FTC Puts Brakes on DraftKings, FanDuel Merger
The US Federal Trade Commission (FTC) has filed suit in an effort to block the proposed merger of daily fantasy sports giants DraftKings and FanDuel. This is very bad news for the beleaguered US-facing daily fantasy sports industry.
In filings associated with the lawsuit, FTC lawyers stated that their efforts are being made in order to maintain a competitive atmosphere in the US daily fantasy sports industry. That’s because most sources suggest that the DraftKings, FanDuel merger would create a mega-company that would control 90-95 percent of the US market.
Not surprisingly, FanDuel and DraftKings are planning to sick their army of attorneys on the FTC in an effort to shut the effort down completely. In a joint statement to their users, DraftKings’ CEO, Jason Roberts and FanDuel CEO, Nigel Eccles said:
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.
Attorneys for DraftKings and FanDuel dispute the idea that their merger would create a near-monopoly in the DFS market. That’s because they believe that they compete with traditional fantasy football providers and do not see daily fantasy sports as a separate entity.
The FTC, however, is not buying any arguments put up by the CEOs. In his own statement to the media, Tad Lipsky, acting director of the FTC’s Bureau of Competition said that the merger must be halted in an effort to maintain a competitive marketplace.
Both sides are clearly digging in for a legal battle that is far from being resolved.