Posted: December 6, 2024, 03:42.
Last updated: December 6, 2024, 03:42h.
DraftKings (NASDAQ: DKNG) and FanDuel are facing bipartisan charges of collusion that could violate U.S. antitrust laws.
FanDuel Sportsbook Logo. Two U.S. senators are asking regulators to investigate the company and DraftKings for possible antitrust violations. (Image: FanDuel Sportsbook)
In a letter to Assistant Attorney General Jonathan Cantor and Federal Trade Commission (FTC) Chair Lina Khan, Sen. Mike Lee (R-Utah) and Peter Welch (D-Vermont) ), DraftKings and FanDuel have engaged in anti-competitive conduct since their 2016 merger was blocked.
After being blocked from merging into a monopoly, FanDuel and DraftKings likely violated antitrust laws by acting as one company…and putting pressure on key business partners not to do business with these new players. “We made a concerted effort to achieve this goal,” the senators wrote. .
California, the District of Columbia, and the FTC fought to block this marriage, which was attempted prior to a 2018 Supreme Court ruling on the Professional and Amateur Sports Protection Act (PASPA). The decision paved the way for each state to make its own decisions about legalizing sports betting. Currently, 39 states and Washington DC allow some form of sports betting.
Senators say DraftKings and FanDuel are moving to crush their competitors
Since the PAPSA ruling, DraftKings and FanDuel have leveraged their previously established advantages in daily fantasy sports (DFS) to gain a decisive competitive advantage in the world of online sports betting.
Today, these two operators are widely described as a duopoly, which is accurate as they control over 70% of the mobile sports betting that takes place in the country. Both companies rank first and second in market share in nearly every state where they offer mobile sports betting. Lee and Welch wrote that DraftKings and FanDuel “may be exacerbating these harms through anti-competitive conduct.”
There is no shortage of competitors for DraftKings and FanDuel in the U.S. sports betting market, but the senators told Kanter and Khan that the two giants will compete with their rivals based on the merits of their offerings. He said he did not think he would do so. Politicians cited public reports claiming that DraftKings and FanDuel were working with the Sports Betting Alliance to crush their competitors.
The senators told regulators that reports suggested both large companies were pressuring rivals to “hinder market access” and that competitors’ “major sports leagues, marketing partners, payment processing There is evidence that the company is interfering with the company’s relationships with other important vendors.
Investors prepare for impact
The story behind the senators’ letter is that it was a volatile day for DraftKings and FanDuel parent company Flutter Entertainment (NYSE:FLUT). At the beginning of Friday’s session, DraftKings was down as much as 7%, while Flutter was down as much as 4%. DraftKings closed 1.29% lower, while Flutter ended the day slightly higher.
Mr. Lee and Mr. Welch reminded Mr. Kanter and Mr. Kahn that their agency is designed to protect consumers from the anti-competitive conduct they accuse gaming companies of engaging in. .
The question now is whether the new leadership at the FTC and Department of Justice will consider investigating DraftKings and FanDuel. With President-elect Trump set to take office next month, Cantor and Khan are likely to remain in their roles, and it is unclear whether their replacements would be interested in moving forward with the investigation proposed by Lee and Welch. is.
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