DraftKings suing former executive for 'taking secrets' to rival Fanatics

[The Buzz]

Juicy sportsbook news in the U.S. during the lead up to Super Bowl Sunday as DraftKings has filed a lawsuit against its former executive Michael Hermalyn in Massachusetts federal court, alleging that he stole confidential business information and transferred it to rival Fanatics.

Adding to the drama, Hermalyn filed a separate lawsuit in California state court against DraftKings, arguing that it was illegally trying to prevent him from moving to Fanatics based on unenforceable noncompetition, nonsolicitation and other employment agreements.

From the DraftKings complaint:

On Thursday, February 1, 2024—only ten days before Super Bowl LVIII, scheduled for February 11—Hermalyn abruptly resigned from his position at DraftKings to take a nearly identical role with Fanatics.

The Super Bowl is the most significant day in the gaming calendar and the most important event of the year for DraftKings and its business, not just because of the billions of dollars wagered, but also for the vital opportunities to strengthen relationships with VIP customers and business partners at events surrounding the game. Without prompt injunctive relief barring Hermalyn from violating his agreements with DraftKings, Hermalyn will be free to launch an unlawful and targeted attack against DraftKings’ business and divert its most valuable customers immediately prior to one of the most business critical weekends for DraftKings.

Customer loyalty is one of the most important competitive edges in the gaming industry. Hermalyn knows DraftKings’ playbook on how to engage and retain VIP clients. On information and belief, Hermalyn, acting in concert with Fanatics, timed his departure and theft of confidential information to coincide with the critical days leading up to the Super Bowl to further a scheme to irreparably interfere with DraftKings’ customer and business relationships by pursuing those relationships at Fanatics using the confidential information and goodwill that he obtained at DraftKings. I

While there, and while still employed by DraftKings, Hermalyn accessed and downloaded confidential and important DraftKings information—some of which only a handful of other DraftKings employees could access.

This information includes, among other things, a detailed list of business partners, such as representatives of teams and leagues, as well as athletes celebrities, influencers, vendors, and corporate officers and directors who are attending the 2024 Super Bowl, as well as a presentation reflecting DraftKings’ marketing strategy and value proposition for prospective business partners to enter into commercial engagements with DraftKings.

Given his impending resignation, there was no legitimate business reason for Hermalyn to download these highly confidential documents to a non-DraftKings device. On information and belief, Hermalyn has misappropriated DraftKings’ confidential information to further the business interests of Fanatics, even before he was on the payroll of his new employer.

Read more from Reuters here: https://www.reuters.com/legal/litiga...al-2024-02-06/

Read the entire document here: https://s3.documentcloud.org/documen...m_medium=email

[universal4]

This information includes, among other things, a detailed list of business partners, such as representatives of teams and leagues, as well as athletes celebrities, influencers, vendors, and corporate officers and directors who are attending the 2024 Super Bowl, as well as a presentation reflecting DraftKings’ marketing strategy and value proposition for prospective business partners to enter into commercial engagements with DraftKings.

Sounds like the categories I bolded could mean affiliates and prospective affiliates and publishers.

Would be curious to know if those who are affiliates at draft kings suddenly were approached by Fanatics, especially those who may have used unique contact information for draft kings.

Not sure how much merit the case might have but if they could prove he did take databases of various categories it might have some traction.

Rick
Universal4

[bpmee]

I imagine this employee signed a vague NDA that would cover most of what he or she disclosed.