FanDuel Ltd. and Draft Kings Inc., which control some 90% of the U.S. market for paid fantasy sports leagues, have called off their merger after the Federal Trade Commission pledged to block the combination.
In a joint statement, Fanduel CEO Nigel Eccles and DraftKinds CEO Jason Robins said that the government's opposition to the proposed transaction had forced the two companies to withdraw their offers.
"We are disappointed by this decision and continue to believe that a merger is in the best interests of our players, our companies, our employees and the fantasy sports industry," the statement read. "We are considering all our options at this time."
The merger had seemed like a longshot from the beginning, considering that FanDuel and Draft Kings have come to dominate a nascent industry with enormous potential for growth. Establishing a dominant player seemed to run counter to basic rules around anti-trust.
"The parties' decision to abandon this transaction is a clear win for American consumers," said Markus H. Meier, Acting Director of the Bureau of Competition in a statement Thursday. "For years, the vigorous competition between Draft Kings and FanDuel has spurred innovation and favorable pricing. In brief, consumers benefitted from the intense rivalry between the two leading players in this space. If this merger had been allowed to go through, those benefits would likely have been lost."
Founded in Scotland in 2009, FanDuel is the second-largest daily fantasy sports provider in the United States, and offers contests in football, baseball, basketball, hockey, soccer, and golf.
New York-based FanDuel is back by Kohlberg Kravis Roberts & Co. LP (KKR - Get Report) , Alphabet Inc.'s (GOOGL - Get Report) Google Capital and Time Warner Inc.'s (TWX) Time Warner Investments. Time Warner's Turner Sports as well as a number of National Football League and National Basketball Association team owners also back FanDuel. Other investors include Shamrock Capital Advisors LLC, Comcast Corp.'s (CMCSA - Get Report) NBC Sports Ventures and Comcast Ventures, Bullpen Capital, Pentech Ventures and Piton Capital.
Founded in 2012 and headquartered in Boston, DraftKings is the country's largest daily fantasy sports provider in terms of entry fees and revenue. It offers contests in football, baseball, basketball, hockey, golf, stock car racing, mixed martial arts, soccer, Canadian football, and eSports.
Boston's DraftKings is back by a litany of investors including Madison Square Garden Co. (MSG - Get Report) , New York merchant bank Raine Group LLC, Kraft Group LLC, which owns the New England Patriots, and Rupert Murdoch's Twenty-First Century Fox Inc. (FOXA) .
Updated to include backers and background information on the two companies.