The two daily fantasy sports (DFS) games and contests providers DraftKings Inc. and FanDuel Inc. have reached a $2.6-million settlement with the state of Massachusetts to resolve an investigation of the companies’ deceptive and unfair practices affecting local players.
The Massachusetts Attorney General Maura Healey and her office announced the settlement, saying that it was a good thing such agreements were reached to address the customer issues that had existed in the industry.
As mentioned above, the two companies, which are currently among the leading daily fantasy sports games and contests providers in the US, finally settled the allegations that they used unfair and deceptive practices to take advantage of local customers.
Now, the two daily fantasy sports companies explained that all their operations comply with the state gambling legislation, under which no players under the age of 21 are allowed to bet of daily fantasy sports. In addition, state rules do not allow contests based on college sports and put certain limits on DFS advertising.
The investigation of the two companies’ operations started before the regulation of daily fantasy sports was adopted by Massachusetts Attorney General Maura Healey’s office. According to Ms. Healey’s office, the DFS regulations in the state of Massachusetts were brought about after they started investigating the daily fantasy sports companies’ business model back in 2015 and discoveries that some operators failed to adequately protect some of their customers.
Both DraftKings and FanDuel cooperated at the time when the investigation was held. Each of the two operators is to pay $1.3 million to settle the issues. No details of the complaints against the companies were released by local officials, but they now claim that their operations are carried out in compliance with the state’s gambling rules.
DraftKings and FanDuel Failed Merger
DraftKings and FanDuel have faced some hard time lately. Back in July, the companies announced that they have left their merger plans behind after facing a legal challenge by US antitrust authorities. The operators, which are currently the largest ones in the DFS market of the US have been seeking a merger, but unfortunately for them, the deal faced a lot of criticism.
The planned merger was criticised not only by the two companies’ rivals in the local DFS market, but also by the US Federal Trade Commission (FTC). In June 2017, the Federal Trade Commission claimed that it would do whatever it takes to stop the deal, after sharing its concerns related to both customer protection and competition protection.
Despite the two operators defended their merger for a long time, saying that it would not affect neither local competition, nor customers in a negative manner, eventually they decided to abandon merger talks and continue their operations as separate entities. If the two companies had managed to carry out their merger, the deal would have created a massive conglomerate that would have owned approximately 95% of the US daily fantasy sports market.