DRAFTKINGS and FanDuel have cancelled their planned big-money merger, deciding to “move forward” as separate companies for the sake of their respective shareholders.
The decision comes in the face of stern opposition from the US Federal Trade Commission (FTC), which filed an anti-trust suit against the fantasy sports operators in June.
Directors at the Bureau of Competition claimed the combined forces of the two industry-leading firms would create a monopoly that controlled over 90 per cent of the daily fantasy sports (DFS) market.
All parties were due to meet for a scheduling conference last Friday, but there was no need after DraftKings and FanDuel announced the dissolution of their agreement on Thursday.
“FanDuel decided to merge with DraftKings last November, because we believed that this deal would have increased investment in growth and product development thereby benefiting consumers and the greater sports entertainment industry,” said Nigel Eccles, chief executive of FanDuel.
“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.
“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.”
It was only a week ago that DraftKings and FanDuel released a joint statement in which they insisted they would fight the block on their proposed union.
But with the Attorneys General of California and the District of Columbia onside with the FTC, both operators now seem more than happy to revert to the status quo.
“We have a growing customer base of nearly eight million, our revenue is growing over 30 per cent year-over-year, and we are only just beginning to take our product overseas to the billions of international sports fans we have yet to even reach,” said Jason Robbins, chief executive of DraftKings.
“We believe it is in the best interests of our customers, employees, and investors to terminate our agreement to merge with FanDuel and move forward as a separate company.”
DraftKing and FanDuel had hoped to have their merger sealed in time for the commencement of the 2017 NFL regular season in September, but legal proceedings would have made that impossible.
What this means for the DFS market
US fantasy sports fans should be rejoicing.
If this deal had gone through, it would have obliterated any semblance of competition in the DFS market.
With the big boys playing on the same team, those lower entry fees, innovative game options and bigger, better promotions would have become a thing of the past.
You can bet the overall quality of the product would not have developed and improved at the same rate as it had in the years prior.
With that sorted, it will be interesting to see what happens in a similar case that is unfolding in Australia.
The Australian Competition and Consumer Commission (ACCC) last week lodged an appeal against the proposed merger of Tabcorp and Tatts Group – the country’s two largest gaming and wagering operators.
If that AUD $11 billion deal were to go through, the resulting mega-brand would hold all the reins for the Australian racing industry.
That would include key media streams such as broadcasting rights and integrated editorial content, where corporate online bookmakers have made big inroads in recent years.
Will we see the two gaming giants turn around with a face full of humble pie in a week or two, much like DraftKings and FanDuel have done?
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