DraftKings and FanDuel are merging into one company
November 25, 2016
Months of speculation and rumors have finally mounted, and the deal between DraftKings and FanDuel has reached full fruition. The two companies will merge into one, and the move has been labeled a "strategic merger of equals." While they have not announced how the company will structure their combined organization, the CEO of DraftKings, Jason Robins, will become the new CEO of the merged company. Meanwhile, Nigel Eccles, the CEO of FanDuel, will become a Chairman of the Board.
Where the Transition Becomes Interesting
Both of the brands plan to continue operation on separate sites into the foreseeable future, which eliminates the question of what the new name of the company would have been. Neither FanDuel nor DraftKings desired a departure from their brand, and the dual-operational structure could be compared to Seamless or GrubHub with their post-merger. The two companies have transformed into one, but each maintained their respective platforms because a lot of the customers have a strong brand loyalty, and that is similar to what we have with FanDuel and DraftKings. Most users will pledge die-hard loyalty to either one or the other.
When the Merger Takes Place
While fans of the two companies can expect the merger to occur in 2017, both platforms will stay separate until after the NFL season in 2017. This is because both companies enjoy lucrative profits during this time. Why have the companies chosen to merge? First, when they lobby for legalization combined together, it saves both time and money. They can work better with government officials to develop an agreeable regulatory framework. In the past, both companies spent separately to reach the same goals with explicit legalization across the United States. In addition, it leads to better cost savings in advertising because they can split the costs.
After the merger, the two companies will not be competing for customers, and they can advertise better. The merger will be more cost effective. As a result, you have a giant company able to bring in profits at a much more rapid rate than before, which will also please the investors of both companies.