FTC, CALIFORNIA, AND DC SUE TO STOP DRAFTKINGS-FANDUEL MERGER ON ANTITRUST GROUNDS
Although the Federal Trade Commission currently is short-handed with one Democrat and one Republican serving on the Commission (out of a normal lineup of five), today they showed that bi-partisan consensus still can exist in Washington. The FTC, along with California and DC, have sued to block the proposed merger of DraftKings and FanDuel, the two largest daily fantasy sports sites.
The federal court complaint alleges that paid daily fantasy sports contests in the United States represent a distinct antitrust product market. According to the complaint, consumers of paid fantasy sports are unlikely to view season-long fantasy sports contests as a meaningful substitute due to the length of season-long contests, the limitations on number of entrants and other issues. The FTC claims that entry or expansion by other providers is not likely to provide timely or effective new competition.
DraftKings and FanDuel are the two largest daily fantasy sports sites, controlling together more than 90 percent of the United States market. The complaint alleges they are each other’s closest and most significant competitor and they have battled head-to-head to offer best prices, product quality, largest prize pool and greatest variety of contests.
A federal judge will decide whether to enjoin the merger pending an administrative trial at the FTC. That hearing will turn on whether the FTC can factually demonstrate its view that daily fantasy sports is its own market. DraftKings and FanDuel issued a statement that they are “considering all their options.”
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