DraftKings and FanDuel "are in talks about a merger," according to sources cited by Sherman & Soshnick of BLOOMBERG NEWS. Sources said that investors in both companies "have been pushing for a tie-up for some time." The companies offer "nearly identical products and spend a lot of money competing with each other," while they also face the same legal challenges that "threaten their business across the U.S." But the sources added that "no final transaction has been agreed, and the deal may still fall apart" (BLOOMBERG NEWS, 6/14). REUTERS' Baker & Bartz noted a deal "could reduce legal costs for the two companies," and it could "also lower their advertising budgets" (REUTERS, 6/13). The WALL STREET JOURNAL's Sharon Terlep notes a potential deal "would result in a single firm controlling more than 95% of the embattled" DFS industry. Investors in N.Y.-based FanDuel include private-equity firm KKR & Co, Google Capital and Comcast. Boston-based DraftKings "raised roughly half of its money from media companies and sports leagues" including MLB, the NHL and MSG (WALL STREET JOURNAL, 6/14).
PIECE OF THE PIE: In Boston, Dan Adams notes the companies’ revenues "are shrinking as more states ban their contests on the grounds that the games violate gambling laws." Fantasy Sports Trade Association member David Klein said, "The revenue isn’t coming in like it used to. It’s a smaller pie and it’s getting more and more expensive to continue in this space. There’s also very little that differentiates them. So with all these headwinds, it makes sense to merge if they can" (BOSTON GLOBE, 6/14). SI.com's Michael McCann noted a merger "would serve as dispiriting news for some employees at both places." It would "likely cost jobs, as certain positions at each company would become redundant." The two companies also are "mostly aligned in lobbying efforts in Congress." While a merger between FanDuel and DraftKings would offer certain business advantages, it could "raise concerns from a legal standpoint," as the most "relevant area of law implicated by a merger would be antitrust law" (SI.com, 6/13).
UNWELCOME DISTRACTION: On Long Island, Yancey Roy notes the N.Y. Gambling Association yesterday "filed an ethics complaint against" FanDuel and DraftKings. It said that the two have been been "lobbying the New York State Legislature without registering and reporting their activities." The association said in the complaint that the N.Y. Ethics Commission "should investigate lobbying activities" of both companies. However, an industry rep "denied the accusation, saying that the group has met all lobbying registration requirements" (NEWSDAY, 6/14).
