December 25, 2024

Fanatics founder and CEO Michael Rubin’s office in New York.

The Washington Post | Getty Images

Sports goods giant Fanatics launches counterattack against sports betting giants Draft king Ongoing legal battle over Fanatics hiring of top executives Draft king manager.

In a legal brief filed late Thursday in U.S. District Court in Massachusetts, Fanatics accused DraftKings of misrepresenting facts and defaming the character of its former senior vice president of business development, Michael Hermalyn.

In February, Hermalyn accepted the position of President of Fanatics VIP and Head of Fanatics’ Los Angeles office. He reports directly to CEO Michael Rubin.

DraftKings is suing Hermalyn in federal court, saying he downloaded confidential company documents and attempted to recruit other employees from DraftKings.

Fanatics claims in its filing that there is a “culture of revenge” at DraftKings, citing Hermalyn as an example of instilling fear in other “DK employees who want to jump ship.”

Documents show that since Fanatics announced it would launch sports betting in 2021, 186 DraftKings employees have applied to work at Fanatics.

Fanatics is a newcomer in the rapidly expanding sports betting industry, with a late start but the backing of billionaire Rubin and an enviable database of customers who buy team jerseys and caps online , or purchase sports memorabilia through its collectibles business.

The elevator entrance is designed to resemble a tunnel into the stadium and was photographed at the DraftKings office in Boston.

David L. Ryan | David L. Ryan The Boston Globe (Getty Images)

DraftKings ranks second in sports betting market share behind FanDuel (owned by FanDuel) flutter. But the two leaders dominate, accounting for about 80% of the market.

Competition is fierce – even from established gambling brands like this caesar and Bette MGM Fight for your customers’ money. They invest in technology to improve apps, personalize marketing and promotions, and make deposits and withdrawals easier. Most of them are proprietary.

But sports gamblers are notoriously promiscuous. They chase promotions or the best odds, and many download more than one betting app on their phones.

The most valuable customers (VIPs) are with the casino or sportsbook host who build relationships and try to cultivate loyalty.

DraftKings alleges that Hermalyn contacted one of DraftKings’ most valuable customers to alert him that Hermalyn was leaving his employer.

Gibson Dunn attorney Orin Snyder, who represents DraftKings, said in a statement: “The evidence against Mr. Hermalin is public. He stole valuable trade secrets. , destroyed evidence to cover his tracks, and then lied about it all,” CNBC reported on Thursday.

In a brief filed on March 14, DraftKings detailed what it described as corporate espionage. Fanatics maintains that they are trying to steal its VIPs, valuable employees and copy the strategies of DraftKings’ business.

In its response, Fanatics strongly denied the allegations and said DraftKings intentionally distorted reality and engaged in character defamation.

“To be clear, this is not a case of hiring an employee to move the book of business from one company to another: Fanatics already has 100 million customers in the United States, DK and Fanatics each have tens of thousands of VIP customers, and as we all know, many (If not all) these customers are overlapping,” the company said in the filing.

DraftKings petitioned the court to prevent Hermalyn from working for Fanatics. The judge denied the petition but issued a temporary restraining order to prevent Hermalin from soliciting clients or employees from his former employer.

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