The Federal Trade Commission and attorneys general in California and the District of Columbia said they will file a complaint to block the merger of the biggest fantasy sports companies, FanDuel and Draftkings.
The complaint will allege that the combined firm would control more than 90 percent of the U.S. market for daily fantasy sports contests, giving the combined company a near-monopoly. Anti-trust is the FTC’s motivation here.
“This merger would deprive customers of the substantial benefits of direct competition between DraftKings and FanDuel,” said Tad Lipsky, the 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 favorable prices and terms consistent with the provision of competitive returns to efficient producers.”
In this sort of merger, the companies could argue that there is plenty of competition among gambling sites and other kinds of sports betting. But the FTC has clearly chosen to narrowly define the relevant market as daily fantasy sports sites. In early 2016, the analyst firm Eilers & Krejcik Gaming noted that the sector has had a lot of troubles with regulators and the companies involved weren’t making a lot of money.
In a join statement, FanDuel CEO Nigel Eccles and DraftKings CEO Jason Robins said:
Today, the Federal Trade Commission (FTC) announced it will attempt to block the proposed merger between DraftKings and FanDuel.
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.
Boom Fantasy CEO Stephen Murphy issued the following statement on Twitter: