The two biggest US fantasy sports companies DraftKings and FanDuel on Friday said they would merge to cut legal bills and improve operating efficiency after tussling for years to win customers.
The tie-up could reduce costs as both companies separately fund legal defenses and lobbying for legislation to authorize fantasy sports in states that have declared it illegal.
Financial terms of the merger were not disclosed.
The companies had each been valued at more than US$1 billion before authorities, including New York Attorney General Eric Schneiderman, began a crackdown on the industry last year.
Fantasy sports have surged in popularity as Web sites have made it easier to create fictional teams of athletes from sports leagues and monitor statistics competitively.
Daily fantasy sports, a turbocharged version of the season-long game, has become a multibillion dollar industry. Players draft teams for one evening’s game, enabling fans to spend money on contests with a frequency critics compare to sports betting.
The deal will be structured as a merger of equals. DraftKings chief executive Jason Robins will become CEO, and FanDuel CEO Nigel Eccles will be chairman. Each company will receive three board seats and there will be one independent director.
The announcement comes after the companies’ US$12 million settlement over false advertising claims with the New York attorney general last month.
The companies have a history of aggressive advertising as they have battled for market share. That ad spending dropped significantly this year, and the companies said in a joint statement that the combined firm could expand spending again on advertising and customer acquisition.
The merger is subject to regulatory approval and expected to close in the second half of next year.
It is likely to attract the attention of antitrust authorities since it would combine two market leaders.
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