DraftKings Executive Accused of Stealing Company Info and Giving to Rival

It's a dog eat dog world in US sports betting and the cut throat nature of the industry just got more exposed in the courts.

DraftKings was awarded an injunction against a former executive accused of stealing proprietary information and handing it over to a competitor.

The preliminary injunction was lodged against Michael Hermalyn, the former head of VIP operations at DraftKings, who left to join forces with Fanatics at the end of January.   He would be in a similar role there.

DraftKings is expected to prevail in its suit.

“Since, as explained, Hermalyn likely misappropriated DraftKings’s confidential information and breached his noncompetition agreement through his employment at Fanatics, DraftKings has established that it would suffer irreparable harm absent injunctive relief,” the ruling said.

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Hermalyn is prevented from engaging in the following practices:

• He's prohibited until February 2025 from providing services that relates “to any aspect of the Business of the Company (as defined in the Noncompetition Covenant) for which Hermalyn performed services or received Confidential Information at any time during the six-month period prior to February 1, 2024.”
• He cannot use confidential information or disclose such information.
• He cannot hire anyone away from DraftKings until the February date.
• He is prohibited from moving, destroying, deleting, altering or otherwise disposing of anything containing confidential information.

Since the United State Supreme Court abolished sports betting prohibition in May of 2018, DraftKings has gone on to become one of the top two sportsbooks in the regulated US market

Fanatics Chimes In

Following the injunction, Fanatics issued this statement:

“Although we disagree with certain aspects of the Court’s ruling, we appreciate that the Court rejected DraftKings’ efforts to prevent Mike from working for Fanatics. Mike is looking forward to rolling up his sleeves and building Fanatics’ business consistent with the Court order. The Court’s order is preliminary, and Mike eagerly awaits his opportunity to present his case on the merits based on a full record. 

“It’s unfortunate that DraftKings’ cheap attempt at petty retribution against a former employee – who simply wanted to take advantage of a better opportunity for himself and his family – will now undoubtedly continue to be used to instill fear and intimidation across DraftKings’ entire employee base. Those employees, now scared into staying in that toxic culture, will be the real losers in this case.

“We’re also a bit dismayed at the breadth of the Court’s ruling in light of the FTC’s recent rulemaking designed to promote employee mobility and free competition – but Mike is committed to advocating for what is fair and just in the final resolution of this matter.”