FanDuel Co-Founder Nigel Eccles has filed a lawsuit against Paddy Power Betfair over its recent $465m takeover of the daily fantasy sports site.
Eccles created FanDuel in 2009, stepping down as company CEO six months before Paddy Power Betfair’s takeover in July.
However, due to “waterfall” financial arrangements and the $465m valuation not being large enough, regular employees including founders such as Eccles did not receive any money from the merger.
On the other hand, new CEO Matt King is set to make millions.
The lawsuit therefore states that FanDuel was purposefully undervalued, stripping the co-founder and others of an estimated $120m plus. The desired outcome would include FanDuel’s preferred shareholders purchasing the founders’ ordinary shares at market value.
Legal representatives have filed a Scottish court order on behalf of Eccles, his wife Lesley Eccles (former CMO), Tom Griffiths (former CPO) and Rob Jones (corporate advisor).
The lawsuit will likely hinge on the FanDuel board’s decision not to recalculate its valuation in light of the PASPA repeal – which legalised state regulation of sports betting in the US.
FanDuel maintain $465m was the highest valuation possible considering the repeal, declining business performance and arguments that daily fantasy sports does not equate to sports betting.