FanDuel and DraftKings lost more than $150m in 2016
Two firms face uncertain future should proposed merger be successfully blocked by the FTC
FanDuel and DraftKings lost a combined $151m in the first three quarters of 2016, according to a leaked investor note obtained by financial news outlet Axios.
In the nine months to September 2016, DraftKings lost $92m on revenues of $160m, while FanDuel posted an EBITDA loss of $59m for the 8 months to October 2016, on revenues of $91m.
The figures show just how important the proposed merger between the two companies could be for their ability to continue as a going concern.
FanDuel told investors its fully-diluted equity valuation was $1.2bn, implying a similar valuation for DraftKings, but warned that that number could be “adversely affected” should the merger not go through, as looks increasingly likely following the FTC’s recent judgement.
FanDuel said in another leaked note to investors recently it was not certain a combined company would be profitable even if the merger should be successfully completed.
The leaked figures will give a boost to smaller DFS companies like the recently-acquired DRAFT, or Boom Fantasy, which also recently raised capital.
Both firms have spoken about their ability to take on established rivals thanks to the inherent flaw in the DraftKings/FanDuel business model that forces them to rely on high-volume and professional players at the expense of recreational players.