DraftKings and FanDuel, the two largest daily fantasy sports platforms, had agreed on a proposed merger in November, but in a sudden move Thursday, the companies announced that the deal is off.
The two companies have struggled to remain profitable as they faced numerous legal battles all over the country. The merger had been discussed for close to a year before it was agreed upon and both sides saw it as a way to move the industry forward.
But it was met with resistance from the Federal Trades Commission because the new company would have controlled 90 percent of the DFS industry.
In June, the FTC, along with attorneys general from California and the District of Columbia filed suit to block the merger.
The merger would have formed one company, lowering lobbying costs to get daily fantasy sports legalized in the United States. Now the two companies will continue to spend millions of dollars each year in court and in statehouses throughout the country.
FanDuel CEO Nigel Eccles released this statement:
“FanDuel decided to merge with DraftKings last November, because we believed that this deal would have increased investment in growth and product development thereby benefiting consumers and the greater sports entertainment industry. While our opinion has not changed, we have determined that it is in the best interest of our shareholders, customers, employees, and partners to terminate the merger agreement and move forward as an independent company. There is still enormous, untapped market opportunity for FanDuel, and we will continue to execute our strategy to grow our business and further expand the fantasy sports industry.”
While DraftKings CEO Jason Robbins explained:
Over the past few years, DraftKings has become the world’s leading fantasy sports company. We are recognized as a global sports entertainment brand and the industry leader in utilizing technology to bring our customers the best fantasy contests and products. We have a growing customer base of nearly 8 million, our revenue is growing over 30% year-over-year, and we are only just beginning to take our product overseas to the billions of international sports fans we have yet to even reach.
Robbins went on, saying he’s excited about the upcoming NFL season, always the most profitable time for sports gambling businesses,
Consequently, we believe it is in the best interests of our customers, employees, and investors to terminate our agreement to merge with FanDuel and move forward as a separate company. This will allow us to singularly focus on our mission of providing the most innovative and engaging interactive sports experience imaginable, forever changing the way fans connect with teams and athletes worldwide. We appreciate the continued loyalty of our players – it is you, our customers who have made this all possible – and we look forward to kicking off what is going to be our best NFL season yet!
If you were brand loyal to one of these companies and were suddenly worried about their impending merger, you’re in luck.
The fact that they couldn’t agree on a deal is also promising for other DFS companies to get in on the action.