DraftKings CEO Jason Robins said that a possible merger between his company and FanDuel is a “very interesting idea” that could add value for shareholders and provide customers with a better service at a better cost.
But he declined to rate the chances of it happening after recent reports of merger discussions between the two daily fantasy sports rivals.
“I don’t really have much more insight into how likely or not likely that would be,” Robins told USA TODAY Sports Saturday. “I certainly haven’t changed my view on how interesting it is.”
United as one or not, Robins still said he sees a clearer path forward for both now that the New York legislature passed a bill that legalizes and regulates daily fantasy sports. The bill cleared the New York senate early Saturday and will become law pending the signature of Gov. Andrew Cuomo, whose office provided input on the bill’s text.
It marked a huge development for both companies after being declared illegal gambling operations in several states since October. Upon Cuomo’s signature, Robins said they could begin operating in New York within 24 hours, getting back on their feet in that state following a crippling battle with Eric Schneiderman, the state’s attorney general.
Schneiderman last year told the companies to cease and desist, saying they violated the state’s gambling laws. In March, they reached a settlement in which the companies agreed to stop operating in the state, pending any legislation that could legalize them.
If New York hadn’t passed the bill, both companies could have stayed shut down in the state and missed out on a lucrative NFL season this fall. Robins said New York represents about 10% of his company’s revenues and is one of the nation’s biggest states for daily fantasy sports.
“It would have been very impactful to not be able to serve those fans this football season, and I’m just very happy that it looks like when the governor signs it into law, we’ll be able to do that,” Robins said.
Schneiderman issued a statement Saturday that said he will continue to pursue part of his lawsuit against the companies.
“As I have said from the start of my office’s investigation into daily fantasy sports, my job is to enforce the law,” the statement said. “Today, the Legislature has amended the law to legalize daily fantasy sports contests, a law that will be my job to enforce and defend. We will nevertheless continue to pursue our claims that DraftKings and FanDuel previously engaged in false advertising and consumer fraud.”
Other state attorneys general seemed to follow Schneiderman’s lead since late last year and determined daily fantasy sports to be illegal gambling, including Texas and Illinois.
Robins hopes that New York now offers a model for states to follow in reverse — making them legal through legislation that regulates them. In New York’s case, the companies would be licensed under certain restrictions and taxed at 15% of revenues. The companies previously were virtually unregulated.
“My hope is that (New York) really sets the tone for the rest of the nation,” Robins said.
Lobbyists in several states are working on behalf of the companies to legalize them in a similar fashion. Because of gambling laws, DraftKings currently isn’t operating in Alabama, Arizona, Hawaii, Idaho, Iowa, Louisiana, Montana, Nevada, New York, and Washington. In March, FanDuel announced it had reached a settlement to shut down in Texas.
“The bill’s passage in New York caps an extraordinary run of national state legislative progress in the last six months, with seven legislative bodies — Colorado, Indiana, Mississippi, Missouri, New York, Tennessee, and Virginia — now passing a fantasy sports bill this year,” FanDuel said in a statement Saturday.
In exchange for an entry fee, daily fantasy sports consumers get the chance to win cash jackpots based on the statistical performance of players in real-life games. The games are played over the course of a day or a week, with immediate payoffs, unlike traditional fantasy sports, which take place over the course of a full season.
The companies say they are not gambling and instead are games of skill, unlike traditional casino games that are based on luck.
The New York bill describes them as games of skill and represents a potential rebound for the companies after a difficult and expensive year.
“It has in some ways been a great challenge, but I also think it’s just been part of the process for an industry that’s been growing quickly and is entering into a phase where regulation is going to become necessary and going to become a reality,” Robins said. “Sometimes that transition can be a rocky one.”
It also can lead to big changes, including a possible merger. Robins said he’s found it to be an interesting concept for the past two years. When asked if discussions about it have heated up recently, he deflected, saying “there’s always discussions that go on” in general.
“Anything that has the potential to … add value to shareholders, I think it’s something I should explore,” Robins said. “I think on the surface it looks like it certainly would have that sort of potential.”
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