Daily fantasy sports giants DraftKings and FanDuel announced Friday they have agreed to a merger.
According to ESPN.com's David Purdum, the merger is expected to be finalized in the second half of 2017, and the two sides are believed to have agreed to a virtual 50-50 revenue split.
Purdum and Don Van Natta Jr. of ESPN.com first reported in October that a deal was "imminent." The merger, which has been discussed since January, will be headquartered in New York and Boston under a yet-to-be-determined name.
In a joint press release, DraftKings CEO Jason Robins explained the rationale behind the merger, according to Purdum:
We have always been passionate about providing the best possible experience for our customers and this merger will help advance our goal of building a transformational global sports entertainment platform. Joining forces will allow us to truly realize the potential of our vision, and as a combined company we will be able to accelerate the pace of innovation and bring a richer experience to our customers than we ever could have done separately.
FanDuel CEO Nigel Eccles added:
Being able to combine DraftKings and FanDuel presents a tremendous opportunity for us to further innovate and disrupt the sports industry. 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.
The two CEOs haven't always seen eye-to-eye, which may have delayed the process. Eccles previously told ESPN the relationship was on the mend after the sides worked together against state regulations.
The latest update comes after Joe Drape of the New York Times reported in October the two websites are facing financial difficulty due to lobbying and legal costs as the daily fantasy sports industry fights to gain approval throughout the country.
Both companies have admitted they are "months behind" in their payments to vendors and are struggling with day-to-day obligations, according to Drape. FanDuel was recently forced to cut 60 people from its workforce, as well.
In October, New York Attorney General Eric T. Schneiderman announced a $12 million settlement agreement with the two companies—$6 million each—for false advertising after an investigation found their advertisements "consistently misled consumers":
Today's settlements make it clear that no company has a right to deceive New Yorkers for its own profit. DraftKings and FanDuel will now be required to operate with greater transparency and disclosure and to permanently end the misrepresentations they made to millions of consumers. These agreements will help ensure that both companies operate, honestly and lawfully in the future.
Drape reported that DraftKings and FanDuel each requested the settlement be paid through installments due to cash-flow issues.
Michael McCann of Sports Illustrated examined the potential merger from a legal perspective in June and stated the companies could face questions regarding antitrust law. The Justice Department and Federal Trade Commission will look into concerns about prices and a lack of competition.