Fantasy sports firms agree on 'merger of equals'

New York (AFP) - Two major fantasy sports operators, DraftKings and FanDuel, announced plans Friday to merge as part of an effort to boost an industry which is growing rapidly but facing regulatory hurdles.

The deal described as a merger of equals aims for "operational efficiencies and cost savings" as well as "a greater focus on developing new products and features."

Financial terms of the deal were not disclosed.

The move creates a powerhouse in fantasy sports, where contestants pick a fantasy roster of professional athletes from leagues such as the National Football League and Major League Baseball and win prizes based on their actual performance.

"Being able to combine DraftKings and FanDuel presents a tremendous opportunity for us to further innovate and disrupt the sports industry," said FanDuel chief executive Nigel Eccles.

"While both companies have accomplished much already, this transaction will create a business that can offer a greater variety of offerings, appealing to new users, including the tens of millions of season-long fantasy players that haven't yet tried our products."

DraftKings CEO Jason Robins will head the combined company and Eccles will become chairman of the firm, to be co-headquartered in New York and Boston, with the deal expected to close in 2017.

The industry had been in a period of torrid growth prior to a challenge last year New York state officials, which claimed it was engaging in illegal gambling operations.

Similar crackdowns took place in a number of other states, including Illinois and Texas.

New York's state legislature however approved a bill in August that allows fantasy sports operations in the state, averting a major crisis for the firms.

The bill taxes the industry and explicitly states that fantasy sports is not gambling, even as it placed oversight of fantasy sports under the New York state gaming commission.