FTC Seeks to Block FanDuel, DraftKings Merger

On Monday, Federal and state officials made moves to block the merger between DraftKings Inc. and FanDuel. Government officials argue the combination between the two companies could hurt competition by controlling 90% of the daily fantasy sports market within the United States.

The Federal Trade Commission says it will file a suit seeking a court injunction to block the deal. The FTC was joined by the attorneys general of California and the District of Columbia.

“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.

DraftKings is the largest fantasy sports company, according to the FTC with FanDuel, which is based out of Scotland is the second largest.

How does DraftKings and FanDuel operate?

Fantasy leagues are the business that runs DraftKings and FanDuel. Users pay a fee to select a line-up of professional athletes; then the customers compete for prizes based on how well athletes do. DraftKings and FanDuel compete to offer the largest prizes by holding different contests, according to the FTC.

In a statement, DraftKings CEO Jason Robins and FanDuel CEO Nigel Eccles explained the two companies would “work together” to determine how the company will move forward.

“We are disappointed by this decision and continue to believe that a merger is in the best interests of our players, our companies, our employees and the fantasy sports industry,” they said.

The FTC voted to authorize their staff to seek a temporary restraining order and preliminary injunction in federal court.

According to Los Angeles Daily News, both companies will reportedly operate separately and it is unlikely a merger will take place before the start of this year’s NFL season, which is the fantasy league industry’s most profitable time of the year.