DraftKings, Fanatics Clash Over Employee Exodus in Sports Betting Saga

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A turbulent legal battle has been brewing between Fanatics and DraftKings since sports retailer Fanatics expanded into the realm of sports betting in 2021. The turbulence was stirred by the departure of 186 workers from DraftKings seeking refuge under Fanatics’ burgeoning sportsbook flag, according to a recent filing in a Boston federal court by legal representatives for Michael Hermalyn, an ex-executive of DraftKings.

The spotlight in this corporate drama is trained on Hermalyn, formerly a Senior Vice President of VIP at DraftKings. In February, DraftKings lodged a lawsuit against him, alleging that he had maliciously plotted for over a year to transition to Fanatics, allegedly smuggling with him vital confidential information about DraftKings’ VIP clients and their Super Bowl business strategies. Even more damning, DraftKings charges Hermalyn with enticing two of its employees to join him at Fanatics upon his move.

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In a move to cripple Hermalyn’s competitive potential, DraftKings recently sought a preliminary injunction. If endorsed, this would bar Hermalyn from working at Fanatics for the length of a non-compete agreement within his previous contract with DraftKings. Nonetheless, such non-compete provisions bear no legal weight in California, Hermalyn’s current residence and workplace, discounting the geographical origins of the initial contract signing.

Sharp-tongued and unambiguously combative, Hermalyn’s and Fanatics’ lawyers fired back a defiant motion to toss out the injunction request. They brandished accusations at DraftKings for twisting the truth and launching an unmerited character assault. The lawyers contend that the 186 workers who desired to migrate to Fanatics were propelled not by Hermalyn, but rather were fleeing what they perceive as a ‘culture of retribution’ at DraftKings.

Furthermore, Hermalyn’s lawyers argue that the two workers he is accused of luring reached out to him of their own accord barely 24 hours after his employment at Fanatics. In light of these allegations, the sheer absence of a single lost DraftKings customer to Fanatics critiques the general claim of stolen trade secrets, pointing to a lack of consequent harm on Draftkings’ part.

Meanwhile, hinged on allegations of Hermalyn downloading work-related documents on a “non-DK device”, DraftKings fails to disclose that it does not provide its employees with work phones, and that the accused device is Hermalyn’s personal phone, utilised for viewing work documents—a process he was fully authorized to do.

The fierce defense presented by Hermalyn’s lawyers concludes by accusing DraftKings of applying a long-standing smear-campaign strategy against employees seeking opportunities elsewhere. According to them, this legal feud is a transparent mutation of such tactics, as they allege that the evidence presents a clear denouncement of any wrongdoing on Hermalyn’s part.