Here’s what we know about a possible DraftKings–FanDuel merger

Rival fantasy sports startups DraftKings and FanDuel, which offer daily fantasy sports competitions with cash prizes, are finally thinking about playing for the same team.

Reports surfaced Monday, beginning with a story in Bloomberg, that the two companies are discussing the idea of a merger.

Recode has confirmed those same discussions, but it sounds like a merger — assuming there will ever be one, which isn’t guaranteed — is not imminent. That is, you won’t wake up tomorrow to an announcement from “DraftDuel” or “FanKings.”

But while we don’t know how this will all shake out, here’s what we do know: DraftKings and FanDuel are offering the same product, bidding on the same partnership deals and fighting the same legal battles. They routinely get into bidding wars over media and partnership deals, unnecessarily running up prices just to stick it to each other. A tie-up of sorts, a la the XM and Sirius satellite radio merger back in 2008, makes total sense.

But a willingness to join forces has always been one of the key differentiators between the DraftKings and FanDuel CEOs, two people who don’t particularly like one another.

DraftKings CEO Jason Robins has been open to the idea of a merger for at least a year, which was easy to understand last summer when his company was considered the industry’s B-player behind FanDuel.

Hundreds of millions of dollars in funding and numerous team and league partnerships later, though, and Robins and DraftKings have significantly closed the gap. The two companies now feel more like equals, in part because they’re lumped into all the same regulatory challenges across the country.

FanDuel’s Nigel Eccles, on the other hand, has shown zero interest — both publicly and privately — in teaming up with DraftKings.

“I know they [DraftKings] repeatedly kinda mention that ... But I don’t see where the need is,” Eccles told Recode’s Peter Kafka in February at the the annual Code Media conference. “I think this market can support a lot of people.”

When Kafka interviewed him again in May, his stance remained the same. “You asked me that three months ago,” he laughed. “No real update. We’re very focused on our business.”

If a deal does materialize, it’ll be because these companies are desperate. Not desperate because business is bad, but because fighting each other is bad business.

There are better ways to spend hundreds of millions of dollars, which DraftKings and FanDuel are finding out the hard way. Both companies are using resources to battle lawmakers across the country that have labeled daily fantasy sports unregulated gambling, making it illegal in most states. Eccles said in May that between 20 percent and 25 percent of the U.S. population can’t legally use his product.

That fight is a long way from over. And it may go better with some teamwork.

Both DraftKings and FanDuel declined to comment.

This article originally appeared on Recode.net.

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