DraftKings-FanDuel merger temporarily halted by FTC

Federal authorities believe deal would cause daily fantasy sports monopoly

The Federal Trade Commission, with the support of the attorneys general of the state of California and the District of Columbia, has moved to file a suit which would stop a proposed merger between daily fantasy sports firms DraftKings and FanDuel. The merger would consolidate 90% of the daily fantasy sports market in the United States. “This merger would deprive customers of the substantial benefits of direct competition between DraftKings and FanDuel,” said Tad Lipsky, acting director of the commission’s competition bureau. Meanwhile, in a joint statement by DraftKings CEO Jason Robins and FanDuel CEO Nigel Eccles, they 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.”

In the daily fantasy sports industry, customers pay a fee to select a lineup of professional athletes in an effort to win prizes based on the selected athletes’ on field performance. DraftKings, the top revenue earning company, and FanDuel, the most popular alternative, compete with each other to offer better prices, larger prizes and more variety of contests, according to the Federal Trade Commission. This deal was also postponed by the Federal Trade Commission because they felt the remaining 10% of the industry was unable to provide a meaningful substitute to the proposed DraftKings-FanDuel merger.

This is the latest in a string of legal battles the two companies have had to face. In the past, state attorneys general tried to limit the industry’s influence, believing them to be of equal standing with illegal sports betting operations. Over a dozen states have adopted new laws and regulations targeting the daily fantasy sports industry, and the two companies began thinking of merging in an effort to reduce legal costs.

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