The Federal Trade Commission is seeking to block the pending merger of daily fantasy sports giants DraftKings and FanDuel saying a merged company will have dominant control of the DFS market.
The FTC in conjunction with the Offices of the Attorneys General in the State of California and the District of Columbia filed a complaint to temporarily block the merger until an administrative trial set for November.
A federal judge then temporarily halted the merger. Judge Ketanji Brown Jackson of the U.S. District Court for the District of Columbia approved a temporary restraining order that was agreed upon last week by the two companies and the FTC, according to the Associated Press.
Without the order, the merger could have been completed last week, court records show. The two DFS companies did not comment on the agreement.
The FTC opposed the merger as it would create a company controlling more than 90 percent of the U.S. market for paid daily fantasy sports contests.
“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 press statement. “The FTC is committed to the preservation of competitive markets, which offer consumers the best opportunity to obtain innovative products and services at the most favorable prices and terms consistent with the provision of competitive returns to efficient producers.”
DraftKing’s CEO Jason Robins and his FanDuel counterpart Nigel Eccles both previously expressed disappointment with the FTC’s stance and said the companies are weighing their options. In a message to employees, the companies are studying legal options to block the FTC, the Associated Press reported.
“Please don’t let this regulatory setback distract you. DraftKings is poised for growth, whether or not we merge with FanDuel,” the message said. “In the days ahead, it will be business as usual as we prepare for the start of the NFL season.”
The two companies say the planned merger would not violate antitrust laws because daily fantasy sports is just one part of a larger fantasy sports industry.
The FTC, however, notes that the two companies are each other’s main competition and doubts that other fantasy sports operations—such as season-long contests—could provide real competition or be viewed as true competitors to DFS by consumers.
The FTC action also prompted opposition from Dallas Mavericks owner Mark Cuban.
“This is ridiculous. The only reason there is little competition is because of backwards and confusing regulations,” Cuban said on Twitter.
One of the announced reasons for the merger—announced in November—was FanDuel’s and DraftKings lengthy, state-by-state battle over DFS regulations as more than 30 states have moved to regulate the industry in some way. The two companies want to combine resources in those battles. A number of smaller DFS companies have closed in the face of tighter restrictions, licensing fees and state-imposed taxes.
