The FTC, along with the Offices of the Attorneys General in California and the District of Columbia, will file a complaint in federal district court seeking to stop the deal.
The move is the latest legal obstacles for the wildly popular fantasy sports operators, which have been banned in some jurisdictions as illegal gambling sites, although NY state previous year legalized the operations.
DraftKings announced its plan to merge with FanDuel last November after the two rivals spent several months and significant resources to defend their businesses from various states against accusations that their games constitute gambling.
The FTC said it also isn't convinced that other fantasy sports companies could provide sufficient competition if the merger went through and that consumers are unlikely to view other products including the traditional, season-long fantasy sports competitions played by millions of Americans each year as a meaningful substitute for the contests offered by the two companies.
It has previously been reported that DraftKings and FanDuel would constitute more than 80 percent of the daily fantasy sports market. "As we work together to determine our next steps, we would like to thank DraftKings and FanDuel players, partners and employees for their patience, support and continued loyalty".
We...are working with our legal team and FanDuel to chart the best court of action, which could include going to court to make our case about the benefits of the proposed merger.
But the FTC argues that any potential efficiencies gained through the merger wouldn't offset the "likely competitive harm".
In the lawsuit, FTC said the merger would create the single largest provider of daily fantasy sports contests, not to be confused with other fantasy sports contests that run for larger periods. If the market is narrowly defined as DFS, then yes, a DraftKings and FanDuel merger would constitute a near monopoly.
The trial would commence on November 21, according to the FTC. A recent forecast warned that if the merger were blocked, one or both of the companies could fail.