FTC Aims To Block DraftKings, FanDuel Merger

The Federal Trade Commission (FTC), in a regulation move, announced that it will ask for a preliminary injunction to stop the merger of DraftKings and FanDuel because the combined company would control more than 90 percent of the U.S. market for paid daily fantasy sports contests.

According to news from Fortune Magazine, the FTC, along with the attorneys general of California and the District of Columbia, will file a complaint in federal district court to block the deal.

The companies said they were considering their legal options.

“We 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,” DraftKings Chief Executive Jason Robins and his FanDuel counterpart, Nigel Eccles, said in the statement.

Between them, the two companies have 95 percent of daily fantasy sports, but they have argued that they compete against larger, more powerful companies in the broader fantasy sports business, like ESPN and Yahoo.

“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.

The regulation by the FTC calls for a preliminary injunction to prevent the companies from closing the deal while it proceeds with an internal review to determine if the merger is legal under antitrust law. In practice, if companies are slapped with a preliminary injunction, they normally terminate a merger because deals cannot be held together during the lengthy internal process.

FanDuel’s investors include KKR, Shamrock Capital, Comcast Ventures, NBC Sports and Google Capital. DraftKings’ investors include KKR and others.