FanDuel and Draftkings, two of the biggest websites involved in Daily Fantasy Sports (DFS) have started a passionate defence of their business merger plans after the US Federal Trade Commission launched an official effort to block the merger. The US Trade Commission is arguing that the merger will break Federal laws and be bad for the consumer, while FanDuel and DraftKings are insisting that the merger will be good for competition within the DFS market.
FanDuel and DraftKings Merger Would Create Monopoly
According to the Federal Trade Commission, a merger between these two companies would break antitrust laws in the United States and create a virtual monopoly within the DFS market. Some estimates say that FanDuel and DraftKings handle up to 90% of DFS players. In addition to this, fierce competition between the two companies over the years saw the firms lowering their entry fees, offering bigger and better competitions, and a wider range of sports. All of this was done in an effort to win over players from the other side.
The Federal Trade Commission is arguing that a merger FanDuel and DraftKings would completely eliminate this competition and there would be little to no reason for the company to offer better benefits to the players.
FanDuel and DraftKings Disagree with Commission’s Assessment
While the Federal Trade Commission has its viewpoint, FanDuel and DraftKings disagree. The companies claim that the merger will only lead to benefits for players, such as cost saving and more innovation. The two companies also stated, once again, that they do not believe DFS is a market on its own and, therefore, they would not have a monopoly. The companies view DFS as a small segment of the overall Fantasy betting market, which is dominated by season-long variants.
The trade commission does not agree with this assessment either, as it has determined that DFS players do not see season-long fantasy sports betting as a viable alternative. We will now have to wait to see what the final results will be. An official hearing has been set for the 21st of November 2017, so the merger is on hold until the results are in.