Embattled fantasy sports companies DraftKings and FanDuel have agreed to merge, a move that they say will provide them with “operational efficiencies and cost savings” that will “accelerate [their] path to profitability.”
They didn’t disclose the terms of the deal. But DraftKings’ Jason Robins will be CEO while FanDuel’s Nigel Eccles will be chairman. They’ll be joined on the board by three directors from DraftKings, three directors from FanDuel, and one independent director.
“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 says. “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.”
The companies — which will be co-headquartered in New York and Boston — estimate that 57 million people in the U.S. play fantasy sports.
The merger comes less than a month after each company agreed to pay $6 million to settle a dispute with New York Attorney General Eric Schneiderman who had accused them of engaging in alleged false and deceptive advertising. He charged that they promoted illegal gambling, not games of skill.
As part of the settlement DraftKings and FanDuel agreed to clearly disclose terms and conditions for marketing promotions, expected winnings, and expected performance in the online contests, as well as resources for players at risk for compulsive gaming disorders. The companies also will be required to maintain a webpage that provides information about the rate of success of users in its contests.
Broadcasters may be relieved if the fantasy sports companies find a way to thrive. Broadcast advertising dropped 13.2% in September vs the same month last year “due to the virtual drying up of spend from FanDuel and DraftKings,” research firm Standard Media Index reported last month.
It estimated that the fantasy sports companies spent $100 million less on broadcast and cable ads in September 2016 than they did last year.