FTC to Block DraftKings and FanDuel Merger
Late last year, news broke that daily fantasy sports giants DraftKings and FanDuel had reached an agreement to merge. However, a pretty serious roadblock has just been thrown in the way. On Monday, the Federal Trade Commission will officially file a complaint to block the merger, per a statement released by the FTC.
The complaint, which will be filed with the Offices of the Attorney General in California and Washington DC, seeks a “preliminary injunction” on the merger and says “that the combined firm would control more than 90 percent of the US market for paid daily fantasy sports contests.” The FTC alleges that the deal is a violation of monopoly laws.
DK and FD Not Pleased
DraftKings and FanDuel released a joint statement regarding the news:
Today, the Federal Trade Commission (FTC) announced it will attempt to block the proposed merger between DraftKings and FanDuel.
We are disappointed by this decision and continue to believe that a merger is in the best interests of our players, our companies, our employees and the fantasy sports industry. We are considering all our options at this time.
As we work together to determine our next steps, we would like to thank DraftKings and FanDuel players, partners and employees for their patience, support and continued loyalty.
This development isn’t entirely unforeseen, as concerns regarding anti-trust laws had emerged since the two sides announced the deal last November.
Tad Lipsky, the FTC’s Acting Director of the Bureau of Competition, said, “This merger would deprive customers of the substantial benefits of the direct competition between DraftKings and FanDuel. The FTC is committed to the preservation of competitive markets, which offer consumers the best opportunity to obtain innovative products and services at the most favorable prices and terms consistent with the provision of competitive returns to efficient producers.”
DraftKings is the nation’s largest provider of daily fantasy sports in terms of entry fees and revenues. It offers a wide array of contests, including football, basketball, baseball, golf, soccer, NASCAR racing, hockey, mixed martial arts, Canadian football and eSports. DraftKings was founded in 2012.
FanDuel was founded in 2009 and is currently the second-largest DFS outfit. It offers contests for football, baseball, basketball, soccer, hockey and golf.
There are a number of smaller daily fantasy sports websites, though none comes close to generating the kind of revenue that DraftKings and FanDuel do. The complaint to be filed by the FTC alleges that the merger between the two DFS giants will limit the ability of those smaller sites to legitimately compete in the marketplace.
There is an administrative trial set to begin on November 21, 2017. In the meantime, the Commission voted to issue an administrative complaint and authorized staff to seek a temporary restraining order and preliminary injunction in federal court.
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