DraftKings Takes Legal Action Against Former Executive Michael Hermalyn

DraftKings has filed a federal lawsuit accusing former executive Michael Hermalyn of stealing confidential data to take to his new job at Fanatics. The civil suit, filed in Massachusetts on February 5, alleges that Hermalyn, who recently became chairman of Fanatics VIP, targeted high-volume bettors and stole commercially sensitive documents from DraftKings before leaving the company on February 1. The lawsuit claims that Hermalyn utilized his knowledge of DraftKings’ playbook to engage and retain VIP clients and that he coordinated his departure to coincide with the critical days leading up to the Super Bowl.

The suit also alleges that Hermalyn met with Fanatics CEO Michael Rubin and other executives during the 2023 Super Bowl and improperly persuaded his subordinates at DraftKings to do the same. DraftKings is seeking a temporary restraining order to prevent Hermalyn from providing any services to Fanatics or its subsidiaries.

The lawsuit follows a legal action by Hermalyn to void his non-compete contract with DraftKings in Los Angeles. DraftKings alleges that Hermalyn fraudulently attempted to establish California residency in order to resign from DraftKings and invalidate his non-compete agreements in California state court. The lawsuit also claims that Hermalyn’s email account purportedly showed him taking time off for the death of a friend, despite geo-location data indicating he was at the offices of Fanatics in Los Angeles. Hermalyn is also accused of receiving millions of dollars in compensation from DraftKings not to disclose confidential information or become a rival of the firm.

Fanatics is also facing a separate lawsuit from Panini America, which alleges that Fanatics interfered with its contracts and recruited employees in violation of their agreements. The lawsuit has been combined with a lawsuit by Fanatics against Panini in the U.S. District Court for the Southern District of New York. Despite the accusations, Fanatics claims that no former employee accessed any Panini-related information. The legal battles reflect the intense competition and high stakes in the sports wagering and trading cards industries.