FanDuel Funds Challenge Board in Expanded Flutter Lawsuit
Date: 2024-08-15 Author: Alex Crawford Categories: EVENTS
FanDuel founders, early investors, and employees recently filed an updated lawsuit in New York, claiming that board members controlled by private equity firms deprived them of significant profits after the company’s sale to Paddy Power in 2018.
At the time of the deal, FanDuel was valued at $559 million and merged with Paddy Power, which was later renamed Flutter Entertainment. However, today, unlike its valuation at the time of the merger, FanDuel is valued at over $20 billion and is the leading sports betting company in the United States.
The legal battle between FanDuel’s founders and private equity firms like Shamrock and KKR has been ongoing for several years. The original lawsuit was filed in Scotland but later returned to the U.S., where the New York Court of Appeals granted leave to proceed earlier this year.
The plaintiffs include FanDuel founders Nigel Eccles, Leslie Eccles, Robath Jones, Thomas Griffiths, and Chris Stafford. They have been joined by dozens of early investors and employees who have supported the lawsuit. The lawsuit alleges that the defendants “ensured that they and other preferred shareholders would own 100% of the new combined company, along with the enormous profits it represented.”
The plaintiffs also said that “in turn, the defendants have completely deprived FanDuel’s ordinary shareholders of their stake in the company they helped build into a billion-dollar enterprise, and have excluded FanDuel’s founders, employees, and early investors from any further benefit in the new combined company.”
Depriving Early Investors and Shareholders of Their Profits
The lawsuit alleges that the defendants “conspired to artificially underprice the 40% stake that FanDuel and its shareholders received in the merger.” The founders and early shareholders claim that Shamrock and KKR intentionally sought to deprive them of their profits. To support their claim, the plaintiffs allege that two years later, the 40% stake in FanDuel was sold for $4.2 billion, an amount significantly higher than the initial valuation.
In their lawsuit, the plaintiffs claim that KKR gained approximately $250 million, while Shamrock gained approximately $100 million.
“It’s not easy to go up against giants like KKR, but I’m determined to get back what was stolen from them in 2018 from the team of over 100 incredible people who spent years building FanDuel from the ground up,” said Nigel Eccles.
Nigel Eccles shared his thoughts on X (formerly known as Twitter), explaining where FanDuel’s founders and early investors stand in this dispute. Eccles noted that despite the challenges, he feels supported by the over 100 people who helped build FanDuel. He expressed hope that this lawsuit will help give back to investors what was stolen from them in 2018.
