Two senators are alleging that DraftKings and FanDuel have worked together to maintain their status as the nation’s top sports betting operators and have asked the Federal Trade Commission and Justice Department to investigate the two companies.
Sen. Mike Lee®, of Utah, and Sen. Peter Welch (D), of Vermont, released a letter last week expressing their concerns and calling for a probe.
“We urge you to look into these allegations to ensure that competition is protected, and consumers continue to benefit from innovation and new offerings in sports entertainment,” the letter noted.
Details On The Allegations
The senators noted that the two companies attempted a merger in 2017, but that the FTC, state of California, and Washington D.C. helped block that deal. The letter alleges that the two have since been engaged in anticompetitive practices to retain their dominance in the sports betting and daily fantasy sports industries.
That allegedly includes working “in concert to exert pressure on smaller rivals to stymie market access.” The senators argue that this has included interfering in rivals’ relationships with sports leagues, marketing partners, payment processing companies, and vendors. The senators allege that after the merger was blocked, the two have virtually acted as a single company.
Front Office Sports notes that the allegations stem from a report earlier this year from Temple University law professor Salil Mehra. He said that the two companies have more than 90% of the fantasy sports market.
The senators believe a federal investigation is necessary to ensure continued innovation in the industry as well as access to capital for other sports betting competitors.
“FanDuel and DraftKings were prevented from merging because it would have substantially lessened competition and harmed consumers by forming a monopoly,” the senators said. “They should not be allowed to accomplish through collusion what was prevented through acquisition.”
Neither company has commented on the call for an investigation. Almost 75% of states now have legalized sports betting and the industry has seen record revenues in recent months. That has included bets totaling $2 billion or more for September and October in New York.