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DraftKings Files Lawsuit Against Former Executive For Stealing Company Info

Former VIP President Now Works At Rival Company Fanatics

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Sports bettors are used to seeing some big battles on the field, court, or rink, but now two major sportsbook operators are squaring off in the courtroom. DraftKings recently sued a former executive now working for Fanatics, alleging the former employee had a “secret plan” to steal company information.

DraftKings alleges Michael Hermalyn, who previously served as president in charge of VIP bettors, took information about some of the company’s biggest bettors to his new position with the Fanatics sportsbook.

“Hermalyn knows DraftKings’ playbook on how to engage and retain VIP clients,” the lawsuit notes. “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.”

The suit comes after Hermalyn also filed his own lawsuit challenging the non-compete clause in his contract with DraftKings. Fanatics has denied the allegations outlined in DraftKings’ lawsuit.

“This is just sour grapes,” the company said in a statement. “DraftKings is understandably upset that one of its employees left for the greener pastures at Fanatics. 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.”

Other Allegations

In addition to the allegations about stealing company information, a DraftKings investigation also revealed workplace misconduct toward female employees by Hermalyn. The operator reported that the former employee “engaged in unwelcome physical contact with a female employee without her consent” and “made inappropriate comments regarding his female colleague’s physical appearance.”

DraftKings’ allegations not only singled out Hermalyn, but also Fanatics management. The suit alleges that Hermalyn met with Fanatics CEO Michael Rubin and other executives at last year’s Super Bowl, and then allegedly “improperly” encouraged subordinates to also meet with Fanatics employees.

DraftKings is seeking a temporary restraining order barring Hermalyn from using any of the alleged stolen information.

Fanatics has faced a similar lawsuit involving entry into the sports cards business. Panini America has sued, arguing that the company raided its employees and interfered with employment contracts that were in place.

Fanatics specializes in sports team gear and entered the betting industry after purchasing the assets of PointsBet’s U.S. operations in 2023 for $150 million.