Daily fantasy powers DraftKings and FanDuel have called off their planned merger, the two companies announced Thursday.
The two sites, which are estimated to make up 90 percent of the daily fantasy market, announced the planned merger in November but met much criticism due to anti-trust regulations. The abrupt cancellation of the merger comes on the heels of the Federal Trade Commission, along with attorney generals in California and District of Columbia, filing lawsuits in June in an attempt to block the merger.
“FanDuel decided to merge with DraftKings last November, because we believed that this deal would have increased investment in growth and product development thereby benefiting consumers and the greater sports entertainment industry,” FanDuel CEO Nigel Eccles said Thursday in a statement.”There is still enormous, untapped market opportunity for FanDuel, and we will continue to execute our strategy to grow our business and further expand the fantasy sports industry.”
DrafKings CEO Jason Robbins maintained that the cancellation of the merger was for the best.
“We believe it is in the best interests of our customers, employees, and investors to terminate our agreement to merge with FanDuel and move forward as a separate company,” Robbins said in a statement.
Some legal experts believe the timing of the cancellation signals more issues than just legal costs.
“Perhaps these companies were worried about the information that would be revealed at the [preliminary injunction] hearing and how that would tarnish their brands. Win or lose, at the end of the day, image is everything to these companies, and they couldn’t afford adverse witnesses or data that could permanently impair their chances of recovering from a failed merger,” Rachel Hirsch, an attorney for Washington, D.C.-based firm Ifrah Law who specializes in FTC investigations, said to ESPN.