Former DraftKings Exec Counters Allegations
Michael Hermalyn Denies All Claims In Court
One of the stranger- and most exciting- sports betting stories to come out in the last couple of months did not involve a player betting on games, line-fixing, or really anything else directly related to on-field play.
Earlier this week, DraftKings sued a former executive who handled VIP betting clients for allegedly stealing company documents and bringing them to rival Fanatics.
The DraftKings executive allegations against Michael Hermalyn are pretty severe and take on an added importance with Super Bowl LVIII coming up on Sunday.
Now, Hermalyn — through his attorneys — has responded to the legal complaint in motion papers in U.S. District Court in Massachusetts that DraftKings is trying to “ruin” his personal and professional lives with these allegations.
He also pointed out similar instances in the past where DraftKings co-founder and CEO Jason Robins went after former employees once they left the company for new ventures. Such disputes are not new for the gambling online giant.
Hermalyn also claimed that he is not in possession of any of DraftKings documents pertaining to business planning and online gambling strategy with a specific focus on DraftKings’ plan for marketing the Super Bowl in Las Vegas.
Court Allows Hermalyn To Join Fanatics
One component of DraftKings’ request to the court in its complaint was that the court issue a temporary restraining order preventing Hermalyn from beginning to work for Fanatics, among other relief as the DraftKings executive allegations extend further. DraftKings alleged in its papers from Hermalyn — in late January 2024 — secretively met with Fanatics CEO Michael Rubin about a job offer, doing so under the cover of Hermalyn needing time to mourn the death of a friend.
Then, Hermalyn resigned from DraftKings on February 1, 2024, and was immediately hired by Fanatics for a role managing VIP clients — essentially the same work he was doing for DraftKings.
DraftKings wanted the court to block Hermalyn’s move from one of the best online gambling sites to a relatively new upstart in the space (Fanatics). However, Judge Julia Kobick allowed Hermalyn to begin working for Fanatics while preventing him from using any confidential information from DraftKings to help in his role.
So, in a way, the court’s ruling on DraftKings’ request for a temporary restraining order was a win for both sides. For DraftKings, at least on paper, Hermalyn is not able to use any of the allegedly stolen proprietary documents or his institutional knowledge of DraftKings in his new role with Fanatics, which is good news.
Also, Hermalyn must return any confidential documents in his possession to DraftKings. But, in reality, it is nearly impossible for either DraftKings or the court to know if Hermalyn is abiding by that ruling.
For Fanatics, it gets to have Hermalyn work there in time for Sunday’s game, which is a huge boon considering how much money is to be made from VIP clients by online gambling sites this weekend.
What’s Next?
So, just because the court ruled on the temporary restraining order does not mean that the case about these DraftKings executive allegations is over. Only the very particular — and time-sensitive — questions of whether Hermalyn could go and work for Fanatics immediately and whether he could actually be involved in the same line of work he was doing for DraftKings have been addressed.
Now that this specific issue has been decided, the parties will continue to engage in motion practice via the submission of legal papers unless and until some kind of settlement is reached or the case heads to trial (which seems unlikely).
Here, because Fanatics has already been able to bring Hermalyn on board and he has been ordered to return all allegedly stolen DraftKings documents, the biggest outstanding claim appears to be the question of damages — how much was DraftKings financially harmed by Hermalyn allegedly using his position with DraftKings to not only be hired by Fanatics but also to try and poach other DraftKings employees to do the same. It remains to be seen whether Fanatics will be fine with settling and paying a sum of money to DraftKings to make the case go away or if both sides will continue to fight this.
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