US: The odds against a DraftKings-FanDuel merger

DraftKings and FanDuel are reportedly in talks to merge as protracted fights over the legality of the daily fantasy sports games they provide take their toll on both companies’ finances. Some legal experts argue, however, that the odds of antitrust regulators approving such a deal are slim.

Investors in the two companies have been pushing DraftKings, which is based in Boston, and FanDuel, headquartered in New York, to join forces for a while, Bloomberg reported, citing people familiar with the situation. The talks were still at a preliminary stage and could fall apart, the news service said.

FanDuel declined to comment on the Bloomberg story. DraftKings spokesperson Femi Wasserman said, “These rumors have existed for as long as both companies have been in operation. We don’t comment on speculation.”

“There are two glaring problems with even suggesting a merger between FanDuel and DraftKings,” said Marc Edelman, an associate law professor at the Zicklin School of Business, Baruch College, City University of New York. “A merger between the No. 1 and No. 2 companies in any marketplace where those companies have an overwhelming share of the market is going to lead to significant antitrust scrutiny from the regulators whether it be the FTC or the DOJ.”.

Not only was it “incredibly unlikely” that such a merger would survive antitrust scrutiny, but going through the process would open up DraftKings and FanDuel to additional scrutiny of their business practices and would subject their senior officers to “investigational hearings,” he said.

Full Content: Bloomberg

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