DraftKings Sportsbook has filed a lawsuit against a former executive for planning to steal data for a rival sportsbook. The complaint describes the executive, who recently took up the position of president at Fanatics Sportsbook, as “improperly” encouraging DraftKings employees to leave the company. Details of the case emerged in a civil complaint filed in Massachusetts earlier this week.
Michael Hermalyn was tagged as the president of Fanatics VIP, a flagship product created for high-volume bettors. The complaint claims Hermalyn “stole many of DraftKings’ most commercially sensitive documents.” Before departing the company, he held a position similar to his current role at Fanatics VIP.
In the complaint, DraftKings told the court that Hermalyn abruptly left the company ten days before the Super Bowl and requested the court to block him from diverting its most valuable customers ahead of “one of the most business-critical weekends” for sports betting in the United States.
Hermalyn countered DraftKings by filing a separate lawsuit in the California State court. He alleged they were illegally trying to prevent him from moving to Fanatics by relying on unenforceable noncompetition, non-solicitation, and other employer agreements. Fanatics Sportsbook remained a nondefendant in the case and stated that the Massachusetts lawsuit was “just sour grapes.”
“The fact that they are trying to drum up ridiculous allegations on one of their well-respected executives in an attempt to ruin his reputation sheds some light on why employees may be choosing to leave that organization,” the spokesperson said.
Fanatics Targets Aggressive Growth
Fanatics is a brand that first gained popularity by selling sports jerseys and merchandise. The plaintiffs told the court that Hermalyn met with its leadership at last year’s Super Bowl. It claimed that the agenda of this meeting was to discuss Hermalyn’s work there. Hermalyn oversaw DraftKings’ relationships with its high-spending “VIP” customers.
The lawsuit details Hermalyn’s appointment to Fanatics Sportsbook’s Los Angeles office last week, where he has taken a nearly identical position to the one he held at DraftKings. It also alleges that he downloaded DraftKings’ Super Bowl business plans to share with the rival brand. In the complaint, DraftKings alleges that he lied to the company that he was away “mourning the loss of a friend from Pennsylvania.”
DraftKings has asked the court to block the misuse of its secrets and monetary damages, including millions of dollars Hermalyn received while under contract as an executive.
On January 29, Hermalyn’s official email address informed two DraftKings employees that a close friend had passed away and that he would be out for two days as a result. Hermalyn lives in New York and frequently travels to DraftKings’ headquarters in Boston. The lawsuit alleges that geolocation data showed that he had traveled to the Fanatics office in Los Angeles.
The allegations outlined in the complaint are similar to another charge that has recently been leveled against Fanatics. In August 2023, Panini America filed an antitrust lawsuit against Fanatics for “launching a raid of Panini employees and tortiously interfered with those employees’ contracts with Panini.”
Though this lawsuit was initially filed in Florida, it was consolidated with Fanatics’s lawsuit against Panini in the U.S. District Court for the Southern District of New York.
DraftKings Attempts To Place Restraining Order On Hermalyn
DraftKings also hopes to secure a temporary restraining order against Hermalyn after he filed a counter-lawsuit against the sportsbook to challenge its non-compete.
Since it acquired PointsBet for $225 million in 2023, Fanatics has also been working on developing talent to consolidate its position as an upcoming competitor in the sportsbook landscape. “Hermalyn knows DraftKings’ playbook on how to engage and retain VIP clients,” the lawsuit reads.
“On information and belief, Hermalyn, acting in concert with Fanatics, timed his departure and theft of confidential information to coincide with the critical days leading up to the Super Bowl to further a scheme to irreparably interfere with DraftKings’ customer and business relationships by pursuing those relationships at Fanatics using the confidential information and goodwill that he obtained at DraftKings.”
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