It is finally time to give some credit to the rumours that were circulating around the merger of Draftkings and FanDuel, the two big giants of Daily Fantasy Sports. The official announcement was made on Friday by both the companies, stating the fact that the merger would allow this organization to reduce the operational costs, as they plan to take on the regulators in the battle to keep their status legal. Financial terms however, were not stated by them, as the companies remain uncertain about long term plans too.
In a short span of two years, both the companies have managed to make millions of dollars through various sponsorship deals and investor money, which has caught the attention of the policymakers.
The merger doesn’t seem to affect the operational details, as the companies have agreed upon not changing the structure until the next NFL season. The headquarters of both the companies will remain the same for the time being, with Boston and New York respectively and the operations, game platforms and brand names will be kept different.
Although the main question would still be whether they can get a clearance on the regulatory approval. Both the companies combined represent a massive 90 percent of the entire Daily Fantasy Sports market, but the respective executives of the company still argued over the fact that two companies still play a small part in the overall fantasy sports market, where giants such as ESPN and Yahoo still dominate.
Jason Robins, who is currently the CEO of DraftKings will be the new chief executive of the combined organization, whereas Nigel Eccles the CEO of FanDuel will be the chairman of the board.
‘If you combine both the companies together, we have just over 5 million customers out of the total 60 million customers which are active. We really felt that we needed to do something for these customers and compete for more’ said Jason Robins, CEO of DraftKings.
‘It hardly makes any difference I feel, when we talk about the competition, the opportunities for growth are still present’ – Peter Schoenke, Chairman, Fantasy Sports Trade association.
The reactions however from various other Fantasy sports companies, industry individuals and players, remain mixed.
Modogoal’s founder Shergul Arshad, shared his views, by stating that although the merger will make it difficult for new companies in the market especially in the United States, it will be a good business internationally, where they compete against the established sports betting companies, which already have a good hold on the international market’.
The cost savings won’t be immediate, since the headquarters and operations still remain different for now.
Meanwhile, some of the big competitors are eagerly waiting for the results of the merger to see how it changes the market.
The CEOs of both the companies stated that the merger will eventually impact the resources and help them improve their products, which includes, giving a variety of contests, building loyalty programs and improving various other features of the website. Although no details were given to describe this more. The process of innovation too is set to speed up with the merger of these two companies.
The main question that is running through the minds of various lawyers including Dustin Hecker from Boston, is for how long can these companies successfully run in the market, without making any profit.
Many top players are now concerned with the fact that this combined organization would now increase the fees of the player, in order to compete on an international level. But most of these players remain patient and plan to wait, till the time the results actually show up.