DraftKings Sues Former VP Claiming an Elaborate Scheme to Join Fanatics

DraftKings is going after its former head of VIP operations after filing a lawsuit claiming an elaborate scheme to steal VIP bettors, take confidential information and bring employees with him to Fanatics.

The sportsbook tycoon filed a civil action in the US District Court in the District of Massachusetts alleging that Michael Hermalyn had an elaborate plot to cripple the VIP operation before the Super Bowl. It was first reported by Front Office Sports.

"Hermalyn, a senior executive compensated millions of dollars by DraftKings to oversee VIP customer acquisition and retention, hatched a secret plan over the past year to steal and use confidential information, solicit customers and employees and join a key competitor, Fanatics," the lawsuit alleges.

DraftKings accuses Hermalyn of pretending to leave the industry and encouraging employees to meet with Fanatics. DraftKings also accused of him of lying about a friend passing away in Pennsylvania as he flew to Los Angeles to finalize his agreement with Fanatics and establish residency in California to battle his non-compete clause.

Last Thursday, Hermalyn's attorneys provided notice that they intended to seek an injunction preventing DraftKings from triggering the noncompete and non-solicitation agreements that were in Hermalyn's contract. The complaint suggested the agreements were overly restrictive and unenforceable in California.

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According to Hermalyn's complaint, he moved to Los Angeles last Monday, three days before the lawsuit was filed. He signed a rental agreement for an apartment, obtained a California driver's license, bought a car in the state and plans to enroll his children in school in Los Angeles.

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

DraftKings declined to comment when a request for comment was made by the Action Network.

DraftKings alleges that Hermalyn downloaded DraftKings' "most commercially sensitive documents" beginning on Jan. 23 even though he allegedly had no working purpose for accessing the documents.

Hermalyn was under investigation for workplace misconduct when he decided to leave DraftKings.