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US Senators Ask FTC to Investigate FanDuel and DraftKings

Two US senators have called on the Federal Trade Commission (FTC) to investigate alleged anticompetitive behavior by FanDuel and DraftKings.

Senators Mike Lee and Peter Welch sent a letter to FTC Chair Lina Hahn and Assistant Attorney General for the Antitrust Division Jonathan Kanter expressing concerns about the dominance of FanDuel and DraftKings in regulated US gambling markets.

They allege that DraftKings and FanDuel “may be in violation of Section 1 of the Sherman Act’s prohibition on coordination to impede or distort competition.” Section 1 of the antitrust law prohibits agreements that restrain trade or commerce.

The request details the failed 2016 merger of FanDuel and DraftKings, which was blocked by the FTC, California, and the District of Columbia. The merger was blocked due to competition concerns, as the deal would have given the combined company about 90% of the U.S. market share. Dominance would have violated the Clayton Act, which was passed to prevent anti-competitive business practices.

Lee and Welch allege that FanDuel and DraftKings collaborated with the Sports Betting Alliance to prevent new operators from entering into deals with their existing partners. The coordinated anti-competitive practices prevented new operators from gaining market share. The existing partners of DraftKings and FanDuel that were allegedly prevented from entering into deals with new operators include sports leagues, vendors, and payment processing companies. Welch and Lee attribute this behavior to the failed merger.

As a result of FanDuel and DraftKings’ alleged anticompetitive behavior, Welch and Lee are asking the FTC to investigate the two operators and their business practices. The lawmakers also want the FTC to take “actions necessary to protect competition.”

The operators have already faced backlash from regulators and a former employee. Previously, a former DraftKings employee filed a lawsuit against the operator after he was allegedly fired after attempting to take advantage of the company’s parental leave policy. The former senior lead engineer is seeking $250,000 in damages.

On Thursday, the Massachusetts Gaming Commission fined FanDuel $10,000 for accepting bets on a Boston College men’s basketball game, a violation of the state’s gambling laws. Massachusetts law allows bets on state college teams during specialty tournaments, but Boston College did not qualify for March Madness.

As a result, the bets were flagged, cancelled, refunded and self-reported to the regulator.

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