Trade commission seeks to block daily fantasy sports merger

Above Draft Kings eventImage Credit Draft Kings Facebook page

Above Draft Kings eventImage Credit Draft Kings Facebook page

"This merger would deprive customers of the substantial benefits of direct competition between DraftKings and FanDuel", said Tad Lipsky, Acting Director of the FTC's Bureau of Competition. "The FTC is committed to the preservation of competitive markets".

After the FTC's announcement, the two companies said they are considering their options, including litigation.

Once the legal issues surrounding daily fantasy sports are solved, it's likely that competitor will eventually grow large enough to be able to compete with a combined DraftKings-FanDuel entity, reducing anti-trust concerns.

The L.A. Daily News reported that both companies will continue operating separately for the time being and that it's unlikely a merger will take place ahead of this year's National Football League season, the daily fantasy industry's most lucrative time of year.

"It all comes down to how you define the relative market, and that's where they fell short", Daniel Wallach, a Floridia attorney who specializes in gambling and sports law said of the two companies.

The Commission votes to issue the administrative complaint and to authorize staff to seek a temporary restraining order and preliminary injunction in federal court were both 2-0.

Other states like Texas and MS have banned FanDuel and DraftKings, stating that they violate online gambling laws.

If the merger between the two companies were to go through, the FTC points out that the resulting firm would control over 90 percent of the fantasy sports industry.

Both companies have endured significant legal and regulatory hurdles as they've rapidly gained market share in the online sports betting space over the last several years.

At the time the merger was announced, the companies said a merger would help them reduce costs as they lobbied for state laws recognizing their legality and fought off legal challenges in court, as well as help them improve their contests.

United States regulators announced Monday legal action to block the merger of fantasy sports websites DraftKings and FanDuel, which allow fans to create teams for virtual matchups in cyberspace.

How does DraftKings and FanDuel operate?

In January 2016, the California state Assembly approved a bill licensing daily fantasy sports sites to operate in the state, but the legislation was never taken up by the state Senate. FanDuel Co-Founder & CEO Nigel Eccles would be promoted to the position of Chairman of the Board.

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