TLDR
- A New York judge allowed most claims in Nigel Eccles’ FanDuel lawsuit to move forward.
- The case centers on FanDuel’s 2018 merger with Paddy Power Betfair, which formed PandaCo.
- Plaintiffs say FanDuel’s 40% stake was undervalued at 559 million dollars.
- The judge dismissed two claims but let fraud and fiduciary duty claims proceed.
- Flutter later paid about 4.2 billion dollars for the rest of PandaCo in 2020.
A New York judge has let most of a lawsuit against FanDuel move forward. The case was brought by co-founder Nigel Eccles and more than 100 former employees and investors.
Judge Andrea Masley issued her ruling on July 9. She rejected most attempts to throw out the case before trial.
The lawsuit goes back to FanDuel’s 2018 sale to Paddy Power Betfair. That deal is now known as Flutter Entertainment.
What the Lawsuit Claims
The merger created a new company called PandaCo. Paddy Power Betfair took a 60% stake, and former FanDuel shareholders split the remaining 40%.
The lawsuit says that 40% stake was valued at 559 million dollars. Eccles and the other plaintiffs argue this number was far too low.
They claim the valuation was set at the exact point where preferred shareholders, including KKR and Shamrock Capital Advisors, would take all the merger proceeds. That left common shareholders and option holders with nothing.
The plaintiffs point to a May 2018 U.S. Supreme Court ruling as key evidence. That ruling struck down a law banning sports betting across most states.
They say this decision made FanDuel worth much more than 559 million dollars. The company was set to gain from a wave of new sports betting markets.
Eccles first filed his case in Scotland in 2018. He then refiled it in New York in 2020, joined by more than 100 other plaintiffs.
What the Judge Decided
Judge Masley allowed several claims to continue. These include breach of fiduciary duty, fraud, conspiracy, and secret commissions.
She rejected the idea that a U.K. Supreme Court ruling should block the fiduciary duty claims. That earlier finding came from the New York Court of Appeals.
The judge also allowed claims that certain investors and directors worked together to cut common shareholders out of the deal. She let fraud claims proceed too.
The court found the plaintiffs gave enough evidence that the valuation ignored FanDuel’s future in sports betting. Claims against people accused of helping the alleged scheme were also allowed to move ahead.
Two claims did not survive. The judge dismissed a claim about unfair treatment of minority shareholders, saying it belongs in a U.K. court under British law.
She also dismissed a claim that KKR and Shamrock broke FanDuel’s own governing rules. The judge found the merger followed the steps laid out in those documents.
In December 2020, Flutter bought most of the remaining PandaCo stake. The price was about 4.2 billion dollars.
Eccles reacted to the ruling on social media platform X. He called it an interim but important step toward presenting evidence in court.
The case now moves toward the discovery phase. That process will require both sides to share evidence ahead of a possible trial.
