Daily fantasy sports operators DraftKings and FanDuel revealed that they have put an end to their merger plans after facing a legal challenge by US antitrust authorities. The long-desired merger deal between the two companies has faced a lot of criticism lately, with the US Federal Trade Commission (FTC) and some rival operators vigorously opposing the agreement.
As reported by Casino Guardian last week, the operators defended their merger on numerous occasions, saying that it would not have a negative impact either on customers or on local competition. Only a week later, each of the Daily Fantasy Sports companies released a separate statement to confirm they had chosen to put an end to merger talks.
DraftKings’ Chief Executive Officer Jason Robin explained that that the DFS operator’s team appreciated their players’ loyalty and further announced that it would not proceed with the FanDuel merger. The Chief Executive Officer of FanDuel Nigel Eccles revealed that the decision was made in the best interest of the company’s investors, customers, partners and employees and FanDuel will move forward as an independent operator.
Back in June, the Federal Trade Commission revealed that it would do anything possible in order to stop the deal. Currently, the Commission is the government agency which takes care of customer protection, so it expressed its concerns related to the merger. According to the Federal Trade Commission, the two DFS operators would form a massive conglomerate which would take hold of about 95% of the US DFS market, which would seriously hurt competition in the region due to a dominance that could be described as a monopoly.
Despite that, the two companies still asked the Federal Trade Commission to greenlight their merger so that they would be able to bring it to end. Both DraftKings and FanDuel insisted at the time that the merger would not harm the local Daily Fantasy Sports industry in any way.
The legal challenge by the FTC was only one of the many difficulties faced by the two US DFS operators in a number of states. The merger deal was officially announced back in November 2016, but local regulators and competitive companies have opposed to it. Despite the fact that none of the financial terms of the deal were revealed, the companies announced the deal as a merger of equals.
The two Daily Fantasy Sports operators, however, are known for their complicated relationship over the years, as they were rivals for quite some time and as such had been following a strategy of aggressive advertising for getting bigger market share. The advertising spending strategies of the companies, however, were reconsidered in 2016, when the two of them surprisingly announced that a combined entity could have a better presence in the local market and expand further, attracting new customers.
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Olivia Cole
