The two largest daily fantasy sports (DFS) enterprises, DraftKings and FanDuel, have agreed to merge. The transaction is expected to close next year, the companies said in a release.
The merger was not unexpected. Both companies have spent the last 18 months in the crosshairs of various state attorneys general, most notably Eric Schneiderman of New York, who sued the companies for violating the state's gambling laws.
The companies said the merger will enable them to better serve customers, who pay money to enter a team of actual sports players, winning points based on how those players perform in actual games. Winners can receive large cash prizes.
But the merger undoubtedly will help both enterprises control costs, which rose when they were forced to mount legal defenses in a number of states and later on to lobby various state legislatures for legal exemptions from gambling laws.
The companies from the beginning maintained they were exempt from gambling laws because their games were classified as games of skill, not chance. Many states took issue with that interpretation.
“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.”