Posted on: December 6, 2024, 03:42h.
Last updated on: December 6, 2024, 03:42h.
DraftKings (NASDAQ: DKNG) and FanDuel face bipartisan allegations of collusion that may breach US antitrust laws.
Senators Mike Lee (R-UT) and Peter Welch (D-VT) penned a letter to Assistant Attorney General Jonathan Kanter and FTC Chairwoman Lina Khan alleging that DraftKings and FanDuel have been engaging in anti-competitive practices since their failed merger attempt in 2016.
After their merger was blocked, FanDuel and DraftKings are accused of behaving as a single entity, potentially violating antitrust laws…and exerting pressured on important business partners not to engage with their competitors,” stated the senators.
The merger, which was halted by California, the District of Columbia, and the FTC, was pursued before the 2018 PASPA ruling that allowed states to legalize sports betting. Presently, 39 states and Washington, DC permit some form of sports wagering.
Senators Allegations Against DraftKings and FanDuel
Following the PASPA ruling, DraftKings and FanDuel utilized their dominance in daily fantasy sports (DFS) to gain an edge in online sports betting.
The two companies now hold a majority market share in mobile sports wagering, operating as a duopoly with over 70% market share. Lee and Welch believe these companies may be engaging in anti-competitive behavior.
Despite competition in the US sports betting market, the senators claim that DraftKings and FanDuel are not competing based on merit. They allege that the companies are working with the Sports Betting Alliance to stifle competition.
Reports suggest that the two giants are pressuring rivals to limit market access and interfering with competitors’ relationships with major sports leagues, marketing partners, payment processors, and other crucial vendors.
Impact on Investors
Following the senators’ letter, DraftKings and Flutter Entertainment (NYSE: FLUT) experienced volatility in their stock prices. DraftKings saw a decline of up to 7% while Flutter was down 4% before recovering slightly.
Lee and Welch urge Kanter and Khan to investigate the alleged anti-competitive behavior to protect consumers.
It remains to be seen if the new leadership at the FTC and Justice Department will pursue an investigation into DraftKings and FanDuel. With incoming President Trump, Kanter and Khan’s successors may decide on the course of action regarding the allegations.