At long last, it’s official: DraftKings and FanDuel are merging to create an online fantasy sports behemoth.
DraftKings announced the tie-up on its website, after weeks of rumors and news reports based on anonymous sources. Financial terms weren’t disclosed, but the news release calls the deal a “strategic merger of equals.”
Here’s what we know about the deal:
1. DraftKings CEO Jason Robins (pictured above) will keep that role in the combined company and will have a board seat, while FanDuel CEO Nigel Eccles will become chairman of the board. In addition, three directors from each company will sit on the board of the new entity, which will also have one independent board director.
2. The company will have dual headquarters in Boston (DraftKings’ home base) and New York (FanDuel’s home).
3. The merger is expected to close in 2017, but it must secure regulators’ blessing first.
But there are a lot of unknowns at this point. Among them:
1. Will the companies be able to convince anti-trust authorities to sign off on the deal? The two companies together control about 90 percent of the paid fantasy sports market, according to various media reports.
2. What will the combined company be called?
3. How well will the two rivals mesh, and who really has the decision-making power?
But the companies have spent heavily on ads to win customers, and the resulting scrutiny of daily fantasy sports from regulators nationwide has led to mounting legal and lobbying costs. Ultimately, DraftKings and FanDuel decided the merger was their best option. In the press release, they said the union allows them to save costs, pool resources for working with government officials, operate more efficiently, invest more in new products and features, and reach profitability faster.
DraftKings and FanDuel have raised more than $1 billion combined from investors, according to Crunchbase figures. Their backers include Time Warner/Turner Sports, NBC Sports Ventures, 21st Century Fox, Revolution Growth, Google Capital, the National Hockey League, Major League Soccer, and Major League Baseball.
FanDuel was founded in 2009, and DraftKings was founded three years later.