Trending: A guide for startups to prepare for the California Consumer Privacy Act (CCPA)
DraftKings CEO Jason Robins. (GeekWire Photo / Taylor Soper)

FanDuel and DraftKings have run into a roadblock for their proposed merger.


The FTC announced today that it will, along with attorney general offices from California and District of Columbia, seek legal action to block the merger of the two daily fantasy sports giants. The deal would “control more than 90 percent of the U.S. market for paid daily fantasy sports contests,” the FTC noted. The merger was first announced this past November.

“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. “The FTC is committed to the preservation of competitive markets, which offer consumers the best opportunity to obtain innovative products and services at the most favorable prices and terms consistent with the provision of competitive returns to efficient producers.”

Here’s a combined statement from DraftKings and FanDuel:

“We are disappointed by this decision and continue to believe that a merger is in the best interests of our players, our companies, our employees and the fantasy sports industry. We are considering all our options at this time. As we work together to determine our next steps, we would like to thank DraftKings and FanDuel players, partners and employees for their patience, support and continued loyalty.”

DraftKings and FanDuel, which have raised a combined $1 billion, previously said that teaming up would help reduce overall cost and get them closer to profitability. Both companies, which spent huge amounts of cash on advertising as they battled each other for users and brand recognition, have faced regulatory and legal hurdles for the past few years.

While fantasy sports have been around for decades, the daily games have become more popular as of late. Rather than a typical season-long fantasy league that forces users to keep the same roster for months, FanDuel and DraftKings let people compile different lineups each week and pick from an array of money pools that have some serious payouts to top finishers. The companies make money by taking a small cut of each pool.

“According to the FTC’s complaint, consumers of paid daily fantasy sports are unlikely to view season-long fantasy sports contests as a meaningful substitute for paid daily fantasy sports, due to the length of season-long contests, the limitations on number of entrants and several other issues,” FTC said in a press release. “The complaint also alleges that entry or expansion by other providers is not likely to provide timely or sufficient competition to offset the anticompetitive effects of the merger. The complaint also asserts that purported efficiencies would not offset the likely competitive harm.”

Sports junkie? Subscribe to GeekWire's Sports Tech weekly newletter


Job Listings on GeekWork

Find more jobs on GeekWork. Employers, post a job here.