Don’t worry about FanDuel and DraftKings merging. These companies are going to be just fine. They may not be profitable yet, but all those smart investors can’t be wrong….right?
I’m no investment strategist, so I’ll leave the profitability of a quasi-gambling, “tech industry” business to Berkshire Hathaway. What I can discuss is how the little people will be affected by this merger.
There are layoffs coming. Name one merger on the corporate level where heads don’t roll. These guys are coming to a fancy cubicle near you if you are a grunt at DraftKings or FanDuel.
Best make up an extra 2000 monthly reports before the merger nears finalization in mid-2017.
Look as busy as possible and maybe even dig up some dirt on your supervisor as a backup plan.
The sharks of the DFS world are going to get out clean no matter how the merger goes too. These fellas have enormous bankrolls, so if things don’t work out, they will just move onto the next easy way to make money.
And there is always a fool willing to part with his money.
Not to mention all the options that are popping up as a result of daily fantasy sports getting all this attention over the past two years. Entrepreneurs all over the world are looking both for legal loopholes to gambling laws and ways to create revenue based on fantasy sports.
What about the poor fish of the fantasy world? The average Joes just looking to bet $10 a week?
Not much will change with this merger, depending on which site you like to use. It remains to be seen if the companies will operate under one umbrella, but with two different brands. Or if all the users are forced to move over to a single platform.
Please be DraftKings if so!
One of the reasons for this merger is supposedly to pool resources and keep costs down. So that should ensure low stakes games are readily available to the masses of fish out there. Even if new taxes put a hurting on the bottom line after DK and FanDuel were permitted to stay alive in states like New York.
Low stakes games are important to the DFS industry since they make way for anyone to play. Got a dollar in Paypal? Then you can join the fun. And you could even get lucky and win some real money as a result. Not likely, but no different than buying a lotto ticket.
The face of the DFS industry is changing from what we saw last year as DraftKings and FanDuel swaggered into your living room every six minutes during NFL telecasts. They had to bow down to government regulation. And they toned their message down from that of a drunk metal band at the end of the cul-de-sac, to a modest garage band who knows people like them but don’t want to bother the wrong folks.
Once this new mega DFS company finalizes the deal and figures out how to become profitable, they’ll have to play along with government regulations forever. Every business eventually has to face that reality once they grow to certain levels.
But just as importantly, FanDuel and DraftKings have to keep their customers happy. The big money sharks have to be able to make money with DFS. And the lowly fish have to always feel like they have a shot.
No matter how cool the user experience is on any daily fantasy site, if the vast majority of users feel strongly that they have no chance of winning, they will move on.