By Iqbal Johal
More than 100 former employees of FanDuel have filed a lawsuit against private investors, accused of cheating them out of money owed following the company's sale to Paddy Power Betfair.
The lawsuit, filed in the New York Supreme Court, is backed by the daily fantasy sports site's five founders, including Co-Founder Nigel Eccles.
They claim private equity firms Shamrock Capital Advisors and KKR & Co, and members of the FanDuel board of directors at the time, deliberately undervalued shares for their own benefit.
That was prior to the 2018 sale of FanDuel to Paddy Power Betfair, which is now Flutter Entertainment, for $465m.
This follows a similar lawsuit filed in 2018 by FanDuel founders in Scotland, which was unsuccessful, with the main difference this time being the amount of ex-employees backing it.
The lawsuit claims FanDuel’s Articles of Association stated preferred shareholders and private equity firms would receive the first $559m of proceeds from the takeover; but as the result of a valuation under that amount, they were left with nothing.
The lawsuit goes on to claim private equity firms also retained a 40% share in FanDuel Group by undervaluing the company, which is claimed to have been worth $1.2bn prior to the takeover.
According to 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."