Now that DraftKings and FanDuel have announced their merger intentions I am going to tell you why it is likely to be blocked.
Under the Hart-Scott Rodino Antitrust Improvements Act of 1976, antitrust regulators from the Department of Justice and Federal Trade Commission now have the opportunity to review the merger and its effect on the market. The regulators will ensure that the unification of the businesses would not adversely affect the consumers and market.
An abbreviated version of 15 U.S. Code § 18 states:
“No person engaged in commerce or in any activity affecting commerce shall acquire… where… the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly.”
DraftKings and FanDuel are the two largest companies participating in the daily fantasy sports market space, due to this the regulators will review the merger with severe scrutiny to ensure that a monopoly is not formed. It is not impossible for regulators to approve the merger, but I suspect even the companies do not suspect it will be allowed.