DraftKings Claims Super Bowl Plans, VIP List Stolen by Exec

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(Bloomberg) — DraftKings Inc. sued a former senior executive, alleging he stole the sports-betting site’s business plans for this Sunday’s Super Bowl and other confidential information to pass them to competitor Fanatics Inc.

In a suit filed Monday in federal court in Boston, DraftKings claims Michael Hermalyn, its former vice president of VIP management, downloaded the Super Bowl plans while he was secretly meeting with Fanatics Chief Executive Officer Michael Rubin to negotiate his move to that company last week. 

DraftKings asked for a court order blocking Hermalyn from working with Fanatics or disclosing any confidential information he gained from his employment. It said the matter was particularly urgent because of the Feb. 11 date for the National Football League championship showdown between the Kansas City Chiefs and the San Francisco 49ers.

“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,” the company said in its suit, “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.” 

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Lawyers for Hermalyn didn’t immediately respond to a request for comment. Fanatics, which wasn’t named as a defendant, called the DraftKings suit “ridiculous” in a statement.

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

This year’s Super Bowl has attracted even more attention than usual due to the romance between Chiefs tight end Travis Kelce and pop superstar Taylor Swift, and speculation that the latter will fly in from a concert date in Tokyo to watch the game. DraftKings said the plans stolen by Hermalyn included a list of celebrities, influencers and athletes who would be attending, as well as a presentation outlining DraftKings’ marketing strategy for the event.

According to the suit, Hermalyn joined DraftKings in 2020 and was paid millions of dollars in his role, which was to acquire and retain the site’s most loyal and high-value customers. In addition to the Super Bowl plan, DraftKings expressed concern that Hermalyn would more broadly share information he obtained or learned in his job, including lists of VIP customers and relationships with business partners like casinos, celebrities, teams and leagues.

“The trade secrets and confidential information that Hermalyn learned and accessed in his role leading DraftKings’ VIP team are among the most valuable owned by DraftKings, and correspondingly, the most attractive that any competitor — like Fanatics — could hope to steal,” DraftKings said in its suit. 

Hermalyn sued DraftKings last week in California state court, arguing that his employment agreement contained “overbroad and illegal post-employment restrictive covenants.” In its own complaint, DraftKings said Hermalyn was wrongly trying to claim California residency. The company said Hermalyn’s wife works in New Jersey, his children are enrolled in school there, and he owns a multimillion-dollar house there.

“He is no more a Californian than Governor Murphy,” DraftKings said.

The case is DraftKings Inc. v. Hermalyn, US District Court, District of Massachusetts (Boston).

(Updates with comment by Fanatics, California suit by Hermalyn.)

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Published: 07 Feb 2024, 12:14 AM IST

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