The governances of leading US daily fantasy sports operators’ FanDuel and DraftKings have issued statements confirming that their planned merger has been called off.
The prospects of creating an ‘outright DFS market leader’ had hit a roadblock last June when the US Federal Trade Commission (FTC) detailed that it could not recommend the FanDuel-DraftKings merger as the combination would control 90% of the DFS market.
Both FanDuel and DraftKings governances were set to contest the FTC’s decision, stating that the combined enterprise would have ambitions beyond DFS. However, yesterday the two DFS operators stated that they would not push forward with the intended merger.
FanDuel Founder and Chief Executive Nigel Eccles commented in a statement on the FanDuel website.
“FanDuel decided to merge with DraftKings last November because we believed that this deal would have increased investment in growth and product development thereby benefiting consumers and the greater sports entertainment industry. While our opinion has not changed, we have determined that it is in the best interest of our shareholders, customers, employees, and partners to terminate the merger agreement and move forward as an independent company,”
DraftKings CEO Jason Robins released the following statement: “We believe it is in the best interests of our customers, employees, and investors to terminate our agreement to merge with FanDuel and move forward as a separate company. This will allow us to singularly focus on our mission of providing the most innovative and engaging interactive sports experience imaginable, forever changing the way fans connect with teams and athletes worldwide. We appreciate the continued loyalty of our players – it is you who have made this all possible – and we look forward to kicking off what is going to be our best NFL season yet!”
DFS and Tech industry insiders believe that both companies will likely re-evaluate their options and strategy. To date, both operators have been heavily backed by leading US Tech venture capital firms and media owners, spending millions of dollars on TV advertising and high coverage sports sponsorships in what has become an expensive two horse market. Both FanDuel and DraftKings have yet to become earnings effective for investors, adding further pressure on the companies.