Federal regulators will attempt to block the merger between Boston-based DraftKings and rival FanDuel, throwing into jeopardy a combination of the two giants of the emerging daily fantasy sports industry.
The Federal Trade Commission said it would sue to stop the deal, arguing that the resulting company would control more than 90 percent of the American market for paid daily fantasy sports contests. The attorneys general of California and Washington, D.C. also joined the challenge.
The companies had argued that they competed more broadly with more established providers of fantasy sports games, like ESPN and Yahoo, but the FTC wrote in its complaint that DraftKings and FanDuel “are each other’s most significant competitor.”
DraftKings and New York-based FanDuel The companies aid in a joint statement that they “continue to believe that a merger is in the best interests of our players, our companies, our employees and the fantasy sports industry.”
“We are considering all our options at this time,” the statement said. “As we work together to determine our next steps, we would like to thank DraftKings and FanDuel players, partners and employees for their patience, support and continued loyalty.”
In an internal memo to employees, DraftKings co-founder and chief operating officer Paul Liberman said the company intends to ask a federal court to issue an injunction against the FTC’s action.
Liberman said the legal options for DraftKings and FanDuel include “going to court to make our case about the benefits of the proposed merger.”
“Please don’t let this regulatory setback distract you,” Liberman wrote. “DraftKings is poised for growth, whether or not we merge with FanDuel.”