DraftKings-FanDuel Merger: FTC To Block Combination Of Largest Daily Fantasy Sports Sites
The United States Federal Trade Commission announced Monday it has authorized legal action to block the merger of DraftKings and FanDuel, the two largest daily fantasy sports platforms in the country.
The commission will file a joint complaint with the Offices of the Attorneys General in California and the District of Columbia in order to seek a preliminary injunction to halt the merger and maintain the current status quo in daily fantasy sports.
Read: Is Daily Fantasy Football Legal In My State? A Breakdown Of Where DFS Is Allowed In US
The FTC also announced it will issue an administrative complaint alleging that the merger violates Section 7 of the Clayton Act, which “prohibits mergers and acquisitions where the effect may be substantially to lessen competition, or to tend to create a monopoly,” and Section 5 of the FTC Act, which deals with unfair acts affecting commerce.
According to the FTC, allowing DraftKings and FanDuel to merge would create a single, combined company that would “control more than 90 percent of the U.S. market for paid daily fantasy sports contests.”
Because the companies are the two largest daily fantasy sports services operating in the U.S. and are each other’s largest competition, it would undermine the current system in which the companies “battle head-to-head to offer the best prices and product quality, including the largest prize pools and greatest variety of contests.”
“This merger would deprive customers of the substantial benefits of direct competition between DraftKings and FanDuel,” Tad Lipsky, Acting Director of the FTC’s Bureau of Competition, said.
“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 favorable prices and terms consistent with the provision of competitive returns to efficient producers.”
Read: Will Sports Gambling Be Made Legal? How Daily Fantasy Sports Have Changed The Conversation
Part of the reason DraftKings and FanDuel hold the vast majority of the market for daily fantasy sports is because of the legal ambiguity that surrounds the industry and has kept many major players in the world of sports and gambling from entering the market.
Daily fantasy sports operations—primarily DraftKings and FanDuel—have come under fire in the past for blurring the lines between fantasy sports and gambling. New York Attorney General Eric Schneiderman attempted to block the services from New York because he believed they were in violation of the state’s gambling laws.
Attorney General Schneiderman is not alone in his belief that daily fantasy sports amount to gambling, but the sites themselves have maintained they are offering games of skill not of chance.
“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,” DraftKings CEO Jason Robins and FanDuel CEO Nigel Eccles said in a joint statement.
“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.”
© Copyright IBTimes 2024. All rights reserved.