FTC to oppose 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 percent 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 onetime 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 maneuver to block the FTC’s efforts, Robins and other DraftKings founders said in a message to employees. 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 have shared that view, concluding the two companies are “each other’s most significant competitor.” The FTC said it also isn’t convinced that other fantasy sports companies could provide sufficient competition if the merger went through and that consumers are unlikely to view other products — including the traditional, season--
long fantasy sports competitions played by millions of Americans each year — as a meaningful substitute for the contests offered by the two companies. More than two- thirds of daily fantasy sports companies have shuttered, changed focus or joined with competitors, the Fantasy Sports Trade Association has said. That’s left DraftKings and FanDuel as the largest remaining operators. DraftKings, which was founded in 2012, is the currently the largest in terms of entry fees and revenues. FanDuel, which was founded in Scotland in 2009, is the second largest.