DraftKings and FanDuel have close to a monopoly on the sports betting scene in America. And now their dominance in the marketplace is drawing the scrutiny of lawmakers.
A pair of bipartisan senators, Mike Lee (R-Utah) and Peter Welch (D-VT), have written a letter to the Federal Trade Commission and Department of Justice alleging that the two sports betting giants are violating anti-trust laws.
Lee shared a copy of the letter on his X page.
We can’t allow online gambling companies like @FanDuel & @DraftKings to violate antitrust laws, especially as more Americans grapple with the effects of this industry on our society.
Glad to join @SenPeterWelch requesting that @linakhanFTC investigate and protect consumers. pic.twitter.com/Jh6EaHjKk3
— Mike Lee (@SenMikeLee) December 6, 2024
“We write to raise concerns regarding FanDuel’s and DraftKings’s conduct that may be violating Section 1 of the Sherman Act prohibition on coordination to obstruct or impair competition,” the letter states.
It cites an attempted 2016 merger between the two sports betting companies that was successfully blocked by the FTC. However, the senators allege that the pair have continued with “anticompetitive conduct” to expand their empire.
“Public reports have alleged that FanDuel and DraftKings, together and through their trade association the Sports Betting Alliance, have undertaken a coordinated effort to pressure crucial business partners not to do business with these new players.”
FanDuel and DraftKings have a huge lead over the rest of the competition when it comes to sports betting. According to Q2 public reports from states, both had a 37% market share with each having a handle over $7 billion. In a distant third was Bet MGM at $1 billion. ESPN Bet was all the way down at $620 million. ESPN knew these challenges existed when they launched their betting platform last year, and they have predictably struggled to make inroads.
Part of the reason for the DraftKings-FanDuel duopoly is that they were first to the market with their daily fantasy games. When sports betting was legalized, the pair had a huge head start with sports fans. They’ve been able to continue that momentum with scores of official partnerships and sponsorships directly with the leagues themselves. It’s not uncommon to see announcers touting these official lines now on their game broadcasts.
“FanDuel and DraftKings were prevented from merging because it would have substantially lessened competition and harmed consumers by forming a monopoly. They should not be allowed to accomplish through collusion what was prevented through acquisition,” the senators conclude in their letter.
Given the exponential rise in the sports betting marketplace and the dominance by DraftKings and FanDuel, it’s honestly a surprise that this hasn’t drawn more scrutiny from the government. Given the change in administration that is upcoming, it’ll be fascinating to see if these inquiries are seriously investigated and what the response from DraftKings and FanDuel might be.
