DraftKings and FanDuel, the two biggest daily fantasy sports platforms that originally announced their intention to merge last year, have called it quits.
This comes a month after the FTC announced they would sue to block the merger to prevent a potential monopoly in the industry, as the combined company would control more than 90 percent of the U.S. market for paid daily fantasy sports contests.
Both companies have confirmed to TechCrunch they will be terminating the merger. Because the deal was never finalized, both sites were operating independently, and of course will now continue to do so indefinitely.
If approved, the merger made total sense. One benefit was that it would have been much more efficient (and cheaper) for one combined company to lobby to get daily fantasy sports legalized throughout the United States. Now, DraftKings and FanDuel will need to both work on these regulatory issues as separate companies.
A merger was also supposed to help the companies cut down on their crazy advertising spending. Over the last few years the two companies had spent hundreds of millions of dollars advertising against each other, which is definitely not good for business. So as the NFL season approaches (the most lucrative time of the year for both companies), it will be interesting to see how they approach this, considering pre-merger both were spending money on advertising at an unsustainable rate.
In a statement provided to TechCrunch, FanDuel CEO Nigel Eccles explained:
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. There is still enormous, untapped market opportunity for FanDuel, and we will continue to execute our strategy to grow our business and further expand the fantasy sports industry. We’d like to thank our partners and customers for their patience, support and continued loyalty over the past several months.” – FanDuel CEO Nigel Eccles
DraftKings also provided a statement to TechCrunch from their CEO, Jason Robins :
Over the past few years, DraftKings has become the world’s leading fantasy sports company. We are recognized as a global sports entertainment brand and the industry leader in utilizing technology to bring our customers the best fantasy contests and products. We have a growing customer base of nearly 8 million, our revenue is growing over 30% year-over-year, and we are only just beginning to take our product overseas to the billions of international sports fans we have yet to even reach.
Consequently, 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, our customers who have made this all possible – and we look forward to kicking off what is going to be our best NFL season yet! – DraftKings CEO Jason Robins.