US Tech news sources have reported that the planned merger of FanDuel and DraftKings maybe be denied by the US Federal Trade Commission (FTC), on grounds that the combination would form an outright leader with more than 80% of the daily fantasy sports market.
FTC officials are reported to have shown concern that the FanDuel-DraftKings combination would lead to a virtual DFS monopoly with a stranglehold on sector business conditions.
The merger has been under FTC review since November 2016, when both sets of FanDuel and DraftKings investors agreed to combine the then fierce rivals.
Backed by a number of high-profile US tech and sports investors, FanDuel-DraftKings still awaits its FTC final approval. Any recommendations made by FTC officials will have to be verified and approved by the competition agency’s lead commissioners, who have the final say on the merger approval.
Tech news source Recode.net reports that should five-member commissioner body be split. ‘the deadlock would allow the FanDuel-DraftKings deal to proceed unimpeded’.
If approved a new company will be formed with DraftKings co-founder Jason Robins acting as Group Chief Executive. FanDuel Co-Founder & CEO Nigel Eccles would be promoted to the position of Chairman of the Board.
The merger is set to be treated as a 50/50 partnership, with each of the operators’ core investors receiving three board seats within the new enterprise. Furthermore, the merger will not include any new equity investment into the combined company.