FanDuel & DraftKings Scrap Merger Plans

Fantasy Sports
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  • PG News July 16, 2017
  • 8 mins Read

In a significant development in the world of daily fantasy sports (DFS), the merger plan of the two largest DFS companies DraftKings and FanDuel has been scrapped. Both the companies issued independent statements that they are no longer pursuing plans to join hands together.

The decision came following a legal challenge by U.S. antitrust enforcers and both were scheduled to defend the deal in front of an administrative judge.

The Federal Trade Commission (FTC) on June 19 said that it seeks to block the deal that the two sites had planned. In response to FTC’s lawsuit to stop the deal, a federal judge had temporarily halted the merger and scheduled an administrative trial for November this year.

The US FTC also said, “it would seek to stop the deal because the combined company would control more than 90 per cent of the US market for daily fantasy sports contests.”

New York based FanDuel was founded in 2009 and Boston based DraftKings entered the market in 2012, and soon both companies occupied the top spots in terms of market share by a wide margin.

It was last November that the two companies announced their plans to merge.

But now the companies seemed to have foreseen the hurdles ahead in the light of numerous challenges ahead stating that the deal was scrapped for the benefit of the customers.

DraftKings CEO Jason Robins said, “We believe it is in the best interests of our customers, employees and investors to terminate our agreement to merge with FanDuel and move forward as a separate company.”

Nigel Eccles, FanDuel CEO, said he still believed the deal, “would have increased investment in growth and product development thereby benefiting consumers and the greater sports entertainment industry”.

“We have determined that it is in the best interest of our shareholders, customers, employees, and partners to terminate the merger agreement and move forward as an independent company. 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.” He added.

Some were surprised at the companies’ decision to scrap their merger plans. Markus Meier, acting Director of the FTC, was pleased about the companies’ decision calling it a “clear win” for consumers.

Meier spoke to the New York Times stating, “For years, the vigorous competition between DraftKings and FanDuel has spurred innovation and favorable pricing. If this merger had been allowed to go through, those benefits would likely have been lost.”

David Purdum of ESPN described the news as “an abrupt end to a deal that many viewed as the best path forward for both companies” despite the pushback it had invited from regulators.

Source called it a “sign of maturation” that the companies are not willing to “burn a pile of cash with little to show for it” in favor of using those funds to continue pursuing current legal challenges in several important states for DFS.

With the upcoming NFL season starting in September, both companies will once again be seen competing with one another to attract the interest and business of DFS players.

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