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FanDuel founders on alert as Flutter looks at listing

Legal action: Nigel and Lesley Eccles (pic: Terry Murden)

Betting group Flutter Entertainment, the owner of Paddy Power, Betfair and PokerStars, is looking to list a small shareholding in its FanDuel division, a move likely to generate further attention from the fantasy sports firm’s Edinburgh founders.

The four creators of FanDuel are pursuing a legal action claiming it was undervalued, leaving them with nothing, when the company was sold to Paddy Power in 2018.

Flutter is now said to be under pressure to consider a spinoff and share sale of FanDuel from some investors who have expressed frustration that Flutter is trading at a discount to rival DraftKings despite FanDuel’s status as the largest competitor in the US with a 40% share of the market.

DraftKings’ market capitalisation is more than $28 billion. The company booked $644 million in revenue in 2020, and predicts it could rise to $1bn this year.

Flutter, the world’s largest online betting group, merged its US business with FanDuel in 2018 following a federal supreme court ruling that year that ended widespread sports betting bans.

In December 2020 it raised its stake to 95% in a $4.2bn deal that valued FanDuel at $11.5bn and encouraged the co-founders to believe it strengthened their legal action.


Nigel and Lesley Eccles, together with fellow founders Tom Griffiths and Rob Jones, say the company was valued at just $565m when it was sold in 2018 to what was then Paddy Power Betfair.

Under the merger terms the preferred shareholders were entitled to the first $559m. This left common shareholders, including the founders, with nothing.

The legal action pursued by the co-founders is against private equity firms Shamrock Capital Advisors and KKR & Co claiming they colluded to wipe out common shareholders and “enrich themselves”.

Mrs Eccles said after the deal in December that she was “looking forward to our day in court.”

The Irish company said this weekend that it was making the disclosure about a possible listing of FanDuel in response to media speculation.

Fox Sports owns 2.5% of Flutter and has an option to buy an additional 18.5% in FanDuel in July. Clearing up Fox Sport’s ownership could delay a spinoff of the company, CNBC reported on Friday.

“Options including the listing in the US of a small shareholding in FanDuel are being considered but no decision has been made at this time,” Flutter said in a statement. 

“Flutter regularly evaluates its organisational and capital structure to assess how best to position itself to deliver upon the group’s strategy.

“Should a decision be made to proceed with a listing in due course, an announcement will be made as appropriate.”

In May 2020, Flutter merged with Toronto-listed rival The Stars Group, adding businesses such as Skybet and Pokerstars to a stable that already held Paddy Power, Betfair and Australia’s Sportsbet.

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