A pair of Senators are urging the Federal Trade Commission (FTC) to investigate alleged anticompetitive behavior by FanDuel and DraftKings.
Sen. Mike Lee and Peter Welch have sent a letter to FTC Chair Lina Khan and Assistant Attorney General for the Antitrust Division Jonathan Kanter raising concerns over FanDuel’s and DraftKings’ market share dominance across regulated U.S. gambling markets. The two Senators claim DraftKings and FanDuel “may be violating Section 1 of the Sherman Act prohibition on coordination to obstruct or impair competition.” Section 1 of the antitrust authority bans agreements that are restrictive for trade or commerce.
The two lawmakers detail FanDuel and DraftKings failed merger in 2016, which was blocked by the FTC, California and the District of Columbia. The merger was blocked due to competition concerns since the deal would have given the combined entity approximately 90% of the market share in regulated U.S. markets. The market dominance would have violated the Clayton Act, which was enacted to prevent anticompetitive business practices.
Lee and Welch believe FanDuel and DraftKings have collaborated with the Sports Betting Alliance to prevent emerging operators from securing deals with their existing partners. The coordinated anticompetitive practices have prevented new operators from gaining market share. The existing partners for DraftKings and FanDuel that have allegedly been prevented from securing deals with new operators include sports leagues, vendors and payment processing companies. Welch and Lee attributed the behavior to the failed merger.
As a result of the alleged anticompetitive behavior by FanDuel and DraftKings, Welch and Lee are requesting that the FTC investigate the two operators and their business practices. The lawmakers also want the FTC to enforce “actions necessary to protect competition.”
Recent woes for FanDuel and DraftKings
The operators have been facing recent backlash from regulators and a former employee.
Earlier this week, a former DraftKings employee filed a suit against the operator after he was allegedly let go after attempting to take advantage of the company’s parental leave policy. The employee, a former Senior Lead Engineer, is suing for $250,000 in damages.
On Thursday, FanDuel was fined $10,000 by the Massachusetts Gaming Commission for accepting wagers on Boston College men’s basketball, an in-state college team violating state gaming laws. Massachusetts law allows wagering on in-state college teams during specialty tournaments but Boston College failed to make the March Madness field.
As a result, the wagers were flagged, voided, refunded and self-reported to the regulator.
