Daily fantasy sports platforms, FanDuel and DraftKings have terminated their plans of a merger after the U.S. federal trade commission challenged their proposed consolidation late in June.
The FTC challenged the merger between the daily fantasy sports companies for a few reasons but mainly because it hinders competition in the marketplace which could have a negative effect for fans.
“This merger would deprive customers of the substantial benefits of direct competition between DraftKings and FanDuel,” Tad Lipsky, acting director of the FTC’s Bureau of Competition said.
According to Bleacher Report, on Tuesday, FanDuel CEO Nigel Eccles told Recode’s Tony Romm his company was “evaluating options” and had not made a decision if it would continue to pursue a union with DraftKings.
However, on Thursday FanDuel released a statement discussing their plans to abandon the merger.
“We have determined that it is in the best interest of our shareholders, customers, employees, and partners to terminate the merger agreement and move forward as an independent company,” Eccles said, per TechCrunch.com’s Fitz Tepper. “There is still enormous, untapped market opportunity for FanDuel, and we will continue to execute our strategy to grow our business and further expand the fantasy sports industry.”
The FTC also felt like the merger would constitute a monopoly since the single entity “would control more than 90 percent of the U.S. market for paid daily fantasy sports contests.”
The two companies were obviously disheartened when the FTC decided to challenge the merger but at the time they were still weighing their legal options and still wanted to pursue it.
“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.
Although, it seems like due to the FTC’s challenge of the merger the two companies have decided that it is in their best interest to no longer consolidate.
What are your opinions? Should FTC have allowed the merger of the two sites and would it benefit daily fantasy sports or make it worse? Let us know in the comment section below.