Following the sale of FanDuel to Paddy Power Betfair, more than one hundred former workers have launched a lawsuit against private investors, alleging that the investors defrauded them of money that was owed to them following the sale of the company. The action, which was brought before the Supreme Court of New York, has the support of all five of the site's original creators, including Nigel Eccles, who served as a co-founder.
They assert that members of FanDuel's board of directors at the time, as well as private equity companies Shamrock Capital Advisors and KKR & Co, intentionally undervalued shares for the purpose of maximizing their own profits.
In 2018, Paddy Power Betfair, which is now known as Flutter Entertainment, purchased FanDuel for a total of $465 million. This occurred before the transaction.
This follows a similar case that was brought in 2018 by the founders of FanDuel in Scotland. That action did not succeed, and the primary difference between this one and the previous one is the number of former employees who are supporting it.
According to the lawsuit, FanDuel's Articles of Association stated preferred shareholders and private equity firms would receive the first $559 million of proceeds from the takeover; however, because the company was valued at less than that amount, these parties were left with nothing and the lawsuit seeks to hold FanDuel accountable.
The lawsuit claims that private equity companies also retained a 40% part in FanDuel Group by undervaluing the company, which is alleged to have been worth $1.2 billion prior to the takeover. The action was filed in the state of Nevada.
As stated in the lawsuit, the plaintiffs are seeking the imposition of "all proceeds obtained from any transfers or appreciation of such stock, held by defendants as a result of the Paddy Power Betfair acquisition of FanDuel." In other words, the plaintiffs want to force the defendants to hand over all of the money that they made from the sale of FanDuel stock or any other transactions.
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