DraftKings and FanDuel End Merger Talks Amid Antitrust Issues
Daily fantasy sports operators DraftKings Inc. and FanDuel Inc. said Thursday they would no longer pursue their plan to join forces, as the companies faced mounting antitrust scrutiny and a legal challenge from the Federal Trade Commission.
In separate statements, the CEOs for Boston-based DraftKings and New York-based FanDuel said the decision to scrap the deal and proceed as separate companies was in the best interest of their customers, employees and other stakeholders. The termination announcement comes less than a month after a lawsuit by the FTC in D.C. federal court, which claimed the merger would have created a daily fantasy sports operator with control of more than 90 percent of the market.
“There is still enormous, untapped market opportunity for FanDuel, and we will continue to execute our strategy to grow our business and further expand the fantasy sports industry,” FanDuel CEO Nigel Eccles said in a statement.
FTC Bureau of Competition Acting Director Markus H. Meier said in a statement Thursday that the decision by DraftKings and FanDuel to abandon their merger was “a clear win for American consumers.”
“For years, the vigorous competition between DraftKings and FanDuel has spurred innovation and favorable pricing,” Meier said. “In brief, consumers benefitted from the intense rivalry between the two leading players in this space. If this merger had been allowed to go through, those benefits would likely have been lost.”
DraftKings and FanDuel announced their plan to merge in November and sought to combine the two largest operators of paid daily fantasy sports. DFS contestants compete for prizes based on the real-life performance of professional athletes over the short term.
The agreement followed rumors that the two had been holding merger talks amid scrutiny from several state attorneys general and other regulators over the legality of daily fantasy sports contests. Many states have considered or enacted laws explicitly legalizing daily fantasy sports, however, such as a provision passed in New York in June that ended litigation from the state attorney general.
The FTC filed its lawsuit against DraftKings and FanDuel in June, saying the pair are in their own league in terms of daily fantasy sports, and that a combination of the two industry giants would not feel competitive pressure from season-long fantasy sports providers.
The companies and the FTC agreed to a temporary restraining order days later, with U.S. District Judge Ketanji Brown Jackson ordering the companies to hold off on consummating deal until after a ruling on the FTC’s motion for a preliminary injunction.
In early July, Judge Brown rejected a bid by DraftKings and FanDuel to move the case from Washington, D.C., to Boston, saying her decision stemmed in part from the fact that the District of Columbia government was participating in the attempt to block the merger, alongside California and the FTC itself.
DraftKings CEO Jason Robins in a statement Thursday noted that the company is beginning to access a so far untapped overseas market, and thanked daily fantasy sports players for the company’s recent success.
“This will allow us to singularly focus on our mission of providing the most innovative and engaging interactive sports experience imaginable, forever changing the way fans connect with teams and athletes worldwide,” Robins said.