DraftKings and FanDuel Call Off Proposed Merger
The proposed merger between daily fantasy sports giants, FanDuel and DraftKings has been called off. Company officials called off the deal late Thursday but questions about the fate of both companies will be lingering for the foreseeable future.
Joining the two biggest names in the daily fantasy sports world seemed like a plausible, even a good, idea back in November when it was first announced, but that dream was almost immediately challenged by the federal government. Lawyers for the Federal Trade Commission (FTC) sued to block the merger on grounds that it would impede fair trade. After all, a DraftKings/FanDuel behemoth would have gobbled up as much as 90 percent of the US daily fantasy sports market.
Of course for the two companies, the merger offered the advantage of shared legal costs as both companies are continuously fighting to operate in almost every US State. But the challenges of fighting those fights and the FTC was apparently too much for the once ubiquitous daily fantasy sports firms.
In an announcement to the media, as reported on by ESPN.com, DraftKings CEO Jason Robins said:
We believe it is in the best interests of our customers, employees, and investors to terminate our agreement to merge with FanDuel and move forward as a separate company.
FanDuel CEO Nigel Eccles sounded optimistic in his own statement saying:
There is still enormous, untapped market opportunity for FanDuel, and we will continue to execute our strategy to grow our business and further expand the fantasy sports industry.
Unfortunately, both men must know that truth of what they’re now facing. Both FanDuel and DraftKings are facing tremendously expensive legal battles across the US and since neither company is currently profitable, they may have trouble raising new funds from investors. In short, the US daily fantasy sports market may open up considerably in the next few months and years.