One of the top sportsbook operators in the U.S. is claiming sports betting espionage.
DraftKings is suing former senior executive Michael Hermalyn and alleges he hatched a “scheme” to steal from his previous employer just days before becoming the president of VIP at Fanatics Sportsbook.
In a lawsuit document filed Monday in Massachusetts and obtained by Front Office Sports, Hermalyn, who handled high-valued customers, is accused of trying to obtain DraftKings customers and employees, which was “in brazen violation of his agreements and duties” to his former employer, before he left DraftKings for one of its competitors on Feb. 1.
DraftKings stated in the complaint that Hermalyn “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.”
DraftKings hopes to obtain a restraining order to keep Hermalyn from “directly or indirectly providing any services to Fanatics or its subsidiaries.”
Hermalyn had already filed a lawsuit in Los Angeles against DraftKings to challenge his non-compete clause.
Where it all began
DraftKings alleged in the complaint that Hermalyn started the “scheme” in February 2023 when he had secret meetings with Fanatics CEO Michael Rubin.
Hermalyn then took “disloyal steps” to get out of the company, DraftKings argues. He concocted a plan to “pretend” he was leaving the sports betting industry last summer and encouraging his subordinates to seek employment with Fanatics “while at the same time urging DraftKings to pay himself and his subordinates large retention payments, valued in the millions of dollars.”
DraftKings believes this was all a ruse to steal sensitive information and attempt to attract business for his future employer.
Confidential plans
Last week, Hermalyn allegedly “accessed and downloaded" DraftKings’ confidential business plans "while sitting in Fanatics’ office." This information included business partners, representatives of leagues and teams, celebrities, athletes, and others who would be at Super Bowl LVIII.
DraftKings said Hermalyn told colleagues in a Jan. 29 email that he was traveling to Pennsylvania to mourn the loss of a friend. Instead, according to geolocation data, DraftKings says he was at Fanatics’ Los Angeles office secretly negotiating an employment agreement and looking at those secret Super Bowl documents.
DraftKings also alleges that Hermalyn “fraudulently attempted to establish California residency” during his visit to Los Angeles to get out of his non-compete agreements filed in his lawsuit once he resigned from DraftKings.
A Fanatics spokesperson said in a statement that "this is just sour grapes."
"DraftKings is understandably upset that one of its employees left for the greener pastures at Fanatics,” the spokesperson said. “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.”
