DraftKings faces backlash from fanatics in heated legal dispute over alleged corporate espionage

• A former executive, Michael Hermalyn, is being sued by DraftKings in federal court for allegedly stealing confidential information to benefit Fanatics and attempting to lure VIP customers away.
• The sports betting giant accuses Fanatics of working to clone its business.
• DraftKings is accused by fanatics of retaliating against Hermalyn for leaving for a better job and discouraging other employees from doing the same.

Fanatics is fighting back against DraftKings in a legal battle over Fanatics' hiring of a top executive.

In a legal brief filed in U.S. District Court in Massachusetts, Fanatics alleges that DraftKings misrepresented the truth and engaged in character assassination against its former senior vice president of business development, Michael Hermalyn.

In February, Hermalyn was appointed as the president of Fanatics VIP and the head of Fanatics' Los Angeles office, reporting directly to CEO Michael Rubin.

DraftKings is filing a lawsuit against Hermalyn in federal court, alleging that he stole confidential company documents and attempted to lure other employees away from DraftKings.

DraftKings is accused by Fanatics of having a "culture of retribution" and using Hermalyn as an example to intimidate other "DK employees considering leaving."

Since 2021, 186 DraftKings employees have applied to work at Fanatics, as stated in the filing.

Fanatics, a sports gambling company backed by billionaire Rubin and with a customer database of team jerseys and sports memorabilia, is the newcomer in the rapidly expanding sports gambling industry.

FanDuel, owned by , holds the largest market share in sports betting, with DraftKings following closely behind at No. 2. Together, they control approximately 80% of the market.

The competition in the gambling industry is intense, with well-known brands such as and vying for customers' money. To stay ahead, they are investing heavily in technology to enhance their apps, personalize marketing and promotions, and simplify deposit and withdrawal processes. Much of this technology is proprietary.

Notorious for their promiscuity, sports gamblers frequently download multiple betting apps on their phones in pursuit of promotions and the best odds.

VIP customers work with hosts to build relationships and foster loyalty in casinos or sportsbooks.

DraftKings claims that Hermalyn contacted one of their top clients to inform him of her departure from her job.

According to Orin Snyder, an attorney with Gibson Dunn representing DraftKings, the evidence against Mr. Hermalyn is clear-cut. He was found guilty of stealing valuable trade secrets, destroying evidence to cover his tracks, and lying about it all.

DraftKings alleges in a brief filed March 14 that Fanatics is attempting to steal its valuable employees, VIPs, and business strategy through corporate espionage.

DraftKings is accused of distorting reality and engaging in character assassination, but its fanatics vehemently deny these allegations.

The company clarified that the situation at hand is not about an employee being hired to transfer a business book from one company to another. Fanatics currently has 100 million customers in the U.S., and both DK and Fanatics have tens of thousands of VIP customers. It is widely known that many, if not all, of those customers overlap.

The judge denied DraftKings' petition to prevent Hermalyn from working for Fanatics but issued a temporary restraining order to prevent her from soliciting clients or employees from her former employer.