The proposed merger between Daily Fantasy Sports giants DraftKings and FanDuel hit its first major snag last month as the US’ Federal Trade Commission (FTC) took steps to block the move.
In an official release announcing its decision, the FTC pointed to the fact that a merger between the two DFS operators would result in a single business cornering 90 percent of the market.
The quasi-monopoly could result in a less competitive offering for consumers, it stated, and had the potential to cause “irreparable harm” to the sector.
Kick-starting its attempt to block the merger, the FTC – supported by the Attorneys General of the State of California and the District of Columbia – is seeking a preliminary injunction to halt the M&A process, pending an administrative trial in November this year.
The FTC’s decision is not guaranteed to stop the merger entirely, but does mark a frustrating – and potentially expensive – bump in the road for DraftKings and FanDuel.
The firms now face an unwelcome hiatus before they can flesh out further details of the deal, and may have to make financial and commercial concessions in order to appease the courts.
Responding to the news, FanDuel CEO Nigel Eccles and DraftKings CEO Jason Robins said they believed the merger would benefit customers as well as their businesses: “We are disappointed by this decision and continue to believe that merger is in the best interests of our players, our companies, our employees and the fantasy sports industry. We are considering all our options at this time.”