Online Poker Might Benefit from DraftKings and FanDuel Merger

Posted on October 31st, 2016 by Jon Pineda
online poker daily fantasy sports DraftKings FanDuel

Not known to be the closest of pals, DraftKings’ Jason Robins (left) and FanDuel’s Nigel Eccles, are reportedly close to merging their companies, and that could be good for online poker. (Image: fortune.com)

Online poker enthusiasts in the US are upbeat on the news that daily fantasy sports (DFS) leaders DraftKings and FanDuel are readying to merge.

According to ESPN, the two DFS heavyweights are in talks to join forces. The rumored compact is being described as “imminent” according to ESPN’s sources.

“A potential combination would be interesting to consider,” a DraftKings spokesperson said in an email. “However, as a matter of policy, we don’t comment on rumors or speculation, and there can be no assurances at this time that any discussion about a combination would result in an agreement or merger.”

Financial news outlet Bloomberg is reporting that DraftKings CEO Jason Robins is expected to retain his title under the forthcoming 50-50 venture. FanDuel co-founder Nigel Eccles will serve as chairman of the board.

The potential unification could improve the odds of online poker expanding into additional states. The multibillion-dollar entity that would be formed through DraftKings and FanDuel coalescing is expected to gain the attention of federal regulators, and potentially Congress.

FTC, Congressional Oversight

Daily fantasy sports continue to operate in murky waters in numerous states around the country. Today, the internet contests have been deemed legal in just a dozen states, but officially banned in only five.

Should DraftKings and FanDuel align, the proposed merger would almost certainly prompt the Federal Trade Commission (FTC) to investigate whether the melding of the two companies creates a monopoly. Per market analysts, combined the two DFS companies control up to 95 percent of daily fantasy sports in the US.

The FTC is responsible for protecting consumers and preventing business practices that are anticompetitive. DraftKings and FanDuel will likely argue that joining will benefit the DFS player, as larger pools will create more payouts and larger distributions.

The federal discussion could also lead to a congressional review in Washington, DC. Though Congress seemed to show little interest in intervening in daily fantasy sports during a hearing last spring, the issue could increase in importance should the mega-merger be announced.

Takes Skill to Legalize

Once federal officials move to critique DFS, proponents will once again make their case that outcomes of daily fantasy contests are determined first and foremost by skill. In the eyes of DFS backers, classifying the games as non-chance endeavors allows it to utilize the traditional fantasy sports carve out in the Unlawful Internet Gambling Enforcement Act passed in 2006.

Internet poker supporters present a similar argument. They state that if DFS is based on skill, so is the card game.

DFS took steps to distance itself from poker in 2015. DraftKings ended its sponsorship of the World Series of Poker, and reps for the two DFS companies threw the card game under the bus.

“The reality is within poker, every time you shuffle the deck, it creates an element of luck,” FanDuel CFO Matt King said in March. “If you look at our data, the players that are good, are frankly consistently good. It is truly a game of skill.”

Of course, poker can easily counter King’s claims by highlighting a player like Daniel Negreanu. Over $32.6 million in live poker earnings likely didn’t come via luck.

If Congress decides to pass a federal DFS bill, poker might be smart to try and piggyback onto its skill-based back.

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