Banking Establishments Dismiss Antitrust Allegations Levied Against DraftKings and FanDuel
Stifel Financial Corp Downplays Federal Petition Against DraftKings and FanDuel
Stifel Financial Corp, a leading US investment bank, has dismissed claims in a federal petition against DraftKings and FanDuel as having "zero validity." The petition, penned by Senators Mike Lee (R-Utah) and Peter Welch (D-Vermont), alleges anticompetitive practices by the two companies.
In a Monday note, Stifel's Managing Director Equity Research, Jeffrey Stantial, declared the petition's risk of enforcement to be "negligible." The analyst's assessment tentatively rejects the petition, which Lee publicly shared on social media while tagging outgoing FTC Chair Lina Khan.
Senators Lee and Welch asserted in their letter to the Federal Trade Commission (FTC) that DraftKings and FanDuel, while operating separately, effectively functioned as one company. They advocate for increased competition in the market and believe DraftKings and FanDuel should be investigated for practices potentially harming the sports betting industry and limiting user choices.
The senators' concerns materialized in the financial markets Monday, with DraftKings shares dropping 4% and FanDuel's holding brand, Flutter, falling 3.2%.
Although the petition questions Boston-based DraftKings' collaboration with New York's FanDuel through their Sports Betting Alliance (SBA), Stifel analysts argue there's little evidence to support the claims. They caution against unreliable source information cited in the senators' letter, dismissing the allegations as lacking credibility.
If collaboration existed between the two brands, Stantial suggests rational behavior would dictate a "duopoly behavior" reminiscent of both operators consistently adopting DraftKings' proposed tax surcharge. However, DraftKings' controversial surcharge on sports bet winnings in high-tax states was abandoned following resistance from FanDuel and other US sportsbooks.
Stantial also cites the forthcoming transition in FTC leadership as another crucial factor reducing the likelihood of any regulatory action. As the incoming US President Donald Trump appoints Andrew Ferguson to succeed Lina Khan as FTC Chair, the commission is anticipated to adopt a more lenient stance on antitrust enforcement.
This news further highlights the complex regulatory landscape faced by the burgeoning sports betting industry, with companies like DraftKings and FanDuel navigating a delicate balance between innovation, user experience, and compliance with ever-evolving regulations.
- The Dialogue between Senators Mike Lee and Peter Welch, concerned about anticompetitive practices in the sports betting industry, has prompted discussions about the business practices of DraftKings and FanDuel, particularly their collaboration through the Sports Betting Alliance (SBA).
- In the realm of finance and technology, the progress of the sports betting industry is not just about offering innovative user experiences but also navigating the complex regulatory landscape, a task made even more challenging by potential investigations into allegations of duopolistic behavior between companies like DraftKings and FanDuel – a bridge that extends into the entertainment sector as well.
