DraftKings and FanDuel are merging, according to sources cited in an ESPN report tonight that claims the two leading daily fantasy sites are on the verge of consolidating more than 90 percent of the market into one company.
ESPN couldn’t get anyone on the record to confirm the news, but cited a highly placed source that told the network each company would equally split the revenue and expenses of the newly-formed corporation.
That’s on the heel of news that both companies are broke as hell. The settlement with New York’s attorney general—which cleared the way for the merger, according to ESPN—is so financially onerous for DraftKings and FanDuel that they reportedly needed to work on an installment plan for paying what they owe for the false advertising of which they were accused.
Within the past three weeks, the New York-based FanDuel has laid off more than 60 people, and both companies have acknowledged that they are months behind in their payments to vendors, especially to the array of public relations and lobbying firms that they have employed across the nation to persuade individual state legislatures to legalize daily fantasy games — the most critical component of rebuilding their business.
Given that a new, merged DraftDuel will have a near-monopoly in daily fantasy, the FTC is sure to investigate. Their best arguments for a merger being in the consumers’ interest—better odds, more payouts, et cetera—are the same that draw questions about how finely daily fantasy as a business toes the UIGEA. We can’t wait for that hearing, and wish the insufferable couple the best in its new life together.