Senators Push for Antitrust Probe into DraftKings and FanDuel
December 9, 2024 Marija D
Two U.S. senators have called for an antitrust investigation into the business practices of DraftKings and FanDuel, two of the largest online betting platforms in the United States. Republican Senator Mike Lee of Utah and Democratic Senator Peter Welch of Vermont sent a formal letter to the Federal Trade Commission (FTC) and Department of Justice (DOJ) on December 5, raising concerns about potential collusion between the two companies.
The lawmakers highlighted allegations that DraftKings and FanDuel might be coordinating efforts to prevent other businesses from working with their competitors. This conduct, if proven, could represent a violation of antitrust laws designed to ensure fair competition in the marketplace. Senator Lee shared the letter publicly on social media platform X (formerly Twitter), amplifying calls for ability in the online betting sector.
Connection to Blocked 2016 Merger
In their letter, the senators linked the current allegations to DraftKings and FanDuel’s failed attempt to merge into a single entity in 2016. At the time, the FTC had blocked the merger, citing concerns that it would lead to a monopoly in the daily fantasy sports market . The two companies ultimately abandoned their plans to combine.
Now, Senators Lee and Welch argue that, despite the merger’s failure, the companies are engaging in behavior that mirrors the anti-competitive concerns raised in 2016. “After their merger to monopoly was blocked, it seems that FanDuel and DraftKings have arguably acted as one company, violating our antitrust laws,” the senators wrote. This accusation suggests that the companies may have found alternative ways to dominate the market, potentially at the expense of smaller competitors.
The senators’ letter urges the FTC and DOJ to scrutinize the alleged practices of DraftKings and FanDuel and determine whether their actions violate federal antitrust laws. While the FTC is responsible for overseeing competitive practices in the marketplace, the DOJ has the authority to prosecute antitrust violations.
Neither agency has yet confirmed whether they will take action based on the senators’ request. DraftKings and FanDuel have also remained silent, with no immediate statements from representatives of either company regarding the allegations.
Industry Impacts and Stock Reaction
The senators’ call for an investigation has drawn significant attention from the broader business community, particularly as the online betting market continues to expand. Industry analysts note that increased regulatory scrutiny could impact the way dominant players like DraftKings and FanDuel operate.
Following the release of the letter, shares of DraftKings experienced a noticeable dip, falling approximately 2.6% during late morning trading on December 5 on the Nasdaq. The decline suggests investor apprehension about potential legal challenges or increased regulatory oversight.
This push for federal intervention underscores growing concerns about the competitive dynamics within the online betting industry. If an investigation is launched, it could reshape how companies in this sector interact with competitors and business partners, potentially leading to stricter regulatory measures aimed at ensuring fair competition.
Source: ”Two U.S. senators seek antitrust probe of DraftKings, FanDuel”, reuters.com, December 06, 2024.
It’s interesting to see senators from different parties coming together on this issue. If DraftKings and FanDuel are indeed working together to stifle competition, that would be a serious problem for smaller businesses and consumers. I’ll be curious to see if the FTC or DOJ takes action and how this might impact the online betting industry.