FTC Wants to Halt FanDuel-DraftKings Merger

Online Fantasy Sports Sites Fan Duel And DraftKings Under Scrutiny Of Government

The two biggest daily fantasy sports sites control over 90 percent of the US market. Scott Olson Getty Images

That's because FanDuel and DraftKings are the largest sites of their kind in the U.S. Together they control an estimated 90% of the market for paid daily fantasy games, according to the FTC.

The attorneys general of both California and Washington, D.C., are planning to join the FTC in a federal lawsuit, asking the court to issue a preliminary injunction to stop the deal pending the outcome of an administrative trial, now slated for November. In its complaint, the FTC said DraftKings and FanDuel are each other's most significant competitor.

Currently, DraftKings is the largest fantasy sports service operating in the United States, with FanDuel coming in as the second largest.

FanDuel and DraftKings, by far the two biggest DFS sites, announced in November that they would combine forces in order to "create a stronger entity that can focus on growing the fantasy sports market by developing new products and features, delivering enhanced user experiences, and creating an overall stronger fantasy sports community".

The vote to approve the suit was 2-0, meaning chairman Maureen Ohlhausen, a Republican, and Terrell McSweeny, a Democrat, agreed.

DraftKing's Jason Robins and FanDuel's Nigel Eccles, the CEOs of the two companies, said they're disappointed by the FTC's decision and are weighing their options.

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. Last year, the companies both found themselves in a legal battle with New York Attorney General Eric Schneiderman, who stated that the sites violated state gambling laws.

It has previously been reported that DraftKings and FanDuel would constitute more than 80 percent of the daily fantasy sports market.

While fantasy sports have been around for decades, the daily games have become more popular as of late.

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