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DraftKings, FanDuel - daily fantasy sports regroup after merger fail

The two DFS giants are ready for the 2017 NFL season
DraftKings, FanDuel, Daily, Fantasy, Sports
DraftKings and FanDuel will no longer merge. Getty Images

A merger between DraftKings and FanDuel, the two biggest daily fantasy sports companies in the United States, was thought to be a slam dunk deal earlier this year. In June, however, the Federal Trade Commission put an abrupt halt on the potential merger – citing antitrust concerns. If the two companies had merged, they would have owned 90 percent of the daily fantasy market in the U.S.

Scared off by more potential days in court, DraftKings – based in Boston - and FanDuel – based in New York - agreed to instead remain competitors – and suddenly, the heated daily fantasy war is back on.

In addition, DraftKings co-founder and Chief Revenue Officer Matt Kalish told Metro that the merger being back on the table anytime soon is not happening.

“It’s over with,” Kalish said. “We’re not pursuing a merger with FanDuel at all anymore. Our team has turned the page and we’ve moved on.”

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Had a merger occurred, DraftKings CEO Jason Robbins was in line to become the CEO of the new combined company. FanDuel CEO Nigel Eccles was going to be put in the chairman position of the company, but was not going to be involved in day-to-day operations. Instead, Eccles is now back in the business of trying to be one step ahead of Kalish and Robbins.

Eccles and FanDuel just last week shut down its site in the United Kingdom in order to focus on its bread and butter – American football.

“As we approach the NFL season, we are allocating all of our resources toward ramping up a U.S. product that consumers love and building out complementary fantasy sports products,” Eccles said (via The Independent – Ireland). “There are over 53 million people playing fantasy sports in the U.S. and we are investing all of our resources on that market.”

 

Return to glory?

Two years ago at this time, you couldn’t go one commercial break on ESPN without seeing a 30 second spot from either DraftKings or FanDuel. The two companies were at each other’s throats for gamers and dollars, and it resulted in one of the biggest advertising battles in the history of U.S. television.

Just because that was the peak of advertising, though, doesn’t mean that it was the peak period for the industry. Kalish and DraftKings insist that they’ve never been more popular.

“I think it’s already well past where it was two years ago,” Kalish told Metro. “We’ve been growing at a 30 percent clip, year after year. We have more users than ever. We have more players playing more contests than we’ve ever had. So the idea that 2015 was the peak point is not accurate. I think there was a lot of buzz around the industry then, because I think a lot of people were learning about it for the first time.

“We will be running a certain amount of advertising during football season because that’s our peak acquisition period, but it won’t be like it was two years ago. There will be a small window where we run a good amount of advertising – the first few weeks of the football season are very strong. So we’ll be in the market, but it won’t be anything like 2015 was. It will be a much more reasonable level that makes sense for our company.”

 

Adapt or die

Both DraftKings and FanDuel are introducing new gaming options for the 2017 NFL season. DraftKings is offering contests in which there is no player salary cap like the way the traditional daily fantasy games work. Instead, users can pick players in “pick ‘em” mode as users are asked to select players from “tiers” of available players.

FanDuel, meanwhile, is going back to the future and is now offering season-long fantasy leagues.

 

Not just football

While the NFL season remains, far and away, the most lucrative time of year for DraftKings and FanDuel – there are some niche sports that have begun to thrive in the daily fantasy world.

“PGA tour golf is up 50 percent over last year,” Kalish told Metro. “It lends itself perfectly for fantasy. NASCAR and UFC are very popular. These sports have big events that are a lot more scarce, they’re not even weekly – so when the events come around players get really excited about them. It’s something different and new.”

 
 
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