Fantasy sports rivals DraftKings, FanDuel to merge

After tussling for years to win customers, the two biggest USA companies in fantasy sports, DraftKings and FanDuel, said on Friday they are teaming up in a merger that will cut down on legal bills and advertising spending.

"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", Robins said.

But none of these management changes will happen until (and unless) the merger goes through, which the companies themselves do not expect to happen until the second half of 2017.

New York State attorney general Eric T. Schneiderman shut down FanDuel's site in October 2015 after a DraftKings employee won a jackpot at the rival company, claiming the companies may have been using inside information to help customers on each other's sites.

Following increasing scrutiny by state and federal regulators about whether the daily games constitute as gambling, the companies announced Friday they'd be joining forces.

DraftKings and FanDuel account for the vast majority of daily fantasy sports players, which they estimate to number around five million. Other investors include Shamrock Capital Advisors, Comcast's (CMCSA) NBC Sports Ventures and Comcast Ventures, Bullpen Capital, Pentech Ventures and Piton Capital. Daily sites, which allow players to assemble virtual teams and get results at a fast clip, are part of a broader fantasy sports universe, the attorney said. Currently, there are 228 million fans of major sports in the US and 57 million fantasy players.

The sites will also be competing against the season-long fantasy sports sites to acquire new users, he said, which will keep them competitive in both pricing and innovation.

FanDuel and DraftKings have agreed to merge.

An industry source recently told the Daily Dot that a merger probably wouldn't happen because so numerous top DFS players use both sites anyway and because FanDuel and DraftKings have different philosophies.

Industry experts say the merger will likely raise anti-trust concerns with regulators since the companies control almost 90 percent of the market.

The move creates a powerhouse in fantasy sports, where contestants pick a fantasy roster of professional athletes from leagues such as the National Football League and Major League Baseball and win prizes based on their actual performance.

The name of the joint company has not been revealed and terms of the agreement were not disclosed.

The tie-up could reduce costs as both companies separately fund legal defenses and lobbying for legislation to authorize fantasy sports in states that have declared it illegal. Also, fantasy sports sites do operate in IL despite legal challenges there.

DraftKings said the combined resources would allow both companies to "work more efficiently and economically with state government officials to develop a standard regulatory framework for the industry".

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