DraftKings and Fanatics Each Gain a Win in Ongoing Feud Surrounding Employee

The budding feud between DraftKings and Fanatics, two of the best sportsbooks, took a couple of steps forward on Friday with each side gaining a win in the courts.

Earlier in the week, DraftKings filed a suit alleging that its former executive Michael Hermalyn lied about the death of a friend, was granted a leave of absence from the company, and ultimately bolted the company ahead of the critical Super Bowl week, for rival Fanatics, while taking with him some valuable company secrets. 

There's been no shortage of back-and-forth between the two sides since Monday's filing. DraftKings said in its filing that Hermalyn “hatched a secret plan over the past year to steal and use confidential information, solicit customers and employees, and join a key competitor, Fanatics, Inc., in a brazen violation of his agreements with and duties to DraftKings.” 

DraftKings' fear is that in theory "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.”

The Fanatics' brass and Hermalyn have maintained that DraftKings' complaints are merely "sour grapes."

The legal rulings have begun in the case, and one judgment gave a win for DraftKings and one for Fanatics on Friday.

Fanatics win

Fanatics was able to maintain the employment status of Hermalyn. The company's hiring of Michael Hermalyn allows one of the best sports betting apps to circumvent a non-compete requirement that should have prevented Hermalyn from working in the gaming industry for 12 months after leaving DraftKings.

A judge in a Massachusetts District Court ruled that Hermalyn will be able to stay on as a Fanatics Sportsbook employee, despite some nefarious circumstances around his departure from DraftKings. 

His expertise in the legal sports betting field as well as the timing of him joining Fanatics just prior to the Super Bowl will help the company's brand.

DraftKings win

DraftKings' win in district court is a ruling that prevents its former executive from sharing any secrets about his time with the company. As of now, Hermalyn is banned from using any DraftKings information to benefit Fanatics and he can'r solicit DraftKings clientele or employees.

“We are pleased that the judge granted a temporary restraining order in favor of DraftKings ordering Mr. Hermalyn not to solicit DraftKings employees or customers, and not to use any confidential company information,” a DraftKings spokesperson commented in a statement.

If Hermalyn complies with the order, customer information will not be used and DraftKings' initiatives will not become part of a Fanatics marketing plan.

Not over yet

The Fanatics/Hermalyn vs. DraftKings battle is far from over. Each of the sports betting sites is in the process of suing the other.

 “DraftKings — a large public company — has invoked its go-to playbook to trash (me) in a transparent attempt to ruin (me) professionally and personally," Hermalyn said. “I knew from past experience with DraftKings that they would likely come after me aggressively and malign me as they have done with others.”

DraftKings will continue to argue against Hermalyn.

“(He) 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,” the company said.

A Fanatics spokesperson refuted those claims.

“DraftKings is understandably upset that one of its employees left for the greener pastures at Fanatics," the company noted. "The fact that they are trying to drum up ridiculous allegations on one of their well-respected executives in an attempt to ruin his reputation sheds some light on why employees may be choosing to leave that organization.”

So far, each side in the lawsuit has received something. Fanatics and Hermalyn get to maintain their relationship, and DraftKings gets assurances that none of its company secrets will be used during Hermalyn's Fanatics employment.

It's an interesting start to an interesting case, surrounding an interesting budding rivalry in the U.S. legal sports betting industry.