FanDuel, DraftKings Merger in Danger of Falling Through

The Federal Trade Commission announced Monday that it will try to stop the proposed merger between DraftKings and FanDuel. This is based on anti-trust matters. The merger has been in the works since it was announced in November. The Federal Trade Commission said the merger would enable the new company to control 90 percent of the paid U.S. market. The statement said the merger “would deprive customers of the substantial benefits of direct competition.”

Other parts of the press release stated “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.”

This means a merger before the NFL season will be difficult, not impossible. But the FTC will seek a temporary restraining order and a preliminary injunction to stop the merger.

Neither FanDuel or DraftKings is believed to be profitable. While that’s primarily due to advertising costs, there are other reasons. The 2017 legislative session wasn’t kind to the DFS companies. Many believed certain states would pass bills to legalize daily fantasy sports. But it didn’t happen in key states like Florida and Texas.

The two DFS companies issued a joint statement after the FTC press release.

“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.”