A former DraftKings employee had allegedly stolen confidential customer information and handed it to his new employer, Fanatics, less than two weeks before Super Bowl Sunday.
The Big Steal
Michael Hermalyn, DraftKings‘ former head of VIP operations, is alleged to have stolen confidential information and turned it over to his new employer, Fanatics. Hermalyn reportedly left his position at DraftKings on February 1st, less than two weeks before the biggest sports betting event of the year, Super Bowl Sunday.
According to DraftKings’ filings, Hermalyn “hatched a secret plan over the past year to steal and use confidential information, solicit customers and employees, and join a key competitor, Fanatics, Inc. (“Fanatics”), in brazen violation of his agreements with and duties to DraftKings.”
The Alleged Plan
The intrigue allegedly began before last year’s Super Bowl when Hermalyn began discussions with Fanatics about joining them in the same capacity as his then-current role with DraftKings and soliciting colleagues to join Fanatics. But things ramped up when he allegedly lied to DraftKings about traveling to Philadelphia after a friend passed away but instead flew to Los Angeles to sign a deal with Fanatics less than two weeks before Super Bowl 58.
During that meeting with Fanatics, the lawsuit alleged, Hermalyn “downloaded DraftKings’ confidential business plans for the Super Bowl while sitting in Fanatics’ offices.” Customer lists, especially those of the VIP variety, are jealously guarded in the sports betting industry.
The complaint also stated, “Hermalyn knows DraftKings’ playbook on how to engage and retain VIP clients.”
The lawsuit went on to allege, “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.”
Hermalyn’s Response
With the Super Bowl looming, time was of the essence to get the matter before a judge as the suit stated, “without prompt injunctive relief barring Hermalyn from violating his agreements with DraftKings, Hermalyn will be free to launch an unlawful and targeted attack against DraftKings’ business and divert its most valuable customers immediately prior to one of the most business-critical weekends for DraftKings.”
Hermalyn countered in a court filing that stated, “Contrary to DraftKings’ unsubstantiated fears and allegations, I did not give Fanatics or any of its affiliates, including Fanatics VIP, the opportunity to access, view, copy, or otherwise record DraftKings’ information.”
Judge Rules
Both sides declared victory when a Massachusetts judge, Julia E. Kobick, ruled that Hermalyn could remain in his position at Fanatics but is barred from revealing any confidential information or soliciting DraftKings’ employees to join Fanatics.
“We are pleased that the judge granted a temporary restraining order in favor of DraftKings ordering Mr. Hermalyn not to solicit DraftKings employees or customers, and not to use any confidential company information,” a DraftKings spokesperson said in a statement.
More Allegations
In another wrinkle, Hermalyn is also accused of engaging “in unwelcome physical contact with a female employee without her consent” and making “inappropriate comments regarding his female colleague’s physical appearance.”
An unnamed source at Fanatics wrote in a statement, “This is just sour grapes. 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.”
