A New York court has largely rejected attempts by KKR and Shamrock Capital to dismiss a lawsuit brought by FanDuel cofounder Nigel Eccles and more than 100 former employees and early shareholders.
The case centres on FanDuel’s 2018 merger with Paddy Power Betfair, now Flutter Entertainment, and allegations that the business was deliberately undervalued before the transaction.
The plaintiffs claim FanDuel’s board valued the 40% stake issued to its shareholders at US$465.5 million. Because that figure fell below a US$559 million preference threshold, holders of preferred shares received the entire equity allocation while common shareholders received nothing.
Eccles and the other plaintiffs allege that KKR, Shamrock and former directors structured the valuation to benefit preferred investors shortly after the US Supreme Court opened the way for state regulated sports betting.
Their amended case includes claims relating to breach of fiduciary duty, fraud, conspiracy and bribery. Those allegations remain contested and have not been proven in court.
The New York Supreme Court largely denied the defendants’ dismissal motion, allowing the principal claims to proceed. It also found that questions over whether KKR and Shamrock exercised contractual drag along rights arbitrarily could not be resolved at the dismissal stage.
Eccles described the ruling as an important interim step.
“All claims relating to breach of fiduciary duty, fraud, conspiracy and bribery remain,” he said. “This is an interim but important step as we move towards being able to present all of the evidence in court.”
The dispute has continued since 2018 and previously reached New York’s highest court. In 2024, the Court of Appeals ruled that the former FanDuel directors owed at least limited fiduciary duties to common shareholders when negotiating the merger and valuing the consideration.
Flutter later acquired the private equity investors’ remaining stake in FanDuel as part of a transaction that valued the interest at substantially more than the figure used in the 2018 merger.
The latest ruling does not decide the merits of the founders’ allegations. It allows the litigation to continue towards discovery and a possible trial.
