Weeks after the Federal Trade Commission went to court to block the merger of daily fantasy sports mega-sites DraftKings and FanDuel, the companies are throwing in the towel rather than fight the government.
DraftKings CEO Jason Robins said in a statement that the company believes “it is in the best interests of our customers, employees, and investors to terminate our agreement to merge with FanDuel and move forward as a separate company.”
In a Q&A for customers, DraftKing adds that it will withdraw litigation from the FTC to formally mark the end of its attempt to merge with FanDuel.
There are no future mergers planned at this point, DraftKings says, and business will continue to operate as usual.
FanDuel CEO Nigel Eccles said that while the company still believes that the deal would have “increased investment in growth and product development thereby benefiting consumers and the greater sports entertainment industry,” the company has also determined that it’s in the best interests of all involved — shareholders, customers, employees, and partners — “to terminate the merger agreement and move forward as an independent company.”
Eccles says the company will continue to grow its business and “further expand the fantasy sports industry.”
The FTC said in June that the two companies share more than 90% of their industry — way too much to put under one roof.
“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 at the time.
The two sites both 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, argued the FTC, there is less reason to innovate, provide new services, or keep prices low for customers.
And although there are 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 these two companies because they differ so greatly in their schedules and structure.
We’ve reached out to the FTC for comment on the companies’ decision to throw in the towel, and will update this post if we hear back.