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Merger Between DraftKings and FanDuel Off

Zachary Gleason

The proposed merger between FanDuel and DraftKings will not occur. The two daily fantasy sports gambling companies announced today that the combining of the two largest companies in the sector is off. This is due to the opposition of the Federal Trade Commission, as well as the attorneys general of California and District of Columbia.

The merger would have given the combined company a market share of over 90 percent. This would have qualified as a monopoly under the federal definition. This could have made it difficult for other companies to enter the industry and the smaller ones still in it may have found it impossible to remain competitive.

The goal of both companies is to continue with normal business. This includes growing the active player bases and lobbying for regulations that will improve business conditions and make the games explicitly legal.

DraftKings is looking towards its future as a standalone company.

“We have a growing customer base of nearly 8 million, our revenue is growing over 30 percent year-over-year, and we are only just beginning to take our product overseas,” DraftKings CEO Jason Robins said.

The legality of daily fantasy sports has been a long debate. Some state legislatures specifically legalized daily fantasy sports betting by declaring it a skill game and taxing it. Some states do not permit the games at all or have opinions from attorneys general that state that the games are not legal. Many states have no laws either way. This means daily fantasy sports companies like DraftKings and FanDuel must rely on legal opinions in those jurisdictions.

DraftKings and FanDuel raised hundreds of millions of dollars in recent years. This money was spent mainly on advertising during the 2015 and 2016 NFL seasons. Neither company has ever posted a profit, despite its massive marketing efforts and market shares.


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