Fan Duel and Draft Kings Merger Creates Monopoly, FTC Alleges
Is this the real life? Is this just fantasy? Caught in a lawsuit, no escape from reality. Open your eyes, look up the Fan Duel and Draft Kings merger to see: the FTC has alleged that the merger violates the Clayton Act due to concerns that it will create a monopoly for daily fantasy sports.
The lawsuit, filed last month by the FTC, seeks to resolve the concern created by the merger by stopping it. Namely, since Fan Duel and Draft Kings are the main providers of paid fantasy sports gaming nationwide, when it comes to these contests or games, consumers don't really have any other choices. By merging together, consumers will have even less choice, and this will allow the sole company resulting from the merger to not have to be concerned about competition in the free market.
What's a Monopoly?
In real life, a monopoly works much in the same way as it does in the board game. When you get all the properties in a particular color, that's a monopoly. In the game, the rent other players must pay you goes up when you have a monopoly. In real life, when a company is the only game in town for a certain product or service, they can charge whatever price they want and people will have to pay it if they want that product or service.
However, because clearly monopolies are not good for consumers, both state and federal governments can step in to either break up monopolies, or prevent them from forming.
Is This Really a Monopoly?
When it comes to daily fantasy sports contests, Fan Duel and Draft Kings have fought rather hard to be the two biggest names in the industry. Together, the two companies own over 90 percent of the market share for daily fantasy sports contests. Many of their users have used both platforms, and the companies have been in a constant battle against each other for the same customers. This competition has resulted in benefits to consumers due to each company having to continually improve not just to get new customers, but also to keep their own customers from switching to the competition.
Whether a court will find that the merger creates a monopoly is yet to be seen. As for the fantasy companies, they believe their merger will actually benefit consumers through an increase in resources, and enhanced services. Both plan to fight the FTC's push to stop the merger, which could be done as soon as the end of this year.
Related Resources:
- Final Fantasy: DraftKings, FanDuel Agree to Massive Merger (FindLaw's Tarnished Twenty)
- DraftKings, FanDuel Settle NY False Advertising Lawsuit (FindLaw's Tarnished Twenty)
- NY Lawsuit: Fantasy Sports Gambling 'Exploits the Financially Desperate' (FindLaw's Tarnished Twenty)
- New York Moves to Legalize Daily Fantasy Gambling (FindLaw's Tarnished Twenty)