M&A

Fantasy Sports Platforms Terminate Merger

The FTC, which had moved to block the combination of FanDuel and DraftKings, calls the termination “a clear win for American consumers.”
Matthew HellerJuly 13, 2017

The two largest daily fantasy sports platforms have scrapped their merger plan rather than fight a Federal Trade Commission effort to block the deal as anticompetitive.

FanDuel and DraftKings cited the best interests of their shareholders in explaining the termination of the merger agreement they announced in November 2016. The deal would have created a powerhouse in the fast-growing daily fantasy-sports segments, but the FTC filed an administrative complaint in June seeking to block it.

“There is still enormous, untapped market opportunity for FanDuel, and we will continue to execute our strategy to grow our business and further expand the fantasy sports industry,” FanDuel CEO Nigel Eccles said in a statement.

DraftKings CEO Jason Robins said remaining independent “will allow us to singularly focus on our mission of providing the most innovative and engaging interactive sports experience imaginable, forever changing the way fans connect with teams and athletes worldwide.”

In taking its legal action, the FTC noted that the two companies are each other’s most significant competitor, and together would control more than 90% of the U.S. market for paid daily fantasy sports contests.

A commission official welcomed their decision to scrap the merger, calling it “a clear win for American consumers.”

“Consumers benefited from the intense rivalry between the two leading players in this space,” said Markus H. Meier, acting director of the FTC’s Bureau of Competition. “If this merger had been allowed to go through, those benefits would likely have been lost.”

According to TechCrunch, a merger would have enabled the companies to combine resources to lobby for the legalization of daily fantasy sports throughout the U.S. — they have both faced regulatory restrictions in numerous states — and may also have helped them reduce advertising spending.

“As the NFL season approaches (the most lucrative time of the year for both companies), it will be interesting to see how they approach this, considering pre-merger both were spending money on advertising at an unsustainable rate,” TechCrunch said.