The spat between Fanatics Betting & Gaming and DraftKings over the career path of executive Michael Hermalyn mirrors the operations of many companies when a new kid enters the block. In this situation, the veteran DraftKings got stung by the upstart sportsbook, Fanatics.
Each side has filed lawsuits against the other. The legal maneuvering has taken a turn for the theatrics. Hermalyn accused DraftKings of “unnecessary character assassination” and efforts to instill fear in employees to dissuade them from “jumping ship.”
According to Hermalyn, 186 DraftKings employees have applied for employment with Fanatics since it launched in 2021. DraftKings has thousands of employees overall.
Hermalyn asked a federal judge in Boston to deny DraftKings’ request for a preliminary injunction to keep him from working for Fanatics, the rival he joined as president, VIP and supervisor of the Los Angeles office. He referred to the position as “unique, career-advancing opportunity.”
At issue is a non-compete clause. California law does not recognize non-compete clauses. Massachusetts does. U.S. District Court Judge Julia Kobick will decide whether to grant or deny a preliminary injunction. While Hermalyn is a defendant in a Massachusetts case, he and Fanatics are plaintiffs in a California case. They have sued DraftKings, arguing the non-compete is unenforceable, according to Sportico.
Hermalyn also dismissed DraftKings’ accusation of misappropriating sensitive materials when he left. He also returned a personal phone, email and other accounts that may have had information from DraftKings.
DraftKings’ attorney, Orin Snyder, has a different perspective. “The evidence against Mr. Hermalyn is open-and-shut. He stole valuable trade secrets, destroyed evidence to cover his tracks and then lied about it all. We look forward to the upcoming hearing,” he said via email.
Russell Beck, who represents Hermalyn, said he and his client are disappointed but not surprised by Snyder’s response.
“DraftKings’ attempt to tarnish Mr. Hermalyn’s reputation is a desperate ploy in their sordid playbook of petty retribution.”
These lawsuits come after DraftKings tried to block Fanatics’ purchase of the U.S. segment of PointsBet. Fanatics CEO Michael Rubin called the attempt to block the deal desperate.
