FanDuel Looking To Inject More Money After FTC Halts Merger
The US Federal and Trade Commission (FTC) has seemingly blocked the merger between DFS powerhouses DraftKings and FanDuel stating that a monopoly would adversely affect players due to lack of competition.
As we have reported over the last few years, both FanDuel and DraftKings have had to raise a lot of money and are actually losing money despite the hype they have enjoyed in the last few years. The Sunday Times is reporting that FanDuel are already having to ask investors to inject more money due to the FTC’s decision to block the proposed merger with DraftKings. According to the report FanDuel investors will be asked to cough up additional funds to the already $350 million invested since 2009. The list if FanDuel’s investors include Scottish Enterprise, KKR and Pentech.
One of the main counter arguments being put forward by FanDuel and DraftKings in favor of the merger is that it is essential for both companies as they are losing money and need to pool resources to ensure profitability and viability of their industry.
It remains to be seen what will come of the proposed merger but the acting Director of the FTC’s Bureau of Competition made it clear that the merger “would deprive customers of substantial benefits of direct competition”.