Player concerns over FanDuel and DraftKings merger
As most of you have probably heard by now, it appears the merger between the two leading daily fantasy sports sites, FanDuel and DraftKings, is now official. There is still a lot of details and legal issues to iron out before an official new branding launch. There is also the hurdle of getting past Federal Trade Commission and Department of Justice anti-trust guidelines.
Under the Hart Scott Rodino Antitrust Improvements Act of 1976, both merging partners will have to submit their case that the new combined entity would not establish an industry monopoly. This is typically a harder case for entities that are number one and number two in their respective industry. There is little doubt that FanDuel and DraftKings qualify for that circumstance. They are the giants of monetary daily fantasy sports. The two respective CEO’s, DraftKings’ Jason Robins, and FanDuel’s Nigel Eccles, will have to navigate murky waters to convince the FTC and DOJ that this proposed merger would not create a monopoly in the paid daily sports industry. The case they will present is that groups such as ESPN and Yahoo! could conceivably enter the monetary fantasy sports industry, therefore the new DraftKings/FanDuel alliance would in fact not be the largest complete entity in the industry.
This is very similar to the merger between Sirius and XM. It was a fairly new industry in which those two dominated. In fact, they were the only satellite radio operators which led to some FCC hurdles to jump before that merger was allowed. But it eventually was and has worked out well for both partners, as well as the consumer. Partly due to their flexibility and keeping both side’s individuality. It would nice if DraftKings and FanDuel did the same after the merger is complete.
There have been a few cases were proposed mergers were denied. In 2011, AT&T announced their intent to purchase cellular competitor T-Mobile. The Department of Justice said not so fast and denied the merger on the grounds that it would violate antitrust guidelines. At the time, the merger would have combined the number one and number four wireless carriers. The DOJ ruling was that it would substantially lessen competition if that merger were to take place.
Back in 2014 there was talk of an attempted merger between cable television giants Comcast and Time Warner. That attempt didn’t make it very far. If that merger were to have passed, the new Comcast/Time Warner entity would own roughly a third of all paid television services in the country. Not to mention those two companies were the top two broadband internet providers in the country as well. Just the thought of that alliance was scary for smaller cable providers, and for consumers who would have had fewer options, and paid a lot more for the privilege.
So now that we have a little back story to the pros and cons of big corporate mergers, this potential alliance begs the question, how does this affect me as a daily fantasy player? What concerns should I have if this merger does go down?
As a moderately high daily fantasy player myself, I started thinking about what I like about both FanDuel and DraftKings, and what I would miss if the individuality of both were stripped away in favor of a new, unified, meagerness. I have a few obvious concerns and questions about how the way I play will be affected, and I have seen some questions and concerns raised on Twitter. Let’s touch on some of the questions and concerns…
Will there be just one app and site, or can I continue using the format I prefer?
I think we all have our preferences as to which site you like for certain sports and which mobile app you find to give you the most info and be the most user friendly. This is a big deal because a lot of daily fantsy players chose one site or the other based soley on look, info, stats, and user friendlyness. They will either chose to use one of the two current formats, or go back to the drawing board to create a new design. If the later is the case, this could be 2018 before it’s officially rolled out.
Will there be more game options, including keeping the ones I usually play daily from both FanDuel and DraftKings?
I have certain NFL contests I like to play on DraftKings, and certain NBA contests I like to play on FanDuel. I would hope that most of the options offered on both will remain once the rebrand is complete. They are similar enough currently that this shouldn’t be a huge hurdle.
What will happen to my current balance and earned credits once the merger is complete?
I assume they will merge your balances together but what does happen to your earned credits? I don’t like the thought of having to spend them or lose them before the merger is finalized. While this is not a huge deal either, it’s something that a lot of players probably wouldn’t think about, or even realize that they had been accumulating credits.
The difference in player salaries can differ quite a bit, which one will the new brand most resemble?
I find that NFL salaries are lower on DraftKings and you can build a better squad with your allotted cap. I personally prefer the DraftKings salaries. Others may prefer the balance of FanDuel salaries. That is exactly why these questions need to be asked. We all have a vested interest.
If I live in Texas, will I be able to continue playing?
Currently Texas residents can play DraftKings, but not FanDuel. Fanduel has cited tougher stands from Texas legislature deeming daily sports sites as gambling. Texas is the one state where it’s not all or nothing. The merger is of huge interest to daily fantasy players in Texas.
If I live in a state where FanDuel and DraftKings is not currently available, would that possibly change with this merger?
We can only hope. The new merged entity of FanDuel/DraftKings could make some changes that may relieve some state legislatures concerns. If the company does indeed go public, that may go a long way in changing the opinions of some states who currently say no to daily sports sites.
Will there be any additional fees going forward?
My concern is that they eventually start charging a membership fee per year, or per month. This is highly unlikely since they want everyone to spend as much money as they can playing contests. However, I could see the end user or player eventually taking home less of the pot, maybe even being charged a percentage of their winnings on the back-end.
Will I still have to draft a kicker in NFL contests?
This was one of the first things I thought of, our own Dan Schalk said it was his main concern, and I have seen it asked on Twitter as well. To be honest, it’s the main reason I play DraftKings in NFL, because they have a flex position in place of the kicker position. But this is a fairly important question to be answered.
It’s still way too early to expect any of these questions to be addressed by Robins or Eccles as the merger, if approved, wouldn’t happen until sometime in late 2017. All of you fellow daily fantasy players out there…stay tuned.
Brandon Reid covers daily fantasy sports for MyFantasySportsTalk.com | Follow him on Twitter @New_Breid
He is from Memphis and graduated from Arkansas State University with a degree in broadcast journalism. He loves the Memphis Tigers, Grizzlies, Titans, and Arkansas State Red Wolves.
“I promise to bring information, insight, and strong opinion. Let the debate begin.”
You can follow Brandon on Twitter @New_Breid