FanDuel, Eccles, hundreds of plaintiffs and two lawsuits: The saga explained
Just days ago, on 31 March 2025, a new chapter unfolded in the already complex legal battle surrounding the sports betting giant FanDuel. The company filed an arbitration claim against its co-founder and former CEO, Nigel Eccles, adding another layer to a saga that began with a contentious 2018 merger and now involves over a hundred plaintiffs. This isn’t just a typical business dispute; it’s a high-stakes drama playing out in New York courts, fuelled by allegations of a deliberately undervalued company sale and now, a personal clash between FanDuel and one of its key creators.
How it started: Merger that left many feeling shortchanged
The roots of this conflict stretch back to 2018, when FanDuel Ltd. merged with the U.S. assets of Paddy Power Betfair plc. For Nigel Eccles, who co-founded FanDuel in 2009, along with a significant group of over 100 common shareholders, including fellow founders, early investors, and employees, this merger didn’t feel like the success story it should have been. They contend that FanDuel’s board of directors and major preferred shareholders, namely Shamrock Capital Advisors and KKR & Co., intentionally undervalued the company during the negotiations leading up to the sale.
These plaintiffs, who collectively held around 10 percent of FanDuel’s common shares, allege a calculated move that resulted in the preferred shareholders pocketing all the proceeds from the merger. The common shareholders, the very individuals who poured their efforts into building FanDuel, reportedly received nothing. They argue in court filings that the director defendants had a direct financial stake in seeing the merger go through and acted in their own self-interest, failing to treat all shareholders with the fairness they deserved.
Their lawsuit, Eccles v Shamrock Capital Advisors, LLC, made its way to the New York Court of Appeals. The central legal question revolved around whether New York law or the law of Scotland, where FanDuel was incorporated, should govern the case.
New York courts look to Scots law
The New York Court of Appeals ultimately determined that Scots law would be the applicable legal framework based on the internal affairs doctrine. This legal principle generally dictates that the law of the jurisdiction where a company is incorporated should govern its internal affairs. However, the court’s decision on 23 May 2024 offered a glimmer of hope for the plaintiffs. While acknowledging the general principle under Scots law that directors owe their duties to the company as a whole, the court recognised a potential exception for “special circumstances” where directors might also owe a fiduciary duty directly to individual shareholders.
The Court of Appeals specifically highlighted the interplay between FanDuel’s “waterfall provision,” which prioritised payouts to preferred shareholders in the event of a merger, and the “drag-along rights” held by KKR and Shamrock, which allowed them to force all other shareholders to accept a merger offer. The court reasoned that this combination could have placed the common shareholders in a particularly vulnerable position, potentially creating a fiduciary duty on the directors to protect their interests. This ruling reversed a lower court’s decision and allowed the plaintiffs’ claims of breach of fiduciary duty to proceed under Scots law.
FanDuel accuses Eccles of sabotage
Fast forward to 31 March 2025. FanDuel has now escalated the legal battle by filing an arbitration claim against Nigel Eccles. According to FanDuel’s lawyers, who informed a New York judge of this development just days ago, Eccles has “repeatedly and flagrantly” violated his November 2017 separation agreement with the company.
FanDuel’s core argument in the arbitration is that Eccles has actively been recruiting and assisting the very plaintiffs involved in the lawsuit he initiated against the company he once led. They contend that this behaviour constitutes a clear breach of his contractual obligations to FanDuel following his departure.
Eccles pushes back on claims
In response, Nigel Eccles told NEXT.io, “KKR, Shamrock, and FanDuel’s former board are afraid to confront their alleged misdeeds that our lawsuit has brought to light.” He believes that instead of addressing the serious allegations of undervaluation in court, the defendants have chosen to sue him for simply filing the lawsuit.
Eccles further added that he believes FanDuel’s action is an attempt to prevent him from helping former FanDuel employees recover what they are rightfully owed from the 2018 sale. He sees it as a tactic by the defendants to avoid answering the significant questions raised by the New York Court of Appeals ruling.
FanDuel’s legal team paints a different picture. In their arbitration claim, they argue that KKR and Shamrock actually stepped in to save FanDuel through the 2018 deal, especially in light of what they describe as “leadership challenges” during Eccles’s time as CEO. They assert that Eccles has breached his separation agreement by actively assisting over 100 other plaintiffs in bringing two separate lawsuits against FanDuel and the KKR/Shamrock investors. They claim these lawsuits seek hundreds of millions of dollars in damages from an acquisition that FanDuel argues rescued the company from a “mess Mr. Eccles had created.”
As a result of Eccles’s alleged breach, FanDuel is demanding the return of approximately $8 million in payments he received under his separation agreement. They are also seeking a legal order to prevent him from providing any further assistance to the plaintiffs in their ongoing case against the company and its preferred shareholders. FanDuel’s lawyers have indicated that the outcome of this arbitration could have significant implications for the main lawsuit and that they may seek to enforce any arbitration award against Eccles in those proceedings.
