DraftKings, FanDuel Merger Finally Has Light at End of the Tunnel

The much-anticipated merger between daily fantasy sports conglomerates DraftKings and FanDuel may not be far off.

FanDuel + DraftKings on the Horizon

Per The Wall Street Journal and numerous media outlets, mere discussion has quickly turned into action, with the two DFS heavyweights reportedly configuring their management positions at the top of the soon-to-be combined company:

If DraftKings and FanDuel merge, DraftKings CEO Jason Robins would be the new CEO.https://t.co/T3ei8dPyyK

— Recode (@Recode) November 1, 2016

The WSJ reports that the two companies are getting closer to a deal that would unify the two biggest daily fantasy sports companies in the industry, with DraftKings Chiefs Executive Officer Jason Robbins set to continue his same role as CEO of the newly joined companies, while FanDuel CEO Nigel Eccles could be slated for the company chairman seat.

Long Time Coming

There has been chatter about a DraftKings-FanDuel merger for months, with initial whispers coming out from company sources in mid-June. CalvinAyre.com has reported that those initial rumors have turned into very real discussions that are leading to an “imminent” merger of the two DFS giants.

Combining efforts started to make serious senses for DraftKings and FanDuel shortly after the start of the 2015 NFL season, when daily fantasy sports was called into legal question after both companies bombarded mainstream media in a marketing war.

Business boomed thanks to the media blitz, but with the new customers also came more attention from lawmakers. That spawned close-up inspection of both sites, as well as the daily fantasy sports industry as a whole, and has already led to numerous states taking a stand against DFS and deeming it illegal.

New York even temporarily blocked customers in the state, but progress has been made both in New York and many other states. Since the negative attention of a year ago, the daily fantasy sports industry has fought back and just 10 U.S. states currently deem the fantasy genre illegal, or at least have forced the top DFS sites out of the state.

Logic suggests both companies could be in financial trouble due to their legal battles, as well as the numerous investments they’ve accepted to promote growth. While still actively bringing in money, it likely made fiscal sense for the two DFS giants to combine forces in order to move past all legal roadblocks.

There could also be the other obvious agenda of creating one daily fantasy sports giant, which could eliminate competition between the two biggest sites and also swallow up all of the other smaller competing DFS entities.

Future of DFS

The how, why and when isn’t all quite clear yet, as much of the news surrounding the merger to this point is mere speculation. There will only be more speculation going forward, however, as fans of DraftKings and FanDuel, respectively, will wonder what a newly joined daily fantasy sports site will look and act like.

The two DFS sites still carry serious difference, from site look and interface to how they run most of their contests. For years, DraftKings held an edge in the mind of many by incorporating a “late swap” option with all of their DFS lineups. The company ditched that for daily fantasy basketball going into the 2016-17 NBA season, however; potentially a clear sign of a looming merger.

What the new FanDuel-DraftKings company and site will look and feel like is certainly something to ponder, but the big draw for these two companies is that they will no longer be competing against each other.

In fact, the two joining forces is expected to eat up 90% of the daily fantasy sports market. In addition, FanDuel and DraftKings joining forces could eliminate media and marketing spending, or at least cut it dramatically from what the two companies were spending while in competition with one another:

Impending DraftKings-FanDuel Merger Wont Move the Needle on Ad Spend https://t.co/7EQmKLR8qu pic.twitter.com/uC7shrEzZA

— Zesty Marketing News (@zesty_marketing) November 1, 2016

Could DraftKings-FanDuel Merger Be Axed?

Of course, as locked in as this merger appears to be, there is still the possibility of outside forces denying it’s existence.

Forbes recently suggested that even if a deal gets hammered out, there still remains a good chance it doesn’t happen.

Per the article, the Department of Justice and the Federal Trade Commission would “not likely approve” such a deal.

While that’s just one opinion, it’s understandable to assume the newly formed daily fantasy sports giant would be under scrutiny and potentially be required to abide by numerous regulations.

Good or Bad?

If the DraftKings-FanDuel merger goes through, it’s tough to say whether it’s positive or negative. It’s most certainly negative for competing daily fantasy sports sites and it also could potentially be bad for advertisers that have been making a killing off of both sites, split up.

For the player, this is a toss-up. There is a reason why daily fantasy sports users choose between the sites on a daily and weekly basis: because they both offer different pros and cons.

Combing the two eliminates that difference, as well as any real choice as to where people can play.

However, two great companies combining their efforts could also potentially offer one amazing product – possibly one where the two sites still co-exist within one larger product.

Exactly how it all shakes out remains to be determined. All we know for now is that the DraftKings-FanDuel marriage looks like its happening and DFS gamers need to prepare for whatever that ultimately is going to mean.