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UPDATE 7/13 - DraftKings and FanDuel Call Off Merger

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06-19-2017, 01:29 PM
  #1
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UPDATE 7/13 - DraftKings and FanDuel Call Off Merger

https://www.nytimes.com/reuters/2017...ings.html?_r=0

Quote:
U.S. to Seek to Block DraftKings, FanDuel Fantasy Sports Merger
By REUTERSJUNE 19, 2017, 1:51 P.M. E.D.T.

WASHINGTON The U.S. Federal Trade Commission said on Monday it will seek to stop the merger of DraftKings and FanDuel, because the combined company would control more than 90 percent of the U.S. market for paid daily fantasy sports contests.
Not surprising, given how few players there are in that segment.


Last edited by Fenway: 07-14-2017 at 09:42 AM.
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06-19-2017, 02:06 PM
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How much is that market though? Can't be that big... And it's not like it's the only kind of sports gambling. These anti-trust guys have really gotten small time recently in their logic, I gotta wonder if they have too much free time on their hands. Between this and that time they blocked the Staples-Office depot merger, they are really micromanaging small time/niche areas, and ignoring highly relevant 21st century stuff like Google and Facebook's domination of the online advertising market, or the intrinsic conflicts of interests built into today's "vertically integrated" telcomm behemoths that control broadband and media content.

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06-19-2017, 02:13 PM
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Originally Posted by Burke the Legend View Post
How much is that market though? Can't be that big... And it's not like it's the only kind of sports gambling. These anti-trust guys have really gotten small time recently in their logic, I gotta wonder if they have too much free time on their hands. Between this and that time they blocked the Staples-Office depot merger, they are really micromanaging small time/niche areas, and ignoring highly relevant 21st century stuff like Google and Facebook's domination of the online advertising market, or the intrinsic conflicts of interests built into today's "vertically integrated" telcomm behemoths that control broadband and media content.
From what I understand in the healthcare market, the DOJ uses the Herfindahl-Hirschman Index equation when analyzing a potential merger. If the merger would raise the HHI by 200 points or more, then it gets flagged. The problem is that this analysis is completely influenced by perceived market distribution at the time of the proposed merger. If the DOJ doesn't understand a market, then they might overestimate or underestimate values. In doing so, the potential merger may or may not get flagged.

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06-19-2017, 02:17 PM
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I was just coming to post this in the DFS thread we had from months ago, very interesting development.

Its interesting how much this industry really didnt take off, I really think the sport leagues expected windfalls from this.

I just dont know how a horse race track can take out 15% for a bet, and these guys were taking out 10% for basically servers? The sites were a ripoff when compared to other gambling options, and they deserve their fate..

I think the take was that FanDuel really needed this to survive in any form.

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06-19-2017, 03:48 PM
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Burke the Legend
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Originally Posted by Crede777 View Post
From what I understand in the healthcare market, the DOJ uses the Herfindahl-Hirschman Index equation when analyzing a potential merger. If the merger would raise the HHI by 200 points or more, then it gets flagged. The problem is that this analysis is completely influenced by perceived market distribution at the time of the proposed merger. If the DOJ doesn't understand a market, then they might overestimate or underestimate values. In doing so, the potential merger may or may not get flagged.
Actually this kind of reminds me now of the XM-Sirius merger, it's even similar because they were the two big competitors in a single market, but the market was a bit of a flop (like DFS) and never took off like the early hype and now remains niche. A quick google search shows a lot of angst about that XM-Sirius in the early 2000s, and they were all wrong.

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06-19-2017, 03:58 PM
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Quote:
Originally Posted by Burke the Legend View Post
How much is that market though? Can't be that big... And it's not like it's the only kind of sports gambling. These anti-trust guys have really gotten small time recently in their logic, I gotta wonder if they have too much free time on their hands. Between this and that time they blocked the Staples-Office depot merger, they are really micromanaging small time/niche areas, and ignoring highly relevant 21st century stuff like Google and Facebook's domination of the online advertising market, or the intrinsic conflicts of interests built into today's "vertically integrated" telcomm behemoths that control broadband and media content.
Well, it's not considered to be gambling by the loophole of the law, so anything else out there doesn't apply (not that any of that is regulated, as online sports gambling is illegal).

As for advertising, Google accounts for a touch over 40% of digital ad revenue and Facebook less than half of that, so there's still quite a bit of the pie out there for other companies to fight over.

