. Insiders close to both companies claim the info is true and have spoken to several news outlets on the matter. It will be interesting to see if the merger does take place or if this is simply just speculation yet again and both companies will remain tough competitors.