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DraftKings, FanDuel merger could be ‘imminent’

Lucas Jackson/Reuters

A long-rumored merger between the country’s top fantasy sports startups could be getting closer to reality, with ESPN reporting Friday that a deal between DraftKings Inc. and FanDuel Inc. was imminent.

The sports network cited multiple unnamed sources in its report, saying an announcement could come as soon as early next week.

In a statement, Boston-based DraftKings said it would not comment on “rumor or speculation,” but left the door open for possible merger talks.

“As we have stated previously, a potential combination would be interesting to consider,” the company said. “There can be no assurances at this time that any discussion about a combination would result in an agreement or merger.”

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FanDuel, based in New York, could not immediately be reached for comment.

Such a deal would combine the two country’s largest providers of daily fantasy sports, digital contests that award cash prizes based on the statistical performance of real-life athletes.

Company executives have hinted at a combination for months. If completed, it could allow DraftKings and FanDuel to reduce their combined marketing and legal costs as the sector seeks to rebound from months of regulatory battles around the country.

DraftKings and FanDuel raised nearly $900 million in combined private investment in the summer of 2015, fueling a commercial blitz that briefly made the industry one of TV’s top advertisers.

The marketing push gained attention, but executives have acknowledged it also backfired after a controversy over industry employees playing against the general public prompted state and federal officials to begin probing DraftKings’ and FanDuel’s business practices.

The most serious challenge came from New York Attorney General Eric Schneiderman, who sought to ban DraftKings and FanDuel from the state for violating state gambling laws. The companies later persuaded New York lawmakers to legalize and regulate the games, but the negative headlines and new legal restrictions crimped the sector’s growth prospects.

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Massachusetts officials, meanwhile, said state law didn’t explicitly allow or prohibit cash-prize fantasy sports. Instead, state Attorney General Maura Healey established a suite of consumer protection regulations, including a ban on players under 21 and restrictions on company advertising.

Investors’ previously rosy views of the industry suffered as a result of the regulatory surge. DraftKings, for example, was valued at about $2 billion by investors when it raised $200 million in early fall 2015. But in February, as DraftKings fought for survival in New York, investor Twenty-First Century Fox Inc. said the value of its $160 million stake had dropped by about 60 percent.


Curt Woodward can be reached at curt.woodward@globe.com. Follow him on Twitter @curtwoodward.