Papers filed in New York

Wealthy investors ‘rigged’ Fanduel sale to cut out founders

Nigel and Lesley Eccles

Nigel and Lesley Eccles: two of the founders (pic: Terry Murden)

Wealthy corporate investors have been accused of rigging the merger of fantasy sports firm Fanduel with Paddy Power Betfair to ensure they shared billions of dollars while the founders and original investors were left with nothing.

The claim appears in legal papers filed against private equity firms Shamrock Capital Advisors and KKR & Co claiming they colluded to wipe out common shareholders and “enrich themselves”.

FanDuel was launched by four friends at Edinburgh university – husband and wife Nigel and Lesley Eccles, Tom Griffiths and Rob Jones – before it moved to New York and became one of the market leaders in the booming sports games sector.

But following a series expensive legal battles with the US authorities over anti-gambling legislation they were forced to sell the business.

The buyers sold the business to the betting giant Paddy Power Betfair and the complaint filed in the Supreme Court of New York, alleges those who invested and the board they installed “engaged in self-dealing on a grand scale by rigging the merger”.

Under the merger terms the preferred shareholders were entitled to the first $559 million in proceeds from the merger. Common shareholders, like the founders and former employees, were entitled to everything above that amount.

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