DraftKings, FanDuel Targeted in Senators’ Antitrust Push
- 06 Dec 2024
- Gambling News
DraftKings (NASDAQ: DKNG) and FanDuel are facing bipartisan allegations of collusion that may breach US antitrust regulations.
In a correspondence to Assistant Attorney General Jonathan Kanter and Federal Trade Commission (FTC) Chairwoman Lina Khan, Senators Mike Lee (R-UT) and Peter Welch (D-VT) assert that following the prohibition of their 2016 merger, DraftKings and FanD
"After their merger to monopoly was blocked, it seems that FanDuel and DraftKings have arguably acted as one company, violating our antitrust laws…and have undertaken a coordinated effort to pressure crucial business partners not to do business with these new players,” wrote the senators.
California, the District of Columbia, and the FTC worked to prevent that marriage, which was sought before the 2018 Supreme Court decision regarding the Professional and Amateur Sports Protection Act (PASPA). That choice opened the door for states to determine their own policies regarding the legalization of sports betting. Currently, various types of sports betting are permitted in 39 states along with Washington, DC.
Senators Claim DraftKings, FanDuel are Attempting to Eliminate Rivals
Following the PAPSA decision, DraftKings and FanDuel utilized their already established supremacy in daily fantasy sports (DFS) to secure a clear competitive edge in the realm of online sports wagering.
Currently, the two operators are often referred to as a duopoly, which is correct as they dominate over 70% of the mobile sports bets made in this country. In almost every state where both companies provide mobile sports betting, they hold the top two positions by market share. Lee and Welch stated that DraftKings and FanDuel “could be exacerbating these issues via anticompetitive behavior.”
The US sports betting landscape is filled with competitors to DraftKings and FanDuel, yet the senators informed Kanter and Khan that they think the two giants are reluctant to compete with challengers based on the quality of their products. Referencing public documents, the politicians asserted that DraftKings and FanDuel are collaborating with the Sports Betting Alliance to eliminate rivals.
The senators informed the regulators that reports indicate the two behemoths exert pressure on competitors “to hinder market access” and there is proof of meddling in rivals’ “connections with key sports leagues, marketing associates, payment processing firms, and other essential suppliers.”
Investors Prepare for Consequences
On the reverse side of the senators’ correspondence, it was an unpredictable day for the stock of DraftKings and its parent company Flutter Entertainment (NYSE: FLUT). At the start of Friday’s session, DraftKings dropped by as much as 7%, while Flutter fell by up to 4%. DraftKings dropped by 1.29%, whereas Flutter ended the day with a modest increase.
Lee and Welch pointed out to Kanter and Khan that their agencies aim to safeguard consumers from the anticompetitive actions that they claim the gaming companies are involved in.
The current question is whether the new leadership at the FTC and Justice Department will take into account an investigation into DraftKings and FanDuel. As President-elect Trump prepares to assume office next month, Kanter and Khan are expected to transition out, and it remains uncertain whether their replacements are keen on continuing the inquiry proposed by Lee and Welch.
