FanDuel and DraftKings discuss merger

FanDuel and DraftKings have held talks over a possible merger, according to Bloomberg.

Anonymous sources told Bloomberg that investors in both daily fantasy sports (DFS) operators have been pursuing a deal for some time.

A final agreement has not been reached and both operators declined to comment to Bloomberg.

A potential merger is something that has been mentioned by industry observers before, and could make sense at this time.

Both companies could centralise their efforts and combine forces in attempting to make DFS legal across the US and could also create one dominant force in the market, rather than leave them competing against each other with very similar products.

DFS has been ruled as either illegal or in line with gambling by 10 states in the last year, and states where FanDuel and DraftKings have either pulled or agreed to pull operations include Nevada, New York and Texas.

Legal Sports Report said DraftKings was recently unable to close a financing round.

This follows hefty financing rounds for both companies last year, as FanDuel closed $275m in Series E financing in July, with Google Capital and Time Warner Investments Group being among the investors.

DraftKings confirmed funding of $300m in Series D financing later in the same month, in a round led by FOX Sports and including Major League Baseball, the National Hockey League and Major League Soccer.

Gambling Insider was told in November that a majority of that funding was “on hold” due to the regulatory uncertainty surrounding the operators.

The last company-wide financial figures seen for both companies show that DraftKings generated revenue of $30m for the full year 2014 and FanDuel reported gross profit (turnover – cost of sales) of $66.5m for the 18 months ended 30 June 2015 and an operating loss of $77.8m.