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Fanatics Executive Fires Back at DraftKings in Court Battle

Arguing DraftKings has relied on “unnecessary character assassination” amid a plot to “instill fear” in employees “looking to jump ship,” former DraftKings executive Michael Hermalyn urged a federal judge in Boston Thursday to deny DraftKings’ motion for a preliminary injunction that would bar Hermalyn from working for rival Fanatics.

Hermalyn joined Fanatics two months ago as president of Fanatics VIP and head of the company’s Los Angeles office. He reports directly to Fanatics CEO Michael Rubin and describes the position as a “unique, career-advancing opportunity.”

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Hermalyn’s brief in opposition to DraftKings’ motion rebukes his former employer’s portrayal of Hermalyn as misappropriating sensitive materials. The case centers in part on whether California law or Massachusetts law applies to a noncompete agreement Hermalyn signed with DraftKings, for whom he was employed from 2020 to 2024. If California law applies, the noncompete would be unenforceable, as the state bans noncompetes; if Massachusetts law applies, there are dueling arguments by DraftKings and Hermalyn as to whether the noncompete ought to be enforced.

Hermalyn raises several arguments. He portrays DraftKings as trying to make an example out of him so other DraftKings workers are dissuaded from seeking jobs at Fanatics. Hermalyn claims 186 DraftKings employees have applied to work for Fanatics since the company announced an online sportsbook launch in 2021.

Hermalyn also asserts that while DraftKings says he “downloaded” documents from a non-DraftKings device, he only viewed documents, which he argues he was authorized to see, on his personal phone. Hermalyn further insists he followed DraftKings protocol by returning “all” of his company-issued devices when he switched jobs and “even surrendered” his “personal phone, personal email, and other accounts that might have had any DK information.”

To obtain a preliminary injunction, DraftKings must establish it would suffer irreparable harm (harm that money damages can’t later remedy), but Hermalyn contends DraftKings can’t show it has suffered “any” harm.

He highlights that DraftKings “does not claim that it has lost a single customer” or any employees to Fanatics since he switched jobs. Hermalyn also dismisses allegations of solicitation of sports betting customers as “mak[ing] no sense” since customer relationships with sports betting companies are not exclusive. He asserts there is no way to “move a book of business” from DraftKings to Fanatics since a DraftKings customer could also be a customer of Fanatics, FanDuel or any other sports betting company. Hermalyn cites Fanatics data showing its average gambler has 2.9 sports betting applications active.

The starkly different legal and factual assessments offered by Hermalyn and DraftKings will be examined by U.S. District Judge Julia Kobick, who will decide whether to grant or deny a preliminary injunction. While Hermalyn is a defendant in a Massachusetts case, he and Fanatics are plaintiffs in a California case. They have sued DraftKings, arguing the noncompete in unenforceable.

These lawsuits are the latest public spat between the two billion-dollar sports businesses, which are competitors in sports betting and NFTs. Last year, Fanatics’ proposed acquisition of PointsBet’s U.S. business was delayed after DraftKings submitted a non-binding offer that it claimed was better than that made by Fanatics. At the time, Rubin claimed the move was a “desperate” attempt to block the deal. DraftKings never submitted a binding offer, and Fanatics ended up making the acquisition at a price 50% higher than its original offer.

The largest online seller of licensed sports apparel, Fanatics has expanded its business in the last few years to include new verticals like trading cards and sports gambling.

On the betting side, it hired a number of well-known executives from across the industry, including former FanDuel CEO Matt King, who took the same position with Fanatics Betting & Gaming, and former Sky Bet managing director Ted Moss. Its growth has been gradual—the Fanatics/PointsBet apps ended February with “low-double-digit” market share for new downloads, according to data from JMP Securities.

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