Fans of fantasy sports betting will continue to have two major choices when it comes to wagering on sports. The original plan to merge the two largest online fantasy sports arenas has come to a screeching halt and daily fantasy platforms FanDuel and DraftKings will no longer work together after the expected alliance was challenged by the United States Federal Trade Commission (FTC).
According to Reuters, via an online article on Fortune, the Trade Commission denied the merger because it claimed the two companies operating as one would constitute a monopoly. The FTC has halted similar mergers in the past, recently stopping Sysco Corp from buying US Foods Inc and preventing office supplies retailer Staples Inc. from acquiring Office Depot Inc. The FanDuel and DraftKings request to merge was denied because the consolidation would mean the two companies together would control more than 90 percent of the U.S. market for paid daily fantasy sports contests.
This denial by the FTC is just another setback for the two companies who have had a rough go of things over the past many months. Both FanDuel and DraftKings have faced regulatory challenges in several states. These challenges have severely hindered their business operations and both companies have publicly stated their unhappiness with the new regulations.
In recent years, fantasy online sports betting has ballooned in popularity. Participants typically create teams that span an entire season in professional sports, including NFL, NBA, NHL and MLB action. Daily fantasy sports, which focus on single-day contests, have grown into a multibillion-dollar industry.
Still, with the millions of dollars each company is making off fans playing their fantasy picks, the idea to merge was in the hopes that as one larger entity, FanDuel and DraftKings may have better luck battling the government and reducing legal costs. As it stands now, both companies will have to separately pony up for legal defenses and lobby for legislation to authorize fantasy sports in states that have declared it illegal.
With merger plans now scrapped, both FanDuel and DraftKings will move forward and attempt to operate as single operators. FanDuel CEO Nigel Eccles told Recode's Tony Romm his company was going to evaluate their options and then followed that up a couple days later stating FanDuel would not be seeking partnership but operating alone. DraftKings put out a similar statement suggesting they would move forward as a separate company.
For now, FanDuel and DraftKings will have to go back to competing with each other — an exercise that has cost the companies millions in advertising dollars. Players can continue to play in states where online fantasy wagering is not illegal.