FanDuel & DraftKings Under Antitrust Investigation

Are FanDuel and DraftKings playing fair? Two US senators believe they might not be.

Senators Mike Lee and Peter Welch have urged the FTC and DOJ to investigate the operators for anticompetitive practices.

Allegations include collusion, market obstruction, and monopolistic behavior, which could stifle innovation and harm consumers.

Dive deeper into these claims and discover how this case could reshape the US sports betting industry.

FanDuel and DraftKings Under Fire: Senators Call for Antitrust Investigation

Key Points

1. Antitrust Concerns Raised: Senators allege FanDuel and DraftKings coordinated efforts to block market access for smaller competitors.
2. Impact on New Entrants: Claims suggest obstruction in partnerships with leagues, vendors, and payment processors, limiting competition.
3. FTC and DOJ Involvement: The senators demand a thorough investigation into potential violations of the Sherman Act.

FanDuel and DraftKings Face Antitrust Allegations: Senators Demand Federal Probe

The US sports betting industry is under scrutiny as Senators Mike Lee and Peter Welch have called on the Federal Trade Commission (FTC) and the Department of Justice (DOJ) to investigate FanDuel and DraftKings for alleged anticompetitive practices.

These allegations, if substantiated, could have significant implications for the online sports betting market, which is rapidly expanding across the United States.

Collusion Allegations and Monopoly Concerns

In their letter, the senators highlighted concerns about the operators’ conduct, suggesting violations of Section 1 of the Sherman Act, which prohibits agreements that restrict competition. The allegations center on claims that FanDuel and DraftKings, through their trade association Sports Betting Alliance, coordinated efforts to stifle competition from emerging players.

Specific accusations include interference with smaller competitors’ access to:

• Major sports leagues for partnerships.
• Marketing platforms critical for brand exposure.
• Payment processing services necessary for smooth operations.

By blocking access to these essential resources, FanDuel and DraftKings are accused of creating significant barriers for new entrants to the market.

A History of Antitrust Concerns

This is not the first time FanDuel and DraftKings have faced antitrust scrutiny. Their 2016 proposed merger was blocked by the FTC, which determined it would result in a near-monopoly, controlling 90% of the daily fantasy sports (DFS) market.

Despite the failed merger, the senators argue that the two companies have acted as a de facto monopoly, collaborating to dominate the sports betting market. Their combined market share of 67% in online sports betting raises further concerns about competitive fairness.

Implications for Competition and Innovation

The senators emphasized the importance of protecting competition in the growing sports betting industry. They argue that the alleged collusion stifles innovation and deprives consumers of new and diverse offerings in sports entertainment.

In their letter, they wrote:

“FanDuel and DraftKings should not be allowed to accomplish through collusion what was prevented through acquisition.”

The senators have called on the FTC and DOJ to investigate and take any necessary enforcement actions to protect competition and consumer interests.

Evidence and Recent Controversies

The letter referenced a Law.com op-ed by Salil K. Mehra, a Temple University law professor, as evidence of the operators’ alleged misconduct. One incident cited involved a lobbyist from the Sports Betting Alliance requesting Wyoming regulators to investigate Pick’em fantasy sports, accusing it of operating as unlicensed sports betting.

Critics argue such lobbying tactics demonstrate an attempt to suppress emerging competition rather than competing on the merits of their products and services.

What’s Next for FanDuel and DraftKings?

With the letter now in the hands of the FTC and DOJ, the sports betting giants face the possibility of an extensive federal investigation. If the allegations are proven, they could result in significant regulatory and legal consequences for both companies.

The call for an antitrust investigation into FanDuel and DraftKings underscores the challenges of maintaining a fair and competitive landscape in the rapidly growing US sports betting industry. As new players enter the market, ensuring open access and healthy competition will be crucial for innovation and consumer protection.

This case could redefine the rules of engagement for sports betting operators, sending a strong message about the importance of fair play in the business of gaming. As the investigation unfolds, the outcome could shape the industry’s future trajectory.

Stay tuned as the FTC and DOJ take the next steps to address these critical allegations. Will this shake up the dominance of FanDuel and DraftKings? Only time will tell.