BOSTON – The two leading daily fantasy sports companies DraftKings and FanDuel have scrapped their proposed merger about a month after federal regulators sued to block it.
The two companies said Thursday they were moving forward separately in the best interests of their customers, employees, and investors. Neither directly addressed the federal government's concerns with the deal.
FanDuel CEO Nigel Eccles said in his statement that his company still believes the deal would have increased investment and product development, benefiting consumers and the broader industry.
But DraftKings CEO Jason Robins in a separate statement touted his company's rapid growth, a possible signal that the once-bitter rivalry between the two companies has resumed.
"We have a growing customer base of nearly 8 million, our revenue is growing over 30 percent year-over-year, and we are only just beginning to take our product overseas," he said.
The Federal Trade Commission — along with the attorneys general of California and the District of Columbia — opposed the merger last month because they said it would create a company controlling more than 90 percent of the U.S. market for paid daily fantasy sports.
An FTC spokeswoman didn't immediately comment Thursday. The companies and the FTC agreed late last month to temporarily halt the merger, pending an administrative trial scheduled for Nov. 21.
The online contests challenge players to build rosters of real-life athletes in order to vie for cash and other prizes based on how those athletes do in actual games. The games grew in large part from a 2006 federal law that banned online gambling but created a specific niche for fantasy sports.
Founded in 2012, Boston-based DraftKings is the younger of the two companies but has grown to become the largest daily fantasy sports company in terms of entry fees and revenues. FanDuel, which was founded in Scotland in 2009, is the second largest.
The companies announced their merger last November after a high stakes advertising war that brought regulatory scrutiny and legal challenges down on the industry, which some consider as essentially selling illegal online sports betting.
Given the legal and legislative battles the two companies have poured resources into in recent years, it isn't surprising they both balked at the prospect of fighting another costly legal case, said Daniel Barbarisi, author of "Dueling With Kings," an inside look at the industry's rise and fall.
He suggests DraftKings is in the better position to weather whatever comes next.
"If the two companies have to go back to war, I'd put my money on DraftKings," Barbarisi said. "Through the merger process, DraftKings operated as if the merger was no guarantee. It raised money and continued to push the envelope and grow the brand. FanDuel didn't raise money, and its new initiatives weren't as aggressive. That has left DraftKings in the stronger position now that the time to play nice is over, and they have to compete for market share again."