DraftKings and FanDuel, the preeminent companies in daily fantasy sports, announced Friday (Nov. 18) they have entered into a merger agreement, confirming weeks of speculation.

The former rivals will be joining forces in an effort to decrease operational costs and increase innovation in the rapidly-changing fantasy sports industry. The hope is that the combined resources will lead to an enhanced consumer experience in the form of new contest formats, improved social functionality and additional sports-focused content and experiences.

“We have always been passionate about providing the best possible experience for our customers and this merger will help advance our goal of building a transformational global sports entertainment platform,” DraftKings CEO Jason Robins said in a statement. “Joining forces will allow us to truly realize the potential of our vision, and as a combined company we will be able to accelerate the pace of innovation and bring a richer experience to our customers than we ever could have done separately.

FanDuel CEO Nigel Eccles added: “While both companies have accomplished much already, this transaction will create a business that can offer a greater variety of offerings, appealing to new users, including the tens of millions of season-long fantasy players that haven’t yet tried our products.”

But perhaps the biggest impetus for the merger is the ongoing legal and regulatory challenges that have embroiled both companies over the past year. Multiple attorney generals have questioned the legality of the contests and consider the games to be a form of gambling. As a result, both companies have paid millions of dollars in settlements that have significantly impacted profitability and stagnated growth.

The merger must still be approved by regulators, but the companies believe the transaction will be complete in 2017. Until then, both companies will continue to operate as separate brands and consumers won’t be impacted.

Photo: TechCrunch