Fanatics founder and CEO Michael Rubin in his New York office.
Washington Post | Getty Images
Sports industry giant Fanatics strikes back on the bookmaking giant DraftKings in the continued legal battle over Fanatics’ employment of the highest DraftKings executive.
In a lawsuit filed late Thursday in U.S. District Court in Massachusetts, Fanatics accuses DraftKings of distorting reality and murdering former senior vp 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 on to CEO Michael Rubin.
DraftKings is suing Hermalyn in federal court, claiming he downloaded confidential company documents and tried to recruit other employees outside of DraftKings.
In its filing, Fanatics maintains that DraftKings has a “revenge culture” and uses the instance of Hermalyn to instill fear in other “Denmark employees looking to jump ship.”
The documents show that because the company announced its 2021 job opening at Fanatics, 186 DraftKings employees have applied to work at Fanatics.
In the fast-growing sports gambling industry, Fanatics is a newcomer, late to the sport but backed by billionaire Rubin and an enviable database of customers who buy team jerseys and ball caps online or sports memorabilia through his collectibles company.
The entrance to the elevators, designed to resemble a tunnel leading into the stadium, is shown on the DraftKings office in Boston.
David L.Ryan | Boston Globe via Getty Images
DraftKings ranks No. 2 in sports betting market share, behind FanDuel, which it owns Flutter. However, these two leaders dominate, with a market share of roughly 80%.
And the competition is fierce – even amongst such well-known gambling brands Caesar AND ZakładMGM fighting for customer dollars. They are investing in technology to enhance their apps, personalize marketing and promotions, and make deposits and withdrawals easier. Most of them are privately owned.
However, sports gamblers are notoriously promiscuous. They chase promotions or the perfect odds, and plenty of of them have a couple of bookmaker app downloaded on their phones.
The most useful customers, VIPs, work with casino or sportsbook hosts who construct relationships and take a look at to encourage loyalty.
DraftKings alleges that Hermalyn contacted one of DraftKings’ most useful customers to warn him that Hermalyn can be leaving his employer.
“The evidence against Mr. Hermalyn is public. He stole valuable trade secrets, destroyed evidence to cover his tracks, and then lied about the entire matter,” Orin Snyder, an attorney working for Gibson Dunn representing DraftKings, said in a press release to CNBC on Thursday.
In a letter filed March 14, DraftKings details what it calls corporate espionage. She insists that fanatics are attempting to steal her VIPs, worthwhile employees and her DraftKings business cloning strategy.
In their response, the fanatics vehemently deny these allegations and claim that DraftKings intentionally distorts reality and engages in character assassination.
“To be clear, this is not a case where an employee was hired to transfer a book of business from one company to another: Fanatics already has 100 million customers in the U.S., DK and Fanatics each have tens of thousands of VIP customers, and it is common knowledge that many , if not all, customers overlap,” the corporate said in its filing.
DraftKings asked the court to ban Hermalyn from working for Fanatics. The judge denied that petition, but issued a brief restraining order to forestall Hermalyn from soliciting clients or employees from her former employer.
