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DraftKings, FanDuel Rumored To Be Eyeing Merger

DraftKings, FanDuel Rumored To Be Eyeing Merger by Kyle Stanford, PitchBook

DraftKings and FanDuel, two daily fantasy sports (DFS) platforms that exploded onto the scene with a barrage of online and TV marketing before the start of last year’s NFL season, are reportedly in talks about a merger. Each of the sites was valued at over $1 billion with its most recent private financing—DraftKings saw its value reach $2 billion with a $200 million investment in August. Combined they have raised almost $1 billion in funding, though the millions spent on advertising, the split of revenues and high costs of the legal battles may have become too much to bear separately.

A merger between the two has been long speculated. Such a move would consolidate competitors that offer largely the same service, as well as bring together a powerful group of investors, which includes large funds like Fidelity and Wellington Management, and sports leagues and networks like Fox Sports, MLB and the NHL. With in-person sports betting almost exclusively limited to Nevada, a state that has outlawed the daily fantasy sites, the sports leagues and networks backing DFS have a huge amount to gain if they can win the legal battle and get the sites available nationwide. A merger may help those investors use their collective influence more efficiently by fighting on the same team, so to speak.

DraftKings and FanDuel together already hold a large majority of the DFS market (it was estimated to be up to 95% in the past). That could also be a slight hold-up with regulators, especially with past market estimations that have pegged industry revenue to hit $10 billion by 2020.

Below are the financing and valuation histories of the companies, along with select investors of each:

DraftKings
Source: PitchBook
FanDuel
Source: PitchBook
DraftKings, FanDuel