As predicted, the Federal Trade Commission is going to court in an attempt to block the merger of daily fantasy sports mega-sites DraftKings and FanDuel.
Though previous estimates had claimed that DraftKings and FanDuel control a combined 80% of the daily fantasy sports market in the U.S., the FTC now says that these two companies share more than 90% of this industry; that’s far too much to put under one roof, says the Commission.
“This merger would deprive customers of the substantial benefits of direct competition between DraftKings and FanDuel,” said Tad Lipsky, Acting Director of the FTC’s Bureau of Competition, in a statement.
The two sites currently offer virtually identical products and target the same customer base. The FTC believes that this competition is helping to keep prices down and compelling each of the companies to provide better service. Without competition, argues the FTC, there is less reason to innovate, provide new services, or keep prices low for customers.
While there are a number of other sites that offer season-long fantasy football games, and some of them include cash prizes, these aren’t truly competition for either of the DFS companies because they differ so greatly in their schedules and structure.
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, currently slated for November.
In a joint statement emailed to Consumerist, DraftKings and FanDuel say they are “disappointed by this decision and continue to believe that a merger is in the best interests of our players, our companies, our employees and the fantasy sports industry. We are considering all our options at this time.”