FanDuel co-founders file lawsuit in wake of Paddy Power deal

Nigel Eccles and three other co-founders of FanDuel, the US fantasy sports betting site with Edinburgh roots, are reported to have filed a lawsuit in the wake of the firm's merger with Paddy Power Betfair's US business.

FanDuel grew to become one of two Scots unicorns. Picture: Ian Rutherford

Representatives for Eccles, the firm’s former chief executive, are understood to have filed a court order in Scotland against Paddy Power Betfair, representing four of FanDuel’s founders, which include Eccles’ wife Lesley.

The co-founders are said to be seeking some $120 million (£95m) in compensation for the sale of FanDuel, claiming that the transaction had been undervalued.

FanDuel allows sports fans to gamble on fantasy sports leagues and contests in American sports. It has more than a 40 per cent share of the US daily fantasy sports market, with some seven million registered customers across 40 states.

FanDuel, which is based largely in New York as its main businesses are in America, still maintains a significant ­presence in Scotland. It grew to become one of two Scots unicorns, with a $1 billion valuation, alongside flight search specialist Skyscanner.

The deal to merge FanDuel with the US arm of Paddy ­Power Betfair was agreed in May of this year.

Under the agreement, Paddy Power Betfair will throw in its existing US assets worth around $612m along with $158m of cash to take a 61 per cent stake in the combined business. Existing FanDuel investors will own the remaining 39 per cent.

Matt King, chief executive of FanDuel, said at the time: “We are excited to bring these two great businesses together. The combination of brands and team, along with a shared culture and ­vision for the future, creates the leading gaming destination for US sports fans.”