FanDuel Merger Defendants Ordered to Submit Withheld Legal Advice for Review

The former FanDuel shareholders suing KKR, Shamrock and FanDuel's old board over the 2018 Paddy Power Betfair merger have won a route into legal advice the defendants withheld as privileged. The order decides nothing about the merits, but it reaches the documents most likely to show how a $465.5 million valuation was set.

• A special master in the New York case brought by FanDuel co-founder Nigel Eccles and more than 100 former shareholders has ordered the defendants to submit withheld legal communications for confidential review, according to NEXT.io's account of a 33-page order dated 9 October
• The order covers advice on FanDuel's valuation, the drag-along rights held by KKR and Shamrock Capital, and the waterfall that shared out the merger proceeds, and applies a fiduciary exception to privilege under Scots law
• The plaintiffs allege the merger consideration was set at $465.5 million, below the roughly $559 million owed first to preferred shareholders, so that ordinary shareholders received nothing, which the defendants deny
• The defendants say FanDuel was failing in 2018 and the deal was its only lifeline, and the ruling does not find that any duty was owed or breached
• Flutter, which now owns all of FanDuel, paid $4.175 billion for a 37.2% stake in 2020, and fact discovery in the case is due to close on 18 December

A Ruling on Privilege, Decided Under Scots Law

Special master Alan Scheinkman has ordered the defendants in Eccles v Shamrock Capital Advisors, index number 651223/2020 in the Commercial Division of the Supreme Court of New York County, to identify and submit withheld communications between FanDuel executives, directors and their lawyers for review in private, according to NEXT.io, which first reported the order, filed on 12 October. Only documents relating to FanDuel's valuation, the drag-along rights or the waterfall provision are covered, and Scheinkman will decide which, if any, reach the plaintiffs.

The basis is what NEXT.io describes as the fiduciary exception, a principle that can allow the beneficiaries of fiduciary duties to obtain legal advice that would otherwise be privileged. Scheinkman found the allegations substantial enough to apply it, while stating that the ruling does not establish that the defendants owed or breached those duties, according to the report. He also ruled that Scots law governs all questions of privilege in the case, because FanDuel was then a Scottish company and the dispute concerns its internal affairs.

It is not a wholesale release. Scheinkman rejected the idea that documents are protected simply because litigation was anticipated, but material created primarily for actual or contemplated litigation may stay protected, and some may be limited to the plaintiffs' lawyers on an "attorneys' eyes only" basis, NEXT.io reports. iGaming Times could not obtain the order itself, as the court's e-filing system was not reachable, so its terms are given as NEXT.io describes them.

What the Plaintiffs Allege, and What the Defendants Say

The merger, in July 2018, combined FanDuel with the US assets of Paddy Power Betfair, now Flutter, and gave FanDuel's shareholders about 40% of the new company, according to the Court of Appeals' 2024 account of the pleaded facts. Preferred shareholders were to be paid first, up to the roughly $559 million they had subscribed. On 22 May 2018, eight days after the US Supreme Court struck down the federal sports betting ban, the board resolved that the consideration was worth $465.5 million, without an independent valuation. KKR, with 21% of the preferred shares, and Shamrock, with 15%, then used their drag-along rights to accept on behalf of every shareholder. Ordinary shareholders received nothing.

The plaintiffs, founders and former employees who held about 10% of the ordinary shares, allege the figure was chosen to match the preferred entitlement. The defendants deny it. In a September 2024 motion they argued that Eccles had "mismanaged [FanDuel] into the ground", citing 2017 losses of $38.8 million, and that the deal was "the only lifeline", according to Legal Sports Report.

The Court of Appeals agreed in May 2024 that Scots law applied but held that the plaintiffs had pleaded a fiduciary duty owed to them, pointing to the combination of the waterfall and the drag-along rights. On 9 July 2026 Justice Andrea Masley largely denied motions to dismiss the amended complaint, letting claims including fraud go forward, according to Gambling Insider. In October 2025 she also refused to block an arbitration that FanDuel Inc and KKR and Shamrock entities brought against Eccles under his 2017 separation agreement, which they say bars him from helping the other plaintiffs.

The Advice Behind the Number Is the Case

The central allegation is that $465.5 million was a destination rather than a valuation. Board minutes show what was decided; the advice directors took while deciding it is where any discussion of the waterfall's effect on ordinary shareholders would sit. That is why the order's scope matters more than its headline: it is confined to the three mechanisms the Court of Appeals said could have left ordinary shareholders exposed. The limits are real. The special master, not the plaintiffs, decides what crosses over, and a defendant whose advice was routine may find disclosure helps it.

Scots Law Is Now Working Against the Defendants That Asked for It

The defendants argued for Scots law because it generally treats directors' duties as owed to the company, not to individual shareholders. They won that argument and lost its consequence: the Court of Appeals applied Scots law and still found a pleaded duty to the shareholders. The privilege ruling follows the same path, since a doctrine letting beneficiaries of a duty see the advice taken in its exercise is the natural sequel. For sponsors holding preferred stock and drag rights in companies incorporated abroad, the choice of a friendlier corporate law does not fix in advance which way it will cut.

The Gap Between 2018 and Today Keeps the Case Alive

The board's figure fell about $93.5 million short of the preferred threshold. In December 2020 Flutter paid Fastball Holdings, owned by FanDuel's former preferred shareholders, $4.175 billion for 37.2% of FanDuel, and in July 2025 it paid Boyd $1,553 million for 5%. The defendants' answer, that a loss-making company could not be priced on a sports betting market that did not yet exist, is serious, and hindsight is not evidence. Flutter's latest annual report does not name the case. The plaintiffs, who seek more than $120 million according to Legal Sports Report, are not the only pressure on FanDuel, which also faces Congress over VIP programmes, but this dispute is about how it was valued before the market opened.

Eight years after the merger, the case has reached the papers that could show how the number was chosen. Whether they support the founders or the board's account of a company out of options is still for the court to decide.