Senators Call for Antitrust Investigation Into FanDuel and DraftKings
Two senators have called for an investigation into potential antitrust violations by DraftKings and FanDuel. The lawmakers suspect the companies of coordinating efforts to stifle competition in the online sports betting market, harming smaller competitors and consumers.
Antitrust Allegations Against FanDuel and DraftKings
Senators Mike Lee and Peter Welch have sent a letter to the Federal Trade Commission (FTC) and the Department of Justice (DOJ), urging them to investigate potential violations of antitrust laws by FanDuel and DraftKings.
The allegations are fueled by the failed 2016 merger attempt between the two companies, which the FTC blocked on the grounds that it would create an entity controlling 90% of the market.
The senators claim that FanDuel and DraftKings, despite the blocked merger, continue to act in ways that suggest coordinated dominance in the sector, potentially violating the Sherman Act, which prohibits collusion to restrain trade.
The operators are accused of leveraging their influence through the Sports Betting Alliance to pressure smaller competitors and restrict their market access.
According to the allegations, FanDuel and DraftKings have purportedly blocked agreements between smaller competitors and key partners, such as sports leagues, marketing service providers, payment processors, and technology suppliers.
DraftKings Shares Drop
The senators emphasized the importance of maintaining fair competition in the sports betting sector due to its growing popularity and the potential risks of consumer addiction.
The outcome of the investigation could significantly impact the U.S. sports betting industry, which has seen rapid growth since state-level legalization in several regions.
Following the release of the senators’ letter, DraftKings’ shares fell by 2.6%. As of now, there have been no comments from FanDuel, DraftKings, the FTC, or the DOJ.
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