A recent court decision has set the stage for a mass arbitration between DraftKings and FanDuel, two of the biggest names in the daily fantasy sports industry. The case will likely have major implications for the future of the industry, and could determine whether DraftKings and FanDuel are forced to merge or operate as separate entities.
In December of 2015, the two companies announced they had reached a merger agreement worth $1 billion. However, the deal was ultimately blocked by the Federal Trade Commission on antitrust grounds. The FTC argued that the merger would have created a monopoly in the daily fantasy sports industry, and would have resulted in higher prices and less innovation for consumers.
DraftKings and FanDuel have since been operating as separate entities, but the recent court decision could change that. The case centers around a class action lawsuit filed against DraftKings and FanDuel in 2016. The plaintiffs in the case allege that the companies engaged in false advertising and deceptive practices, including misleading consumers about the odds of winning prizes.
The case was initially set to go to trial in 2018, but the judge presiding over the case granted a motion to compel arbitration in 2019. This means that the case will now be decided by an arbitrator, rather than a jury.
The arbitrator will have to decide whether the plaintiffs have a valid claim against DraftKings and FanDuel. If the arbitrator finds in favor of the plaintiffs, it is possible that DraftKings and FanDuel will be forced to merge. However, if the arbitrator finds in favor of DraftKings and FanDuel, the companies will likely remain separate entities.
