FanDuel may abandon proposed merger in the face of US regulatory opposition

Former American football quarterback Joe Montana launching FanDuel Fantasy Golf in New York yesterday. Picture: FanDuel.

FanDuel is considering whether to walk away from its proposed merger with DraftKings in light of a decision by the US Government to challenge the deal in court. In an interview with Recode, chief executive Nigel Eccles said that his company was still “evaluating options,” and when pressed whether the two daily fantasy sports sites might abandon their plans or fight federal antitrust regulators, he replied: “All of those things are still on the table.”

Last month, the US Federal Trade Commission last month voted to block a deal that — in the estimate of federal competition regulators — would have given the combined entity more than 90% of the market for daily fantasy sports bets. Those contests allow web users to draft fictional rosters of athletes and wager on their performance each week. For their part, FanDuel and DraftKings tried to stress to the FTC that they serve a much broader marketplace — not just daily fantasy sports, but weekly and yearly contests, including more casual leagues offered by sites like ESPN and Yahoo. But the FTC disagreed with that assessment and, on a 2-0 vote, it moved to challenge the deal on grounds that it would harm consumers and companies alike.

FanDuel, which originated in Edinburgh, and DraftKings can now choose to fight the federal government, amend the deal in some way or cancel their merger entirely. Asked about the future, a spokeswoman for DraftKings told Recode: “We are working as quickly as possible to determine the best course of action in the interest of our customers, employees and investors.” FanDuel’s Eccles stressed that his daily fantasy sports site is “still growing” — and is in good shape to take on its competitors, including its preferred partner, DraftKings. He was speaking to Recode at the launch in New York of a daily fantasy golf competition, part of a move to feature other sports.