DraftKings, FanDuel Merger: What Does Merger Agreement Mean?

By in Daily Fantasy on

The merger is officially on. Per reports, daily fantasy sports industry giants DraftKings and FanDuel have officially come to an agreement to merge the two companies.

DraftKings, FanDuel Merger Arrives

Once competing against each other at the top of the DFS industry, the two biggest sites in daily fantasy sports will now join forces in an effort to combat legality concerns and maximize joint profits.

FanDuel issued an email to all of their members:

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.

We are very excited about the transaction and believe that combining our talent, technology, industry relationships, and resources with DraftKings will help us deliver a better and more exciting product to our players and fans. The deal allows us to invest in new products and services while leveraging our combined resources to bring you even more games, contests and offerings than are currently available.

As you know, both FanDuel and DraftKings are still relatively new companies and operate in a rapidly evolving and changing space. By combining and streamlining resources, we can accelerate work with government officials to continue to seek legal clarity to enable the continued growth of the industry.

While we can’t answer all the questions you may have right now, we do want to address what we can here:

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 like 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.

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

FanDuel

DraftKings also released a statement, via Twitter:

What it Means

For now, we really only know what FanDuel and DraftKings are telling us. It sounds like the two sites will make some type of a move in the not too distant future to combine their platforms, which at some point likely could mean they ditch one of the two websites.

It could even mean an entire rebranding that cuts both brands loose and starts from scratch. That, or the two companies could merely do what they’re stating – join forces and put their technology, resources, finances, etc together to form a giant company that works separately, yet together.

If that ends up being the case, the sites could still potentially run indivdually and cater to their very different fanbases.

But predicting the future of whatever DraftKings + FanDuel ends up being might be a waste of time. Both DFS sites have undergone major changes over the last few years, whether it be their game types, the way they brand themselves or who they allow to play their games.

One thing we know for sure, is that the current sports seasons (specifically NFL ad NBA) won’t be impacted by this merger, so any grand reveal of a new plan (site, brand mission or whatever it may be) probably won’t come until several months deep into 2017.

Structure & Plan

As far as the merger goes, The Wall Street Journal reports that the high level management is already in place. DraftKings top executive Jason Robbins is slated to take over as CEO of the new company, while FanDuel CEO Nigel Eccles will take over as the new company’s chairman of the board.

This is just confirmed speculation, of course, as a DraftKings/FanDuel merger has been in talks since the summer.

The merger will also place three directors from each site on the company board, while the new company will have offices split between New York and Boston. Per the report, the merger may not officially be done until late in 2017.

Tough Road Ahead?

The biggest reason DraftKings and FanDuel are merging has to be for financial and legal reasons – likely together. Both sites (and the entire daily fantasy sports industry) have been under constant scruity following an aggressive media blitz to promote their product in 2015.

A reported scandal involving DraftKings players possibly using insider information to gain a competitive edge only fueled the drama.

Since then, DraftKings and FanDuel have stood firm in their battle to keep DFS legal and have undergone some wins and losses. Their ongoing battle has even sparked interest in daily fantasy sports and clarity on all gambling laws on a federal level, which could be seen as an extreme positive or the beginning of the end.

The silvering lining, of course, is that this DraftKings and FanDuel merger suggests the two companies see light at the end of the tunnel. Perhaps the only way they get to that safe zone is with each other, or maybe joining forces just gets them there faster.

Ultimately, the long-term move was for DK and FD to merge, so they can eat up a massive chunk of the market and together fend off the smaller daily fantasy sports sites, rather than blow marketing spend and finite resources on competing against each other.

Changes Coming

The speculation can now officially begin as to what this DFS merger means and what a new company will look and feel like.

Daily fantasy sports players typically play on one of the two sites, or switch back and forth. Due to sharp difference in site style, game types, entry fees and competition, many can point out obvious pros and cons to either side.

The trick – should DraftKings and FanDuel opt for a total rebrand as one entity – would be figuring out how to combine forces without alienating fans/users that enjoyed one product or the other for a very specific reason.

The other question is what can we expect in the name? Is DraftDuel the easy fix? Maybe, maybe not. It would make sense as a true merger name, though, and it’d sure beat the heck out of FanKings or KingsDuel.

Whatever FanDuel and DraftKings end up deciding, it will be interesting to see it all unfold. One thing is for sure, however: the daily fantasy sports landscape officially changes forever with the announcement of DraftKings and FanDuel merging.

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