U.S. regulators might block the merger of FanDuel and DraftKings
The fate of two of the largest daily fantasy sports sites lies in limbo as the Federal Trade Commission (FTC) decides if a merger will create an unfair market.
In the U.S., Fan Duel and Draft Kings dominate the daily fantasy market. The two companies remain separate at this point, and have not always seen eye to eye. Both sites went on a mass spending spree to see who could outdo each other in marketing and campaigns.
However, recent regulations that pushed both companies out of New York, and a slew of other states for a time resulting in cash flow problems and other issues, the two fantasy sports giants have decided to buddy-up.
In November of 2016, Fan Duel and Draft Kings announced a merger that would see both companies operating under the same umbrella. Both sites would still exist but essentially become one conglomerate. The merger would have given them an almost 80% share of the daily fantasy sports market, pushing competitor sites like Yahoo, and Disney’s ESPN, who also offer daily fantasy sports services, to the wayside.
It’s this massive market share that the FTC needs to decide whether a merger will create an unfair market.
According to sources, concerns by the FTC may force them to file a lawsuit to halt the merger. This would only put the merger on pause, with a final decision by the FTC’s chairman still the deciding factor.
Complicating matters further, is the fact that a split vote could happen, given that one Republican and one Democrat reside on the FTC panel. A split vote would see the merger pass through.
Fan Duel and Draft Kings have added season long fantasy options, which would provide the argument that they are not just a daily fantasy sports site. The addition of season-long contests puts them in a much broader market, as there are far more services offering season long fantasy sports.
A ruling on the merger could happen as soon as next week.