Two senators have launched a bipartisan effort aimed at getting federal authorities to look into allegations that two of the largest online sports betting companies in the U.S. are trying to pull the ladder up behind themselves and disadvantage the competition.
Utah Sen. Mike Lee and Vermont Sen. Peter Welch wrote a letter on Thursday to officials from the Department of Justice and the Federal Trade Commission regarding "Possible Anticompetitive Conduct" by DraftKings and FanDuel.
"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 senators wrote. "We urge you to look into these allegations to ensure that competition is protected and consumers continue to benefit from innovation and new offerings in sports entertainment."
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.
— Mike Lee (@SenMikeLee) December 6, 2024
Glad to join @SenPeterWelch requesting that @linakhanFTC investigate and protect consumers. pic.twitter.com/Jh6EaHjKk3
A spokesperson for FanDuel said the company had no comment at this time. DraftKings did not respond to a request for comment before this story was published.
Nevertheless, the letter is a shot across the bow of the duopoly that has formed in online sports betting in the U.S.
While it’s uncertain where the incoming Trump administration will land on antitrust allegations like these, the fact it is coming from Lee, a Republican, and Welch, a Democrat, suggests there could be support from both parties.
DraftKings and FanDuel account for around 75% of the gaming revenue generated in the U.S. by online bookmakers, and they show no signs of falling off the podium anytime soon. DraftKings CEO Jason Robins also said earlier this week that he believes his company and FanDuel will likely maintain their top spots even if they face fresh competition.
BFF exclusivity
The letter from Lee and Welch notes that DraftKings and FanDuel were blocked from merging in 2017 when they were the dominant forces in paid daily fantasy sports. After this, the senators say, the two companies "expanded their dominance by leveraging their positions in fantasy sports to become online sports betting giants."
The duo, the senators allege, could be "compounding these harms" using anticompetitive tactics, such as lobbying business partners not to collaborate with new companies.
"For example, there are concerning reports that FanDuel and DraftKings have worked in concert to exert pressure on smaller rivals to stymie market access," the senators wrote. "This reportedly includes interfering with their rivals' relationships with major sports leagues, marketing partners, payment processing companies, and critical vendors."
The two senators cite an article by a Temple University law professor regarding pick’em-style fantasy contests as the source of at least some of their allegations.
A pick'em problem?
Among other things, the article quotes Underdog Fantasy CEO Jeremy Levine’s claims that DraftKings and FanDuel (which are members of the Sports Betting Alliance) are lobbying gatekeepers to limit competition and consumer choice, similar to how brick-and-mortar gaming operators did the same against the two former DFS giants.
The citations suggest Lee and Welch are concerned about the pushback against pick’em operators. While some argue that pick’ems are sports betting, and operators such as PrizePicks and Underdog have adjusted their businesses to comply with the patchwork of state rules, they remain a popular product.
At any rate, Lee and Welch are asking the DOJ and FTC to look into the allegations and take any action needed to protect competition.
"After their merger to monopoly was blocked, it seems that FanDuel and DraftKings have arguably acted as one company, violating our antitrust laws," the senators alleged.
