DraftKings Accuses VIP Exec of Corporate Espionage, Says Staffer Sold Secrets to Fanatics
In a young court of law filing that reads ilk the playscript for a Hollywood thriller, DraftKings (NASDAQ: DKNG) claimed former executive director Michael Hermalyn sold switch secrets to Fanatics inward an effort to procure a chore with a direct contender to his employer.
In a polite complaint filed Monday inward the U.S. District Margaret Court in the District of Massachusetts, Boston-based DraftKings said Hermalyn, who oversaw the gaming company’s efforts to draw and keep back VIPs, crosshatched a strategy that supposedly started at the 2023 Super Bowl. There, he met with high-ranking Fanatics executives, including CEO Michael Rubin, to “discuss employment.”
He took further disloyal steps o'er the summer, pretending he was ‘getting out of the industry’ and improperly encouraging his subordinates to receive with Fanatics’ CEO near work there, piece at the same clip urging DraftKings to pay himself and his subordinates big keeping payments, precious inwards the millions of dollars,” according to the legal document.
The gaming companionship said Hermalyn’s villainous deeds continued as of endure calendar week to lapse DraftKings’ VIP trading operations inward move on of the upcoming Super Bowl. The Super Bowl is the most wagered-on athletic contest in the U.S. and is a marquee case for all sportsbook operators.
DraftKings asserts that last-place week, Hermalyn took a clandestine touch off to Los Angeles to receive with Fanatics executives, using the purported decease of a friend inwards Pennsylvania as cover.
Rift Underscores Industry Competition
While inward Los Angeles, Hermalyn is said to feature “negotiated an employ understanding with Fanatics, downloaded DraftKings’ confidential business sector plans for the Super Bowl while sitting inwards Fanatics’ offices, and fraudulently attempted to constitute Calif. abidance during his 48-hour call in so he could resign from DraftKings and attempt to invalidate his noncompete agreements inwards California state court of justice only a few days later,” according to DraftKings.
If that’s what Hermalyn did, in theory, it was a shrewd run because, potential owing to California’s status as nursing home to a slew of technology companies, it forbids enforcement of noncompete agreements. Last September, Gov. Gavin Newsom (D-CA) signed II bills to that effect.
“Together, the bills amount amid a nationwide push to banning noncompete agreements and other restrictive covenants in employ and further California’s leading public insurance stance against such agreements,” according to law unshakable Ogeltree Deakins.
Fierce Competition
The rift between DraftKings and Hermalyn underscores the dot that the U.S. sports betting industry is fiercely competitive and that competition is amplified regarding employees and attracting bountiful bettors — the latter of which were described inward the DraftKings legal document as scarce resources.
Hermalyn led DraftKings’ VIP team, responsible for(p) for acquiring and retaining DraftKings’ most loyal and high-value potency players,” added the companionship in the complaint. “In the fantasize sports, roving sports betting, and iGaming industry, businesses put up go under or swim on the strength of their customer relationships. DraftKings is i of only a few prominent companies competing for passing scarce resources, especially the patronage of the relatively little list of high-net-worth customers who wager substantial sums on sporting events.”
While employed with DraftKings, Hermalyn knew the identities of the operator’s largest customers and their betting proclivities.
More Bad Blood
The accommodate against Hermalyn also extends speculative blood 'tween DraftKings and Fanatics. There was a time when DraftKings cofounder and CEO Jason Robins was supposedly well-disposed with Rubin, and the ii companies nearly sealed a monolithic $48 billion merger inwards 2021.
Late in the negotiations, Rubin halted the plan. Now, his in private held accompany is worth an estimated $31 billion, patch DraftKings has a market capitalisation of $19.56 billion.
The bad blood lingered and was displayed in conclusion year when Fanatics attempted to acquire PointsBet US. The suitor originally offered $150 billion for that business, but DraftKings later conjure $195 million. While Fanatics ultimately won PointsBet US, it was forced to wage hike its $150 gazillion proposal because of the DraftKings offer.
In a statement on DraftKings’ civic complaint against Hermalyn, Fanatics called it “sour grapes.”