The Daily Fantasy Sports (DFS) industry in the United States has been rocked during the last 12 months as a number of state attorney generals have banned DFS operators from offering cash games in their respective states as they allege that DFS games are similar to casino games and hence DFS operators must have a license to operate. Nevada, Illinois, Delaware and Texas are some of the states that have banned DFS games.
DraftKings and FanDuel are the two biggest DFS operators in the United States and together have more than 90 percent of market share. As a result, the crackdown on the DFS industry has significantly impacted their profits and they have paid out millions of dollars in lawsuits in an attempt to prove that DFS games are games of skill and should not be treated similar to casino games.
There were reports earlier this year that DraftKings and FanDuel were in talks for a possible merger but there wasn’t a lot of progress made on the deal and some analysts believe that one of the reasons for the lack of progress was due to the strained relationship between Nigel Eccles, CEO of FanDuel and Jason Robins, CEO of DraftKings. However recent reports doing the rounds suggest that the two CEO’s have managed to put their differences aside and have worked out an agreement that could result in the possible merger of the two companies within a very short period of time.
In a statement, gaming attorney Jeff Ifrah from Ifrah PLLC said “There are of course good arguments about why such a merger is in fact in the interest of the consumer: pooled liquidity, higher prize pools, etcetera. But that has not always been enough to shut down FTC scrutiny.”
Should the two companies decide to move ahead with the merger, it would be subject to regulators who will have concerns over the deal as it would allow the new entity to have a monopoly over the DFS market which would be against FTC regulations. DraftKings and FanDuel are yet to officially confirm the news of an imminent merger.
A representative for DraftKings recently released a statement confirming once again that a potential merger is an interesting proposition but refrained from confirming rumor and speculation as it was against company policy. The representative also said that the discussions between the two companies did not mean a merger is guaranteed to take place.