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06-23-2017, 02:51 PM
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Quote:
Originally Posted by Crede777 View Post
From what I understand in the healthcare market, the DOJ uses the Herfindahl-Hirschman Index equation when analyzing a potential merger. If the merger would raise the HHI by 200 points or more, then it gets flagged. The problem is that this analysis is completely influenced by perceived market distribution at the time of the proposed merger. If the DOJ doesn't understand a market, then they might overestimate or underestimate values. In doing so, the potential merger may or may not get flagged.
It goes into far more detail than that, though. HHI is just a first-run look, it's not the end all be all of the DOJ's analysis.

I'm guessing the FTC has already run through the second request process, though, so this will either a) end up in front of a judge, or b) be abandoned.

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06-24-2017, 09:30 AM
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I had totally forgotten these things existed.

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06-24-2017, 11:33 AM
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I had totally forgotten these things existed.
It's crazy how fast their downfall has been.....they did nothing to prevent the huge amount of people that would try it for a week and quit after getting crushed by people doing this for a living with advanced math picking their 5000 entries into the same tournament.

I'm just happy I can watch TV without every other ad being for DFS. Think it was 2 years ago that football was almost unwatchable because not only were the commercial breaks all ads for DFS, all the pregame talk and segments were 100% Ads for DFS also. Full shows on ESPN about WHO TO PICK FOR YOUR DRAFTKINGS LINEUP!!!!!!!!!
Not to mention the whole cheating scandal where employees at one site just happened to be making hundreds of thousands in winnings on the other, completely unregulated. Good riddance imo.

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06-24-2017, 07:45 PM
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Originally Posted by Burke the Legend View Post
How much is that market though? Can't be that big... And it's not like it's the only kind of sports gambling. These anti-trust guys have really gotten small time recently in their logic, I gotta wonder if they have too much free time on their hands. Between this and that time they blocked the Staples-Office depot merger, they are really micromanaging small time/niche areas, and ignoring highly relevant 21st century stuff like Google and Facebook's domination of the online advertising market, or the intrinsic conflicts of interests built into today's "vertically integrated" telcomm behemoths that control broadband and media content.
This is the only legal form of sports betting in the USA unless you are physically in Vegas.

DK and FD would control 90% of the DFS market if this was passed. Both companies have a history of buying all the smaller fish and increasing rake fees right after. Draftstreet whats up, we miss you! They are now taking 14% rake from players and if this merger was approved that would hit a few points higher, which is insane!

If google merged with MS or yahoo I guarantee they would block it. If apple merged with MS it would also be blocked. Google and FB have such a large search market share due to a better products, not via merging. Big difference.

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06-24-2017, 07:53 PM
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Originally Posted by nabbyfan View Post
It's crazy how fast their downfall has been.....they did nothing to prevent the huge amount of people that would try it for a week and quit after getting crushed by people doing this for a living with advanced math picking their 5000 entries into the same tournament.

I'm just happy I can watch TV without every other ad being for DFS. Think it was 2 years ago that football was almost unwatchable because not only were the commercial breaks all ads for DFS, all the pregame talk and segments were 100% Ads for DFS also. Full shows on ESPN about WHO TO PICK FOR YOUR DRAFTKINGS LINEUP!!!!!!!!!
Not to mention the whole cheating scandal where employees at one site just happened to be making hundreds of thousands in winnings on the other, completely unregulated. Good riddance imo.
Their downfall was greed. They did nothing to help the little fish, they catered 100% towards the big fish which killed off all the little fish. On top of that they paid insane CPA for each small fish.

Very much like poker but imagine you enter a low stakes game and everytime you played you had to beat the top poker players in the world in order to win. Pro poker player would never enter a $1 game where dfs experts could play those games without spending the time grinding it out. All it was was a single checkbox to play the game.

Pigs get fat while hogs get slaughtered is a very appropriate phrase for these companies.

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06-24-2017, 07:54 PM
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Quote:
Originally Posted by syc View Post
This is the only legal form of sports betting in the USA unless you are physically in Vegas.

DK and FD would control 90% of the DFS market if this was passed. Both companies have a history of buying all the smaller fish and increasing rake fees right after. Draftstreet whats up, we miss you! They are now taking 14% rake from players and if this merger was approved that would hit a few points higher, which is insane!

If google merged with MS or yahoo I guarantee they would block it. If apple merged with MS it would also be blocked. Google and FB have such a large search market share due to a better products, not via merging. Big difference.
I'm not familiar with how online sports wagering goes since I'm here in Vegas and it's illegal.

When you say rake, isn't the rake baked into the odds like it is here? Or is this the online fantasy stuff where they take all the entry fees and take their cut off the top?

Can you bet on single games or parlay off the board on DraftKings/FanDuel?

