In 2016, it was announced that the two largest daily fantasy sports companies were considering a merger. Fast forward a few months to June 2017, and the United States Federal Trade Commission decides they feel that the two companies joining together could create an unfair market so they are working to block the merger. Now, FanDuel may have to ask for funding from investors in order to stay afloat since the merger has been blocked.
According to The Sunday Times, investors of FanDuel may be forced to provide more funds after the FTC decided that the historic merger would be unfair. Current investors of FanDuel include Shamrock Capital, Pentech Ventures, private equity firm KKR and Scottish Enterprise. The report states that investors have already provided $350 million since the company was first created in 2009.
The merger with DraftKings would have actually been of benefit to FanDuel as their accounts for the period ending December 31st, 2015 have been overdue as of the end of this past June.
The proposed merger is being blocked by the Federal Trade Commission as they feel the two companies coming together would create a combined group that controls more than 90% of the daily fantasy sports market in the United States.
The acting director of the Bureau of Competition for the FTC, Tad Lipsky, commented in a statement on the merger that customers would be deprived of the benefits found in direct competition between the two companies. The role of the FTC is to preserve the competitive markets and Lipsky feels that the filing to block the merger by the FTC was a demonstration of their commitment to this goal.
Both FanDuel and DraftKings disagree with the statement by the FTC and have said that the merger is pro-competition.