Fantasy sports industry takes a hit
FTC TO BLOCK FANDUEL-DRAFTKINGS MERGER
Federal regulators are challenging the planned merger of FanDuel and DraftKings, saying the combination of the two largest daily fantasy sports sites would create a company controlling more than 90 per cent of the market.
The Federal Trade Commission announced Monday it will file a complaint — along with the attorneys general of California and the District of Columbia — seeking to temporarily stop the deal, pending an administrative trial scheduled for Nov. 21.
Combining the one-time rivals would “deprive customers of the substantial benefits of direct competition,” said Tad Lipsky, acting director of the commission’s Bureau of Competition.
DraftKing’s Jason Robins and FanDuel’s Nigel Eccles, the CEOs of the two companies, said they’re disappointed by the FTC’s decision and are weighing their options. That includes filing their own legal manoeuver to block the FTC’s efforts, Robins and other DraftKings founders said in a message to employees.
“Please don’t let this regulatory setback distract you. DraftKings is poised for growth, whether or not we merge with FanDuel,” the company executives said. “In the days ahead, it will be business as usual as we prepare for the start of the NFL season.”
Daily fantasy sports contests are online games in which players build rosters of real-life athletes and vie for cash and other prizes based on how those athletes do in actual games. They grew in large part from a 2006 federal law that banned online gambling but created a specific niche for fantasy sports.
DraftKings and FanDuel have argued their merger doesn’t violate antitrust laws because the two companies represent a niche within the larger, multibillion dollar fantasy sports market in which ESPN, Yahoo and other major corporations have long dominated.
But the FTC doesn’t appear to share that view, concluding the two companies are “each other’s most significant competitor.”
“It all comes down to how you define the relevant market, and that’s where they fell short,” Daniel Wallach, a Florida attorney who specializes in gambling and sports law, said of the two companies. “And I’m not convinced they’ll do any better in a federal court.”