FanDuel, Private Equity Backers Want Scottish Regime Applied in Founders Suit, But Judge Has Reservations
FanDuel and private equity shops KKR and Shamrock Capital are asking New York Supreme Court Justice Andrea Masley to apply Scottish law in a suit brought by founders Nigel and Lesley Eccles and Thomas Griffiths, but the judge is indicating the defendants may be setting the bar too high.
The proceedings, conducted by video conference on Monday, stems from litigation filed in February by Eccles, his wife, Griffiths and more than 100 former FanDuel staffers claiming that the private equity firms pressured conflicted board members of the daily fantasy sports (DFS) to accept a $559 million takeover offer from Paddy Power Betfair that enriched KKR and Shamrock while essentially leaving common equity investors out in the cold.
FanDuel was founded in Scotland and incorporated under that country’s laws, though it maintained an office in New York and relies on the US for the bulk of its revenue.
It is well known that there is a market for incorporation … now the founders made their choice and investors can choose whether to accept a Scottish regime,” said FanDuel attorney Mark Kirsch.
In 2018, a Scottish court tossed a suit brought by FanDuel founders attempting to stop the sale of the company to Ireland-based Paddy Power. Eccles and his fellow founders would later sue KKR and Shramrock for $120 million, claiming those entities received preferential treatment not afforded to common equity investors.
Plaintiffs Say FanDuel Undervalued by a Mile
Eccles and the other plaintiffs argue not only did Paddy Power’s takeover offer enrich only preferred stockholders, but it also undervalued the DFS company relative to its potential.
For example, the acquisition was cemented just before the US Supreme struck down the Professional and Amateur Sports Protection Act (PASPA), sparking a rally in the Irish gaming company’s shares, but that news was never accounted for in the purchase price of FanDuel.
Paddy Power would later become Flutter Entertainment, the world’s largest online gaming company. Plaintiffs’ attorney Andrew MacNally of Bartlit Beck LLP says his clients believe FanDuel’s future potential should have been factored into the takeover offer.
“History has proven that correct,” MacNally said. “Today the company is worth billions of dollars.”
He may be onto something. FanDuel’s most direct competitor is DraftKings, a company with a market capitalization of $18.94 billion. In the US, FanDuel holds a larger percentage of the online/mobile sports wagering market than its rival.
Term Sheet Not Enough
Counsel for FanDuel assert a term sheet was presented to the plaintiffs explaining how the company was being valued at the time of the Paddy Power overture.
However, Justice Masley debated the importance of relying on such a document as the means for dismissing the litigation in the early innings, as it is today.
“I have to say, that is my issue throughout your papers,” she said. “I think you are holding this plaintiff to a higher standard.”
The judge gave no indication as to when she’ll make final ruling.
Recently, rumors surfaced that Flutter could be mulling a spin-off of its US businesses, including FanDuel, in an effort to capitalize on the growth of iGaming and sports wagering in this country.
The post FanDuel, Private Equity Backers Want Scottish Regime Applied in Founders Suit, But Judge Has Reservations appeared first on Casino.org.
Playson adds second “Double Hit” slot to growing portfolio via new 3 Fruits Win game
On the heels of its debut in the regulated Georgian market and casino games and…
British online blackjack player finally awarded £1.7 million Betfred jackpot
In the United Kingdom and an online casino player has reportedly won his three-year court…
Carousel Group and Maxim join forces to create new online sports betting brand in the US
The Carousel Group announced a new partnership this week with men’s magazine Maxim. The sports…
ESA Gaming’s EasySwipe content now live with iSoftBet’s GAP platform
After recently launching its latest hit, award-winning online games supplier and content aggregator iSoftBet has…
Delay for Caesars Entertainment Incorporated’s acquisition of William Hill
In the United Kingdom and final approval of the deal that could see American casino…
Habanero unleashes new fantasy-themed video slot, Before Time Runs Out
After recently making its Paraguayan debut, online and land-based casino games provider Habanero Systems (Habanero)…