The FTC Moves To Block The Merger Of FanDuel And DraftKings

The FTC Moves To Block The Merger Of FanDuel And DraftKings

The FTC Moves To Block The Merger Of FanDuel And DraftKings

U.S. regulators announced Monday legal action to block the merger of fantasy sports websites DraftKings and FanDuel, which allow fans to create teams for virtual matchups in cyberspace.

"This merger would deprive customers of the substantial benefits of direct competition between DraftKings and FanDuel", said Tad Lipsky, the head of the FTC competition department. "The FTC is committed to the preservation of competitive markets".

The merger was first announced this past November.

While fantasy sports have been around for decades, the daily games have become more popular as of late.

According to ESPN, FanDuel will not accept customers in 11 states, DraftKings in 10.

Daily fantasy sports contests are online games in which players build rosters of real-life athletes and vie for cash and other prizes based on how those athletes do in actual games. "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".

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DraftKings and FanDuel will "consider all options" in response to the FTC's complaint. They reached a merger agreement past year with the scheduled date for the merger to complete coming up, but the fate of the two operators lies in the hands of the Federal Trade Commission.

Once the legal issues surrounding daily fantasy sports are solved, it's likely that competitor will eventually grow large enough to be able to compete with a combined DraftKings-FanDuel entity, reducing anti-trust concerns.

The suit does not mean there has been any finding of guilt, only that there is a reason to believe the merger violates the law.

This is based on what FTC investigators were asking as it reviewed the merger. New York-based FanDuel, which was founded in 2009, is the second-largest player in the USA market.

If the FTC gets its way, the merger will be held up pending the result of the trial that is set to start in November. A recent forecast warned that if the merger were blocked, one or both of the companies could fail.

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