PROVIDENCE – Fantasy-sports betting rivals DraftKings and FanDuel have announced an end to their bid for a merger, after federal regulators blocked the proposal last month.
In a statement released July 13, FanDuel CEO Nigel Eccles said the company still believes a merger would have benefited New York-based FanDuel’s growth and product development, but the decision to terminate the deal was “in the best interest of our shareholders, customers, employees and partners.”
“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,” said Eccles.
In June, the U.S. Federal Trade Commission voted to block the merger of FanDuel and DraftKings, citing antitrust regulations after determining the combined company would control more than 90 percent of the daily fantasy-sports market.
“This merger would deprive customers of the substantial benefits of direct competition between DraftKings and FanDuel,” Tad Lipsky, acting director of the FTC’s Bureau of Competition, said in a statement.
In an interview with Axios, DraftKings CEO Jason Robins said he was surprised by the FTC’s ruling, and that he “thought the consensus was pretty clear that this was going to be a good thing for fantasy sports and its customers.”
Robins told Axios that “a number of factors” contributed to the merger’s ultimate failure, including the fact that the Boston-based DraftKings is now a larger company than FanDuel, and not similarly-sized as the two competitors were when they signed the original merger agreement.
R.I. Attorney General Peter F. Kilmartin had previously conducted a review of daily fantasy-sports operations, to determine whether DraftKings, FanDuel and similar games could legally conduct business in the Ocean State.
In February, Kilmartin found in favor of DraftKings and FanDuel, joining the attorneys general of Massachusetts, Kansas, Maryland, Florida and South Dakota in his opinion that daily fantasy sports are games of skill, rather than a game of chance that would constitute illegal gambling.
Kilmartin later told Providence Business News that “any source of legal gambling is a legitimate source of revenue for the state,” and therefore Rhode Island shouldn’t shy away from the potential revenue venue of daily fantasy sports.
The attorneys general of Vermont, New York, Illinois, Nevada, Texas, Hawaii and Mississippi have all submitted opinions to the contrary, finding that daily fantasy sports are illegal in those states since the game’s “element of chance” could constitute a form of gambling.
Kaylen Auer is a PBN contributing writer.