The historic merger of daily fantasy sports (DFS) giants FanDuel and DraftKings is facing a major roadblock after the U.S. Federal Trade Commission (FTC) reportedly raised serious competition concerns.
Recode reported that the FTC may block the FanDuel-DraftKings merger as it believes that the combination of the DFS firms would threaten competition.
Both FanDuel and DraftKings share the largest piece of the daily fantasy market pie. The report said that the two companies will face major anti-trust roadblocks if the FTC decides only on the effect of the merger on the DFS market.
The saving grace for both FanDuel and DraftKings was the fact that they introduced other products in recent years. Daniel Wallach, a lawyer at Becker & Poliakoff in Florida who works on gaming and sporting law, pointed out that diversification of the two firms “buttress the contention that they’re not just simply in the space for daily fantasy sports.”
Wallach said FanDuel and DraftKings will likely survive the antitrust scrutiny if they can persuade FTC that it is advantageous for the two firms to have a broader marketplace.
The news report’s three unnamed sources, however, pointed out that there is a likelihood that the government agency will block the deal due to the fact that DraftKings and FanDuel eat up 80 percent of the DFS market.
The FTC commissioners are reportedly getting ready to cast their vote on the matter this week.
According to the report, the only chance for the merger of FanDuel and DraftKings to proceed unimpeded if there will be a vote deadlock. Among the members of the FTC include a Republican chairman and one Democratic commissioner.
Both FanDuel and DraftKings declined to comment on the report, according to Recode. The FTC also declined comment.
