Are DraftKings and FanDuel set to merge?

Are DraftKings and FanDuel set to merge?

Tuesday, June 14, 2016
Tax and licence costs could prove overwheming for the operators

DraftKings has responded with caution to reports it is in talks with rival FanDuel over a possible merger.

In a statement released to TotallyGaming.com, the daily fantasy operator (DFS) said it would not comment on speculation, a line shared by FanDuel.

Both the Reuters and Bloomberg news agencies reported on Monday that talks have been going on for some time, with investors from both brands involved. The sources added that no final transaction had been agreed, and it is possible that the proposed deal may not progress.

DraftKings and FanDuel are the two dominant operators in the US DFS sector, with more than 50 million players regularly entering contests. However, their potential has been halted, and their valuation decreased, in the last year after DFS games were ruled to be illegal betting in a number of US states, including New York.

Femi Wasserman, DraftKings’ vice-president of corporate communications, said: "These rumours have existed for as long as both companies have been in operation. We don't comment on speculation."

TotallyGaming.com says: “The DFS sector has had a dreadful few months and must change significantly if it is to survive. These two operators were able to build their businesses through huge marketing costs, but spend on taxation and licence fees could be huge in those US states that regulate rather than ban DFS contests. Money must be saved, and a merger could offer the best chance of survival.”

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