Bloomberg News has reported that leading US daily fantasy sports (DFS) operators FanDuel and DraftKings are in merger talks, according to business insiders familiar with the situation.
Merger talks have been pushed by investors, who have seen the value of their venture investments dip amid the continued legal trouble that the DFS operators have faced in various US states.
Roughly a year ago FanDuel and DraftKings had been labelled as the ‘Fantasy Unicorns’ as the young companies had secured $1 billion valuations following multi-million $ funding rounds.
Leading investors in FanDuel include private equity firm KKR&Co, Shamrock Capital and media giant Time Warner Inc. DraftKings are backed by main investors Kraft Group and venture capital firm Raine Ventures.
US public and political Concerns relating to the legality of DFS services and products has seen FanDuel and DraftKings pull their services from ten US states. As a consequence, both companies have suffered steep player activity declines due to their legal constraints.
Currently both companies are awaiting New York legislators review of DFS services, which could see a conditional bill drafted for the legal/licensed framework of DFS state services.
As yet both companies have not commented on the reports of ongoing merger talks.