Yesterday, the Federal Trade Commission (FTC) issued a ruling to block the FanDuel and DraftKings merger. I have been playing Daily Fantasy Sports since before FanDuel and DraftKings were part of the Fantasy Sports landscape and I understand that having options will always benefit consumers. The blocking of this merger isn’t the end of the Fantasy Sports business; we will always have Daily Fantasy contests. However, I would have welcomed the merger of FanDuel and DraftKings.
I am concerned about the escalating fees we are now seeing in many of the Daily Fantasy Sports Tournaments. The DFS companies are taking in a greater rake, even in the lower dollar tournaments, and that money comes right out of consumers’ pockets. For the longest time, the DFS companies took a strict 10-percent rake from all contests, but now there is no standard. I believe this is the direct result of the licensing costs that the various states have put in place through recent legislation. The escalating cost of doing business in those states is being passed on to consumers.
A merger to create a single large Daily Fantasy Sports company would mean a lower overall licensing burden, fewer costs passed along to consumers and it would preserve the lower price pools. One smaller DFS company named FantasyDraft was forced to offer head to head contests with no rake as a response to changes in the rake at FanDuel and DraftKings. While that may seem to benefit consumers, it actually does not. FantasyDraft has not been able to increase their business volume despite this player-friendly option.
For now, we have FanDuel and DraftKings, and we are at the mercy of those two companies. I know I will continue to play at both companies. During the coming NFL season, consumers will continue have both sites competing for our money, so sit back and play at your favorite site.
For more on the ruling, including the statement made by the FTC, read this report by Dustin Gouker of the Legal Sports Report.