Home

DraftKings, FanDuel Abandon Merger Plans After Being Faced With Rising Legal Costs

DraftKings, FanDuel Abandon Merger Plans After Being Faced With Rising Legal Costs

Published

DraftKings and FanDuel "abandoned their plans for a merger on Thursday almost eight months after first announcing the plan," according to Kurt Wagner of RECODE. DraftKings co-Founder & CEO Jason Robins said that there were a "number of factors why DraftKings and FanDuel decided to throw in the towel." A big part of it was "time and money -- fighting the FTC would have been an expensive and lengthy process, and both companies have already spent millions fighting legal battles in order to operate in states that consider their product a form of gambling." Robins claims DraftKings is in a more "stable position business-wise than it was a year ago when these conversations first started." Robins: "When you combine that with the notion of spending a bunch of money and time in continuing to try and fight this, and probably not a whole high likelihood of success anyways, it made sense for us to move on" (RECODE.net, 7/13). In Boston, Andy Rosen notes the FTC "argued the two companies would have formed a 'near monopoly,'" with more than 90% of the U.S. market for paid DFS. By "abandoning a deal the companies had contended was critical to their future, DraftKings and FanDuel now return to the familiar -- and costly -- role of battling each other for the upper hand in the still young daily fantasy sports business." The companies had long been bitter rivals, but Robins said that he "does not expect a similar public battle this time" (BOSTON GLOBE, 7/14). The WALL STREET JOURNAL's Kirkham & Minaya note some analysts now question whether the market for DFS is "large enough to support two profitable companies" (WALL STREET JOURNAL, 7/14).

ALL RISE
: ESPN.com's David Purdum wrote the announcement is an "abrupt end to a deal that many viewed as the best path forward for both companies, but also one that drew federal scrutiny and anti-trust concerns." The FTC in June, along with attorneys general from California and DC, "filed suit to block the merger over competition concerns" (ESPN.com, 7/13).

Home