DraftKings and FanDuel Merger is Cancelled

by Jim Hall

Fanduel DraftkingsThe two giants of daily sports betting, FanDuel and DraftKings, are no longer set to merge as one major DFS company.

It was announced last year after rumors began circulating that the two top daily fantasy sports companies in the world, FanDuel and DraftKings, would be merging. DraftKings was set to take in FanDuel and create a mega-DFS gaming company. A few months after the announcement, the Federal Trade Commission filed for the merger to be blocked as they felt the two coming together would create a monopoly of sorts with the majority of the DFS community taking part in their gaming, virtually eliminating the competition. Now, it seems the merger is definitely off as an announcement has been made of the cancellation of the two companies coming together.

Major Merger Cancelled

Close to a month after the Federal Trade Commission decided to block the merger, FanDuel and DraftKings are calling it quits. The two companies announced yesterday they will no longer be seeking to merge as one and will be moving forward separately to operate in the best interest of their investors, customers and employees. Neither FanDuel or DraftKings spoke about the government’s concerns of the deal in their announcement.

Nigel Eccles, the CEO of FanDuel, stated that his company believes that the deal would have helped to increase investment and product development as well as been of benefit to consumers and the broader daily fantasy sports industry. However, CEO of DraftKings, Jason Robins, had different feelings on the matter. Robins stated that his company has seen rapid growth and this could be a sign that the rivalry with FanDuel is back in action. According to Robins, the customer base of DraftKings is up to almost 8 million and revenues have grown more than 30% year-over-year. This is on top of the fact that the company is just now moving their contests to international markets.

The Federal Trade Commission Steps In

In June, the Federal Trade Commission along with the California and District of Columbia’s Attorney Generals, showed their opposition to the merger stating that the two coming together would create a company that would control over 90% of the United States market in regards to daily fantasy sports paid contests.

Late last month the FTC decided to temporarily stop the merger with a pending administrative trail set for November 21st. In the past two years, both companies have spent a ton of cash fighting legal battles in individual states. It does make sense for the two companies to decide to stop the merger in order to not face any more legal battles.

Beginning in late 2015, several states attorney generals began to decide that DFS was an illegal activity. Since that time, many states have created legislation to regulate the industry but both brands faced issues for some time before legislation was put in place. Now trying to recover, it seems that DraftKings is on the up and up.

FanDuel may be in the position of having to ask investors for more funds while DraftKings is sitting pretty. According to Daniel Barbarisi, an author of daily fantasy sports “Dueling With Kings”, DraftKings is sitting in a better position. While the merger process was on, the company operated as a single entity raising money and pushing to grow their brand. FanDuel did not do the same. Now, DraftKings is in a stronger position and can easily take on the top position as the number daily fantasy sports operator in the US as well as on an international level.