FanDuel Founder Asks Court to Stop Arbitration in Ongoing Legal Fight

On March 31, FanDuel initiated arbitration against Eccles, accusing him of violating the terms of their 2017 separation agreementImage Source: Shutterstock.com

Nigel Eccles, who started FanDueland used to run it, wants a New York court to stop his old company from making him go to arbitration. This is the latest part of a legal battle that has been going on for years about selling the sports betting company in 2018.

Eccles Accuses FanDuel of Dodging Shareholder Lawsuit

In a motion submitted to the New York State Supreme Court, Ecclesasked the court to issue a temporary restraining order against FanDuel. He claims the company’s push for arbitration serves as a deliberate distraction to avoid the main lawsuit. This lawsuit aims to recover payouts that plaintiffs say FanDuelheld back from early sngakeholders during its sale to Paddy Power Betfair,now known as Flutter Entertainment.

On March 31, FanDuelstarted arbitration proceedings against Eccles. The company alleges he broke the terms of a 2017 separationagreement. FanDuelsays Ecclesviolated this contract by helping others involved in the ongoing shareholder lawsuit. The company wants Ecclesto give back about $8 millionit paid him under the original agreement.

In response, Ecclesand his lawyers argue that FanDuelwants to delay things. They say this is to avoid a judge looking at what the original shareholders claim. They point out that FanDueldid not try to enforce the supposed breach for more than seven years. During this time, FanDuelkept paying under the same deal. They say FanDuelwants arbitration now because the shareholder case is picking up steam.

Lawsuit Alleges FanDuel’s 2018 Sale Was Rigged to Favor Private Equity Firms

The main issue is about how much FanDuel was worthwhen it joined with Paddy Power Betfairin 2018. Ecclesand other early shareholderssay the company’s value was made too low on purpose. They claim this let preferred shareholders — private equity firms like KKRand Shamrock Capital Advisors— get all the equity in the new combined company. Meanwhile regular shareholders got nothing.

This argument got stronger after the New York Court of Appealsdecided in 2024 that Ecclesand other plaintiffs had enough evidence to claim breaches of fiduciary duty under Scots law. Scots law applied because FanDuelwas first set up inScotland. The court recognized that some directors might have had special fiduciary duties to shareholders given the unique setup of the merger and share structure.

Ecclesinsists that his 2017 agreement never stopped him from ngaking legal action about future events. He stresses that he is part of this current case to help over 100 early employees and investors get fair treatment. These people believe they missed out on the financial benefits of FanDuel’s later success.

FanDueland its private equity backers have not said anything about the newest filing. The lawsuit goes on in New Yorkwhere Ecclesand other plaintiffs want compensation and payback for what they claim was a planned effort to ngake away their fair share.