DraftKings, FanDuel Abandon Merger Plans in Wake of FTC Pushback
DraftKings and FanDuel, operators of the two largest sites in the multibillion online fantasy sports industry, have abandoned their plans to merge in the face of pressure from the Federal Trade Commission.
The companies “believed that this deal would have increased investment in growth and product development thereby benefiting consumers and the greater sports entertainment industry,” FanDuel CEO Nigel Eccles said Thursday.
“While our opinion has not changed, 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.”
DraftKings echoed that in a statement of its own. “We believe it is in the best interest of our customers, employees and investors to terminate our agreement to merge with FanDuel and move forward as a separate company,” CEO Jason Robins said.
“This will allow us to singularly focus on our mission of providing the most innovative and engaging interactive sports experience imaginable.”
The FTC announced its intention to block the deal last month on the grounds that if approved, the two companies would make up 90 percent of the market and be potentially harmful to consumers and rivals.
The two daily fantasy sports companies, who announced the proposed merger last November, maintain that they make up a much smaller segment of the overall online fantasy gaming sector, which includes such media giants as Yahoo and ESPN, whose games operate on weekly or monthly cycles.
According to recent research conducted for the Fantasy Sports Trade Association, the total number of individuals participating in fantasy sports in the United States rose to 57.4 million in 2016 and that number looks set to increase this year.
The move comes as the fantasy sports game companies have signed up David Boies, of Boies Schiller Flexner in New York, to defend it in class action litigation.
Contact Todd Cunningham at firstname.lastname@example.org. On Twitter: @toddcnnnghm.
Source: Law Journal