Industry Reports

FanDuel and DraftKings Call Their Merger a Pro-Competition Measure

DraftKings and FanDuel have claimed they want the two companies to merge and they have already asked the Federal Trade Commission for permission to do so. The daily fantasy sports giants have come to the conclusion that this is the best interest of the fantasy sports industry.

The proposed merger is expected to be of mutual benefit for the two firms and it will not deprive the customers of the considerable pros which a direct competition can provide them with. DraftKings and FanDuel have already submitted their responses to the Federal Trade Commission in approval of their joint decision. The operators agree their decision will bring only benefits for the community because it will ultimately result in substantial efficiencies specific for the merger, cost-savings, innovation, and other pro-competitive effects that will directly increase the consumer value proposition.

As all daily fantasy sports fans are well aware of, DraftKings is still the largest site in the field in the US, even though it recently admitted the company underwent operating losses amounting to half a billion dollars. An attestation to this fact was made by FanDuel in its 23-page reply sent to the Federal Trade Commission. However, the Federal Trade Commission filed a complaint last week, aiming to prevent the proposed merger between the two companies. They claim that this demonstrates the regulator’s commitment to protect the competitive markets and allow competition to thrive.

According to the Commission, the combined entity of the new beast company would amount to more than 90 percent of the daily fantasy sports market in America. As a further measure, the Federal Trade Commission has given a staff the permission to seek a temporary restraining order and preliminary injunction to prevent the merger from happening. There is an administrative trial scheduled for the 21st of November.

The complaint of the Commission was joined by the Attorneys General of California and the District of Columbia. They have not provided a further comment on the issue, but California has a big significance for both daily fantasy sports operators and its involvement in the process should be taken into account.

Jason Robins, CEO of DraftKings and Nigel Eccles, CEO of FanDuel filed in a joint statement which aimed to express their utter disappointment with the actions of the Federal Trade Commission. There are also implications that the two companies might be looking for an option to ask federal courts to block the injunction of the Commission. For the time being, they will continue their work as separate entities well past the upcoming NFL season.