He will be replaced by his counterpart at Betfair, Jonathan Devitt, who will become chief marketing officer of the combined entity, Paddy Power Betfair. Devitt also has prior marketing experience at Paddy Power.
The decision to combine the two CMO roles comes as a surprise from Paddy Power Betfair, as it had been expected Thompson would remain with the business after the merger.
When the merger was first announced last year, Betfair and Paddy Power promised the combined entity would pursue a "dual brand strategy", keeping the two brands distinct and complemetary.
It is likely there will be other job losses after the £5bn merger, which completed on 2 February this year. It is not clear if there have been further job losses in the marketing department, and Paddy Power Betfair declined to comment.
Thompson joined Paddy Power in April 2015 after a stint as CMO of Thunderhead.com. He was formerly global director of innovation at Telefonica, and founded the mobile network Giffgaff while at O2.
It is understood that Thompson's departure will not necessarily lead to a consolidation of Paddy Power's agencies.