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FANTASY SPORTS
Eric Schneiderman

Daily fantasy sites DraftKings, FanDuel announce merger

A.J. Perez, and Eli Blumenthal
USA TODAY

DraftKings and FanDuel, the nation's two dominant daily fantasy sports websites, announced Friday that they will be joining forces.

DraftKings co-founder Jason Robins will become the CEO of the new company and FanDuel CEO Nigel Eccles will serve as chairman of the board, according to the joint news release sent to USA TODAY Sports and other outlets.

Financial terms of the so-called “merger of equals” were not announced. The companies said the merger should close next year.

"For the last year or so we've been working really, really closely together on all the policy work," Robins told USA TODAY in an interview Friday afternoon. "We've had a very busy 2016 on the legislative front."

While there were on and off discussions about a merger for two years, it was through the lengthy legal battles that DraftKings and FanDuel began to further entertain the idea of teaming up.

"Through that process, we realized that we share an identical vision and we're really trying to accomplish the same goals," said Robins.

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The two companies said that collectively they have a combined 5 million users, a small fraction of the users playing fantasy sports on Yahoo and ESPN. According to the Fantasy Sports Trade Association, 57.4 million people are playing fantasy sports in the U.S. and Canada in 2016.

"Together we're going to have the resources to maybe actually have a shot to compete against those companies for those players."

The companies have revamped their services in recent months in a bid to attract new users, putting an emphasis on making the games more social. "Both businesses think quite broadly about that broader fantasy sports market, but even really the (general) sports market," said Eccles. "How do we drive more engagement to the sports."

Investors have pushed for the merger since at least June as legal and lobbying bills mounted with states such as New York challenging the legality of daily fantasy sports. New York Attorney General Eric Schneiderman announced a settlement last week that called for DraftKings and FanDuel to pay $6 million each after he alleged the two engaged in deceptive and false advertising practices.

The settlement in New York — which secured an injunction that prevented the two fantasy sites from operating paid games in the state for months — was one major hurdle toward a merger. The other was who would run the combined company: Robins or Eccles?

“These were both visionaries who started companies from nothing and built them into unicorns,” Daniel Wallach, a sports and gambling attorney, told USA TODAY Sports. “Neither wanted to be subservient to the other. That apparently has been resolved and both will have significant roles in the new company.”

The merger could still face possible legal hurdles, particularly in a Trump administration. President-elect Trump has signaled on the campaign trail that he would block AT&T's proposed $85.4 billion purchase of Time Warner over anti-trust concerns.

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"We're not lawyers, we've always discussed more in terms of what our plans are and what we plan to do," said Robins, stressing that it is the larger fantasy sports companies that "look a lot more like AT&T and Time Warner than we do."

Wallach said he expects some scrutiny from the Department of Justice and the Federal Trade Commission but doesn’t expect the feds to block the merger.

“While these are the two dominant companies within daily fantasy sports, there are hundreds of companies within the fantasy sports landscape as a whole,” Wallach said.

The merger could provide a spark for more moves, too. Sara Rayme, senior vice president of public affairs for the American Gaming Association said in a statement Friday, “DraftKings and FanDuel have sped up the debate on legalizing sports betting by demonstrating its popularity and mainstream nature. Fans have a desire to be invested in games. We’re building on the momentum created by DFS to remove the federal ban on sports betting.”

No immediate changes are planned for either service, which will continue to operate separately through the 2017 NFL season. "We think that the right approach is to be very thoughtful, to solicit feedback from our players," said Robins.

"We think that's ultimately the best way to earn the loyalty of our customers."

Follow A.J. Perez on Twitter @byajperez . Follow Eli Blumenthal on Twitter @eliblumenthal.

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