DraftKings suing SVP of Growth after he defects to Fanatics

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A new lawsuit has DraftKings suggesting its former head of VIP concocted a plan to steal company secrets and defect to competitor Fanatics just days before the 2024 Super Bowl.

DraftKings has filed a lawsuit in Massachusetts District Court against Michael Hermalyn who served as SVP of Growth prior to tendering his resignation on Feb. 1.

In the suit, DraftKings alleges that Hermalyn lied about the death of a friend and took personal leave at the end of January and instead traveled to Los Angeles to meet with Fanatics at the company’s California office.

DraftKings claims Hermalyn stole work product to share with Fanatics

Hermalyn was said to have downloaded several highly confidential pieces of DraftKings work product, including a detailed spreadsheet about VIP plans regarding next week’s Super Bowl.

During that time, Hermalyn also allegedly established residency in California, including renting an apartment, buying a car and obtaining a California driver’s license. According to DraftKings, this was done so Hermalyn could challenge his non-compete, which would have required him to not work in the gaming sector for 12 months after leaving the company.

“Hermalyn would have this Court believe is that anyone with some spare cash and a phone can become a California resident in less time than the average trip to Disneyland,” the suit read.

Lawsuit claims Hermalyn was inappropriate with female DK employees

In addition to claiming Hermalyn purposefully timed his exit to cause the most amount of disruption to DraftKings in the time leading up to the Super Bowl, the company also said he had numerous other work incidents that verged on unethical and, in some cases, illegal behavior.

Hermalyn was said to have inked a deal to host DraftKings VIPs at properties owned by a restaurant group without disclosing his financial interest in the group. He also was said to have actively recruited other DraftKings employees on his team to defect to Fanatics.

Most notably, the company also alleged multiple inappropriate incidents with female DraftKings employees, including making comments about their appearance and touching them without their consent.

DraftKings is seeking the courts to bar Hermalyn from working with Fanatics, enforce his noncompete agreement and prevent him from reaching out to DraftKings VIPs he worked with to entice them to patronize Fanatics.

Fanatics calls legal action “sour grapes”

Fanatics is not named in the suit but did issue the following comment via a company spokesperson:

“This is just sour grapes. DraftKings is understandably upset that one of its employees left for the greener pastures at Fanatics. 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.”