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06-26-2017, 08:21 AM
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Quote:
Originally Posted by syc View Post
Their downfall was greed. They did nothing to help the little fish, they catered 100% towards the big fish which killed off all the little fish. On top of that they paid insane CPA for each small fish.

Very much like poker but imagine you enter a low stakes game and everytime you played you had to beat the top poker players in the world in order to win. Pro poker player would never enter a $1 game where dfs experts could play those games without spending the time grinding it out. All it was was a single checkbox to play the game.

Pigs get fat while hogs get slaughtered is a very appropriate phrase for these companies.
The thing is, the poker rake is much cheaper than DFS still for what is essentially the same costs of running a server. When I stopped playing poker after Black Friday, I think the rake was like 6-8%.

Poker would still be a good market if Black Friday didnt happen. You took 1000s out of the pool. Those were good days too, the amount of stupidity in poker games back then with so many people playing was astounding.

DFS' problem is when they pushed it, it was already filled with automated system sharks. At least with poker, it cant be automated. Players sitll have systems, but there is still someone making decisions, one entry at a time.

And yeah, 14% rake is ridiculous when a place like Woodbine has 15% for horse rracing with drastically bigger costs. DFS does not take a big enough hit on this front. 14% rake for what they do is ridiculous.


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06-26-2017, 08:25 AM
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Quote:
Originally Posted by BattleBorn View Post
I'm not familiar with how online sports wagering goes since I'm here in Vegas and it's illegal.

When you say rake, isn't the rake baked into the odds like it is here? Or is this the online fantasy stuff where they take all the entry fees and take their cut off the top?

Can you bet on single games or parlay off the board on DraftKings/FanDuel?
When I played poker, I remember it would would look something like (completely making this up without doing the math for rake): $5.0 + .10.

The 10cents is the entry fee, the $5 goes into the pool to be won. I think DFS tournies look the same, as DFS uses a lot of the same software poker did.

I dont know the rake in Vegas, but I think online sportsbooks add up to 51.5%+51.5%

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06-26-2017, 08:41 AM
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Originally Posted by BattleBorn View Post
I'm not familiar with how online sports wagering goes since I'm here in Vegas and it's illegal.

When you say rake, isn't the rake baked into the odds like it is here? Or is this the online fantasy stuff where they take all the entry fees and take their cut off the top?

Can you bet on single games or parlay off the board on DraftKings/FanDuel?
These DFS sites don't even openly display rake for each contest. Of course you can calculate it yourself, but they bank on the fact that a lot of people won't do that.

They started off with a normal rake of about 9 to 10%. Now they hover around 14-15%, which is absurd. For example, contest is laid out as $5 to enter. Entry fee X pool size. Then you have to compare that to total pot to get rake %. My favorite part about all the states yelling for regulation is that none of them made the simple requirement to display rake for each contest.

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06-26-2017, 06:11 PM
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I usually stick to single entry contests,most contests allow too many entries for example a Golf contest $33 150 max entries which make it hard to win for the little guys.

I did manage to win some money with little wins here an there which add up over time, but DK won't let me cash out until I authorize my account by sending them a copy of my drivers licence and a utility bill to prove my address.

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07-14-2017, 09:00 AM
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DraftKings and FanDuel will no longer merge

To quote:

"DraftKings and FanDuel, the two biggest daily fantasy sports platforms that originally announced their intention to merge last year, have called it quits.

This comes a month after the FTC announced they would sue to block the merger to prevent a potential monopoly in the industry, as the combined company would control more than 90 percent of the U.S. market for paid daily fantasy sports contests.

Both companies have confirmed to TechCrunch they will be terminating the merger. Because the deal was never finalized, both sites were operating independently, and of course will now continue to do so indefinitely."

Source: https://techcrunch.com/2017/07/13/dr...-longer-merge/

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07-14-2017, 09:41 AM
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https://www.nytimes.com/2017/07/13/s...rger.html?_r=0

Quote:
BOSTON — The two leading daily fantasy sports companies, DraftKings and FanDuel, scrapped their proposed merger on Thursday, about a month after federal regulators sued to block it.

The Federal Trade Commission — along with the attorneys general of California and the District of Columbia — had opposed the merger because, they said, it would create a company controlling more than 90 percent of the United States market for paid daily fantasy sports.

A federal judge late last month temporarily halted the merger, pending an administrative trial scheduled for Nov. 21.

Markus Meier, the acting director at the F.T.C.’s Bureau of Competition, said the decision was a “clear win” for consumers.

Continue reading the main story


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