Bloomberg has reported that merger discussions have been going on for quite some time between daily fantasy sports companies Fan Duel and DraftKings but nothing is guaranteed or permitted as of yet.
Both companies asked not to be labeled because the negotiations are confidential. They both declined to comment on the situation.
Over the past decade, daily fantasy sports, which is like a turbocharged form of the season-long game has boomed. Online participants or players have the ability to construct a fantasy team in just one night or throughout a weekend. It has become more popular as technology has become more advanced.
Fanduel and Draftkings, two of the top daily fantasy sports companies, have had difficulty negotiating with several states because the state regulators say that it’s illegal gambling. The sites are combatting regulars, the DFS companies are also combatting each other with the investment of million dollars on advertising. In March, the companies agreed to ban New York residents from participating in online contests.
If a deal is made, it would be quite beneficial for both companies as they both need to defend themselves as legal obstacles. Plus, they need to solicit for legislation to make the online contests legal in the several states that have asserted them illegal. If these challenges are resolved, FanDuel and DraftKings can significantly reduce legal costs and advertising budgets. Both million-dollar companies have spent an immense amount of money in the past few years combatting for market share against each other.
DraftKings has raised $345 million in venture capital funding. Meanwhile, FanDuel has raised $361 million with the assistance of sports broadcasters, teams and owners putting up much of that $806 million in funding.
Fanduel is restricted in the states of Arizona, Idaho, Hawaii, Iowa, Louisiana, New York, Mississippi, Nevada, Texas, Montana and Washington. In March, Virginia passed a bill making it the first to U.S state to legally regulate fantasy sports.
If regulators agree that daily fantasy sports is in its own category, a merge can be disapproved.
