Last updated: December 16, 2024
US Senators Mike Lee and Peter Welch have called on the Federal Trade Commission (FTC) and Department of Justice (DOJ) to investigate DraftKings and FanDuel for alleged antitrust violations.
Two United States senators issued a formal request to the Federal Trade Commission, as well as the Department of Justice, to investigate the online sports betting sites DraftKings and FanDuel.
On December 5, in a letter, Republican Senator Mike Lee and Democratic Senator Peter Welch expressed their criticisms over the companies that allegedly coordinate efforts to suppress competition within the industry.
The senators also cited reports stating that the companies were engaging in coordinated activities aimed at encouraging other businesses not to do business with competing betting platforms. DraftKings and FanDuel are members of the Sports Betting Alliance, which the senators claim has been employed to aid those efforts.
“Given that their proposed merger into a monopoly was blocked, to all effects FanDuel and DraftKings have, in fact acted as one, violating our antitrust laws,” the senators claimed.
Since being stopped in 2017 by the FTC on the grounds of antitrust, which argued that the merger would have enabled the combined enterprise to dominate more than 90% of the daily fantasy sports market, DraftKings and FanDuel have boomed in size. They also entered regulated sports betting and established themselves as the leaders of the emerging industry.
The letter to FTC Chair Lina Khan and Assistant Attorney General for Antitrust Jonathan Kanter claims that these companies have collaborated to limit access for smaller competitors. It accuses them of using their power and influence with other major US sports leagues, commercial partners, payment processors, and merchants to discourage partnering with other sportsbooks.
The senators assert that these coordinated efforts have rendered it progressively more challenging for smaller platforms to compete effectively.
The senators pointed out that the alleged practices may have serious competitive effects on the sports betting market. Such practices, the senators argue, create barriers to entry, limit the choice available to consumers, and stifle innovation.
The letter calls for federal supervision with a view to having a balance-of-market with conformity to antitrust provisions.
It arrives at a time when DraftKings and FanDuel are already facing litigation constraints.
It is also facing a lawsuit from the NFL Players Association in regard to unpaid fees for using the images of NFL players in non-fungible tokens. The NFLPA is seeking $65 million in damages.
FanDuel, on the other hand, recently agreed with the MLB Players Association on similar issues involving the usage of player names and images. It was also fined $10,000 in Massachusetts last week after it took wagers on the Boston College men’s basketball team. Massachusetts does not permit college wagers except in tournaments. Although DraftKings and FanDuel have not publicly addressed the senators’ request for an investigation, the scrutiny contributes to the increasing pressure on these industry leaders.
The Federal Trade Commission and the Department of Justice have not made any public remarks regarding the letter; however, their potential engagement may indicate an escalation of regulatory oversight within the sports betting industry. If the FTC and DOJ would really take the step for probing, then it could go up to huge implications not just within DraftKings and FanDuel but for the whole sports betting industry. The consequence should determine how companies communicate through competition, partners, or potential customers in this dynamic sport market.
