DraftKings and FanDuel scrap merger
DFS operators agree to go it alone in face of a lengthy litigation battle against US competition authorities
The planned merger between DraftKings and FanDuel has been abandoned, the two DFS operators announced Thursday evening.
The tie-up, first announced last November, had been on shaky ground ever since the Federal Trade Commission filed a suit to block it last month.
Both companies said the move was in the best interests of their customers and shareholders, with the firms facing a lengthy court battle against the FTC.
FanDuel CEO Nigel Eccles said: “FanDuel decided to merge with DraftKings last November, because we believed that this deal would have increased investment in growth and product development thereby benefiting consumers and the greater sports entertainment industry.
“While our opinion has not changed, we have determined that it is in the best interest of our shareholders, customers, employees, and partners to terminate the merger agreement and move forward as an independent company.”
Eccles said there was still “enormous, untapped market opportunity for FanDuel,” and the company would continue to grow and expand the fantasy sports industry.
DraftKings CEO Jason Robins added: “Over the past few years, DraftKings has become the world’s leading fantasy sports company. We are recognised as a global sports entertainment brand and the industry leader in utilising technology to bring our customers the best fantasy contests and products.
“We have a growing customer base of nearly eight million, our revenue is growing over 30% year-over-year, and we are only just beginning to take our product overseas to the billions of international sports fans we have yet to even reach.
“Consequently, we believe it is in the best interests of our customers, employees, and investors to terminate our agreement to merge with FanDuel and move forward as a separate company.”
Rachel Hirsch, an attorney for Ifrah Law, told ESPN the timing of the announcement suggested there was more behind the decision than cost savings.
“Perhaps these companies were worried about the information that would be revealed at the [preliminary injunction] hearing and how that would tarnish their brands,” she said. “Win or lose, at the end of the day, image is everything to these companies, and they couldn’t afford adverse witnesses or data that could permanently impair their chances of recovering from a failed merger.”
The FTC said the decision was a “clear win” for American consumers.