Both companies have faced legal battles in the US, where a number of states have moved to clamp down on their operations, arguing that their daily competitions amount to gambling, rather than a game of skill.
A spokeswoman for FanDuel declined to comment on the “total speculation” that the Edinburgh-based firm was in talks over a tie-up, while DraftKings said: “These rumors have existed for as long as both companies have been in operation.”
Last month, FanDuel auditor Deloitte raised “significant” doubts over its ability to continue as a going concern amid the ongoing legal challenges in the US.
The warning came as the company, which insisted it had sufficient funding to meet its working capital needs for the coming year, revealed its pre-tax losses jumped to $94.9m (£66.8m) for the 18 months to 30 June 2015, compared with a loss of $11m for 2013. It said the losses had widened on the back of a decision to “significantly” ramp up its investment in product development and marketing.
In its latest annual report, the firm – co-founded by five entrepreneurs including chief executive Nigel Eccles – said it had wound down operations in New York and Texas “until the legislative bodies in these states have determined whether or not to expressly legalise fantasy sports”.
FanDuel, one of Scotland’s most lauded technology start-ups that has been valued at more than $1 billion, has also suspended competitions in Nevada and reached “similar settlements in a couple of smaller states”.
The company is now preparing a launch in the UK, with players paying an entry fee of as little as £1 to scrap it out over the season, with 90 per cent of the fees going towards prizes and the remaining 10 per cent going to FanDuel.
Eccles said last month: “We’ve wanted to go international for some time and we’ll be launching in time for the new Premier League season. There are five million people that play fantasy sports in the UK, and there are even more who will be willing to play.”