Battling the FTC is expensive and time-consuming.
DraftKings and FanDuel abandoned their plans for a merger on Thursday almost eight months after first announcing the plan back in November.
The catalyst for ending the arrangement was that the Federal Trade Commission was planning to challenge the proposed merger in court because of monopolistic reasons. (The two are the biggest daily fantasy sports sites around.)
Now, both companies plan to operate independently, just like they were 12 months ago.
DraftKings CEO Jason Robins is putting a positive spin on the decision to abandon the merger. Robins, who spoke to Recode about an hour after the news was announced, said that there were a number of factors why DraftKings and FanDuel decided to throw in the towel.
A big part of it was time and money — fighting the FTC would have been an expensive and lengthy process, and both companies have already spent millions fighting legal battles in order to operate in states that consider their product a form of gambling.
Robins says that’s not the entire reason the two sides will part ways, though. He also claims DraftKings is in a more stable position business-wise than it was a year ago when these conversations first started, which is the kind of reassurance you would expect Robins to offer. (Unsurprisingly, FanDuel sources are saying the same thing about their business.)
“When you combine that with the notion of spending a bunch of money and time in continuing to try and fight this, and probably not a whole high likelihood of success anyways, it made sense for us to move on,” Robins said.
In a statement, FanDuel CEO Nigel Eccles voiced something similar: “There is still enormous, untapped market opportunity for FanDuel,” he wrote.
Robins says DraftKings isn’t in need of more cash. The company has raised more than $700 million.
“If there’s an opportunity to get the right partner involved and the deal made sense we would certainly consider raising more money but we don’t need to,” he added.
What will be interesting to watch is whether or not competition once again heats up between DraftKings and FanDuel now that the deal is dead. The two companies used to be bitter rivals. Then they agreed to merge and things became cordial. Will they go back to hating each other like they did in 2015, when they were each burning cash on extensive TV marketing campaigns?
“I don’t think we’ll ever really go back to that mindset,” Robins said, referring to the early days when the companies fought tooth and nail over users, team deals and venture capital. “We’re substantially larger now. There was this point in time where we were trying to chase down FanDuel and they were furiously fighting us off and that’s not the case anymore.”
Recode – All Go to Source
Author: Kurt Wagner
Powered by WPeMatico