Corporate Espionage Drama Between DraftKings and Ex-Employee Continues

Article by : Milena Petrovska Mar 21, 2024

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The situation between DraftKings and its former head of the company’s VIP program, Michael Hermalyn, has gone a step further. The betting company has announced that it found more evidence regarding the corporate espionage accusations towards Hermalyn.

Early in February, Hermalyn filed a lawsuit against DraftKings for breaching the employment agreement through illegal post-employment restrictions. He demanded that DraftKings pay him $310,604 in legal fees.

On the other side of the coin, DraftKings argued that Hermalyn had a secret plan to “steal and use confidential information.” Acting on the accusations, district judge Julia E. Kobick gave DraftKings a temporary restraining order against Hermalyn.

DraftKings’ VIP Programme the Center of Attention

The scandal involving the two parties began when Hermalyn wanted to leave DraftKings to join Fanatics VIP. According to DraftKings, this was part of a wide plan by Fanatics VIP to clone the DrafKings’ VIP programme and use it to its benefit.

DraftKings also argues in its suit that Hermalyn downloaded various valuable documents to his personal devices. According to the betting company, Hermalyn’s benefit was a “multi-million-dollar compensation package.”

Furthermore, DraftKings argues that Hermalyn deleted various pieces of evidence that would tie him to this corporate espionage scandal. However, DraftKings presented several documents to support its accusations.

These include a forensic investigation of company-issued laptops, confirmed lies by Hermalyn, and affidavits from other employees at DraftKings. There’s also the “incriminating deposition testimony” by the defendant himself.

The business states that these actions confirm that Hermalyn didn’t care for his contractual and legal obligations.

In a separate filing, Hermalyn argued that DraftKings terminated him unlawfully to ensure that he was not heard in court on an emergency basis. Additionally, DraftKings wanted to ensure that they sabotaged Hermalyn’s transition to Fanatics VIP.

Hermalyn is looking for courts to void the non-compete provisions in his previous work contract with DraftKings.

Not the First Corporate Espionage Scandal This Year

Massachusetts judge Julia E. Kobick ruled that Hermalyn could stay in his current position at Fanatics VIP but couldn’t reveal any confidential information. The judge also prohibited him from soliciting DraftKings employees to join Fanatics.

Following the ruling, both sides declared victory.

These happenings took place back in February, and since then, Hermalyn has been accused of engaging in physical contact with a female employee without her consent.

An unnamed Fanatics source stated that these allegations are nothing more than “sour grapes.” The source went on to say that DraftKings is looking to compile lies to ruin Hermalyn’s reputation.

Interestingly enough, this isn’t the first corporate espionage scandal that shook the iGaming industry this year.

Mid-January, a former OnAir Entertainment employee blew the whistle on an alleged multi-year espionage targeting Playtech.

Ivans Ivanovs argued that OnAir infiltrated Playtech’s systems and monitored its actions for about two years. In a LinkedIn post, Ivanovs even stated that OnAir knew new Playtech game releases six months in advance.

NEXT.io even corroborated the story with a second former senior employee at OnAir, who wished to remain anonymous. In a statement, Playtech stated that it’s aware of the issue and is currently investigating the matter.

As the iGaming industry keeps growing year after year, the competition between giants becomes fiercer than ever. All we can do is keep following how the situation with DraftKings will develop and whether new scandals will come to light.