DraftKings and FanDuel in merger talks: reports

The twin titans of fantasy sports could soon become one.

Boston-based DraftKings and New York-based FanDuel are in talks about a possible merger, insiders have told Bloomberg. Reuters has also reported the news, citing unidentified sources.

Both companies let sports fans pay money to cobble together teams of athletes, then compete with other users for cash prizes.

DraftKings’ founders famously started the company in a Watertown bedroom, then built it into a billion-dollar powerhouse. They are now headquartered in Boston’s Financial District.

FanDuel dismissed the news of a merger in a statement to Boston.com.

“We get these questions every six months,” spokeswoman Justine Sacco told the site. “It’s total speculation, we’re not commenting on this.”

DraftKings hadn’t commented publicly by Monday evening.

It’s been a tough year for the fledgling online fantasy sports industry. The companies have argued their contests are games of skill, while regulators in several states have argued what they offer is actually illegal gambling.

Both companies have also grappled with payment processing companies that have refused to work with them for fear of running afoul of the law.

The unnamed sources tell Bloomberg that the companies see a merger as a way to join forces against those obstacles, while also saving money by not competing with one another.

A punishing blow came in March when DraftKings and FanDuel agreed to stop doing business in New York, which was among their largest markets.

Scrutiny of the industry ratcheted up last fall, when an employee at DraftKings made $350,000 in a match-up on the company’s rival site.

After high-dollar rounds of funding, the privately held companies have both recently seen valuations dip.

There has been lots of money to be made though in short-term online fantasy games. The flow of cash bankrolled a massive advertising campaign worth hundreds of thousands of dollars.

Investors in DraftKings include Patriots owner Bob Kraft.

Massachusetts Attorney General Maura Healey earlier this year completed online fantasy gaming regulations she called “the most comprehensive in the country.” The rules bar players under 21, limit per-player losses to $1,000 a month, and ban contests based on college sports. They go into effect July 1.