DFS: DraftKings, FanDuel to merge. What does it mean?

By JOHN SAHLY – jsahly@shawmedia.com
Published:
FILE - In this Sept. 9, 2015, file photo, Bear Duker, a marketing manager for strategic partnerships at DraftKings, works at his computer at the company headquarters in Boston. Daily fantasy sports rivals DraftKings and FanDuel have agreed to merge after months of speculation and increasing regulatory scrutiny. The two companies made the announcement Friday, Nov. 18, 2016, saying the combined organization would be able to reduce costs as they work to become profitable and battle with regulators across the country to remain legal. (AP Photo/Stephan Savoia, File)
FILE - In this Sept. 9, 2015, file photo, Bear Duker, a marketing manager for strategic partnerships at DraftKings, works at his computer at the company headquarters in Boston. Daily fantasy sports rivals DraftKings and FanDuel have agreed to merge after months of speculation and increasing regulatory scrutiny. The two companies made the announcement Friday, Nov. 18, 2016, saying the combined organization would be able to reduce costs as they work to become profitable and battle with regulators across the country to remain legal. (AP Photo/Stephan Savoia, File) — Stephan Savoia

Last Friday, the two biggest companies in daily fantasy sports – DraftKings and FanDuel – announced they would merge into one organization.

The financial terms were not disclosed, though multiple reports say it will be a 50/50 split or close to it for the two DFS giants.

The two rival companies have grown in scale immensely as investors and sponsorships (including 28 of the 32 NFL teams) brought in millions of dollars. But with that growth has come increased scrutiny in the form of state and federal inquiries and legislation, and controversy with a DraftKings employee winning $350,000 on FanDuel in one 2015 contest, sparking what were ultimately unfounded accusations of insider trading. The two companies also spent hundreds of millions on advertising, with almost inescapable commercials at the start of the 2015 NFL season.

New York temporarily forced out both DFS companies, while Alabama, Delaware, Hawaii, Idaho, Illinois, Mississippi and Texas all issued rulings that DFS violated state gambling laws. Illinois' was a non-binding advisory opinion from Attorney General Lisa Madigan, and litigation is pending. The state House has considered a bill to legalize and regulate the industry.

With those legal issues, FanDuel and DraftKings have faced ever-increasing legal fees in order to keep their business alive. The Associated Press reported the merger had been rumored for months, and faces regulatory approval.

So what does it all mean for the average daily fantasy sports player?

In short, not much. At least not yet.

The merger announcement did not include much information on what this means going forward for players. The merged company does not have a new name. The two companies are retaining their respective headquarters – DraftKings is in Boston while FanDuel is in New York.

Operations and platforms aren't undergoing any immediate changes, either.

Both sites will also remain operational through the end of the 2017 NFL season.

"The main thing is that, in the near future, things are not going to change much or at all," Saahil Sud, a 27-year-old Bostonian widely considered the game's leading player, said to The Associated Press. "Given turmoil over [the] past year, having business as usual is somewhat reassuring. But it's too early to tell. I'm definitely not going to overreact. I'm just going to continue doing what I'm doing."

As to what the new brand from this unnamed company will look like – even bigger contests? A new player rewards program? A higher rake? Stay tuned.

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