The two leaders of daily fantasy sports, DraftKings and FanDuel, have agreed to merge.
The companies announced the long-rumored deal Friday morning, with a pending transaction expected to close next year. Financial terms were not disclosed.
DraftKings CEO Jason Robins will be CEO of the newly-combined company, which will be co-headquartered in New York and Boston; FanDuel CEO Nigel Eccles will be chairman of the board, which includes three directors from DraftKings, three directors from FanDuel, and one independent director.
“We have always been passionate about providing the best possible experience for our customers and this merger will help advance our goal of building a transformational global sports entertainment platform,” Robins said in a statement. “Joining forces will allow us to truly realize the potential of our vision, and as a combined company we will be able to accelerate the pace of innovation and bring a richer experience to our customers than we ever could have done separately.”
Speaking at TechCrunch Disrupt SF in September, Robins said the two companies had been talking about a potential merger “on and off for the last year-and-a-half.”
In a press release, the companies said that teaming up will help reduce overall cost and get them closer to profitability. Both companies, which spent huge amounts of cash on advertising as they battled each other for users and brand recognition, have faced regulatory and legal hurdles for the past few years. Last month, the companies agreed to a $12 million settlement with the New York Attorney General’s office over false advertising practices.
DraftKings and FanDuel, which are completely banned in five states, had raised a combined $1 billion in investment from backers like Comcast, NBC, team owners, professional sports leagues, and top venture capital firms. The regulatory and legal issues have not only increased expenses, but also cooled their valuations.
“Being able to combine DraftKings and FanDuel presents a tremendous opportunity for us to further innovate and disrupt the sports industry,” Eccles said in a statement. “While both companies have accomplished much already, this transaction will create a business that can offer a greater variety of offerings, appealing to new users, including the tens of millions of season-long fantasy players that haven’t yet tried our products.”
It’s not clear if the companies will maintain their brands once the transaction closes, or if they’ll create a new combined company name.
While fantasy sports have been around for decades, the daily games have become more popular as of late. Rather than a typical season-long fantasy league that forces users to keep the same roster for months, FanDuel and DraftKings let people compile different lineups each week and pick from an array of money pools that have some serious payouts to top finishers. The companies make money by taking a small cut of each pool.