The US Federal Trade Commission (FTC) has dealt a severe blow for the planned merger of leading daily fantasy sports operators FanDuel and DraftKings, filing an official lawsuit against the formation of a new company.
Last week, US Tech news sources reported that FTC officials may have concerns on the combination of FanDuel-DraftKings, which would see one player takeover a reported +80% of the DFS market.
Issuing a statement on Monday, FTC officials confirmed their appeal against FanDuel-Draftkings, detailing ‘that the combined firm would control more than 90% of the U.S. market for paid daily fantasy sports contests.’ The FTC further detailed that following its 6-month review of FanDuel-DraftKings, commission officials believe that US consumers and sports stakeholders are best serviced if the companies continue to operate as separate entities.
“This merger would deprive customers of the substantial benefits of direct competition between DraftKings and FanDuel,” said Tad Lipsky, Acting Director of the FTC’s Bureau of Competition.
“The FTC is committed to the preservation of competitive markets, which offer consumers the best opportunity to obtain innovative products and services at the most favourable prices and terms consistent with the provision of competitive returns to efficient producers.”
Jason Robins DraftKings CEO has been the first merger stakeholder to respond to the FTC’s ruling, issuing the following statement
“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. We are considering all our options at this time.”
“As we work together to determine our next steps, we would like to thank DraftKings and FanDuel players, partners and employees for their patience, support and continued loyalty”.
The FTC’s decline of FanDuel-DraftKings will have implications throughout the US gambling, sports and tech sectors.Both firms have been heavily backed by leading US Tech venture capital firms and media owners, spending a vast sum of money on TV advertising and high coverage sports sponsorships.