Duo plots strat­egy

New York Post - - BUSINESS - By JOSH KOSMAN jkos­man@ny­

FanDuel and DraftKings will fight an ex­pected move by Wash­ing­ton reg­u­la­tors to block the merger of the daily fan­tasy sports sites, The Post has learned.

The com­pa­nies, which con­trol about 90 per­cent of the daily fan­tasy sports mar­ket, ex­pect to ar­gue that each loses money and there­fore could not be pro­vid­ing its ri­val with vi­able com­pe­ti­tion, a source close to the com­pa­nies said Mon­day.

Ear­lier in the day, the Fed­eral Trade Com­mis­sion said it in­tended to sue to block the merger — which was an­nounced last Novem­ber.

In ad­di­tion, the Cal­i­for­nia and Wash­ing­ton, DC, at­tor­neys gen­eral are ex­pected to join the suit.

Daily fan­tasy sports play­ers will be harmed by the merger as the com­bined en­tity will con­trol 90 cents out of ev­ery dol­lar paid in DFS con­tests, the FTC said.

“This merger would de­prive cus­tomers of the sub­stan­tial ben­e­fits of di­rect com­pe­ti­tion be­tween DraftKings and FanDuel [in­clud­ing larger prize pools],” said Tad Lip­sky, act­ing di­rec­tor of the FTC’s Bureau of Com­pe­ti­tion. “The FTC is com­mit­ted to the preser­va­tion of com­pet­i­tive mar­kets.”

One ques­tion sure to be raised in any court bat­tle is whether DFS was a mar­ket dis­tinct from sea­son-long fan­tasy sports.

The merger par­ties main­tain sea­son-long fan­tasy sports have a much larger player base, per­haps as many as 40 mil­lion, and that more com­pa­nies com­pete in that genre — in­clud­ing Ya­hoo Sports, ESPN and CBS Sports, ac­cord­ing to a source close to the mat­ter.

DFS has roughly 5 mil­lion par­tic­i­pants, ac­cord­ing to re­ports.

As such, the mar­ket for com­pe­ti­tion should in­clude sea­son-long fan­tasy sports, FanDuel and DraftKings could ar­gue, ac­cord­ing to the source.

“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,” DraftKings and FanDuel said in a joint state­ment. “We are con­sid­er­ing all our op­tions at this time.”

In DFS NFL con­tests, par­tic­i­pants cob­ble to­gether a team from play­ers through­out the league and com­pete over a sin­gle week of ac­tual games — with real statis­tics de­ter­min­ing the DFS win­ners.

The fan­tasy teams whose play­ers per­form the best win — at times $1 mil­lion or more.

This is in­terim FTC chief Mau­reen Ohlhausen’s first ma­jor block since tak­ing charge in Jan­uary.

In 2015, the in­dus­try came un­der scru­tiny when New York sued the com­pa­nies. The suit was set­tled for $12 mil­lion, with the com­pa­nies promis­ing to change the way the games were mar­keted.

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