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A federal court has ordered a preliminary injunction against the DraftKings ex-VIP head accused of taking confidential information.

The order will drastically limit the services that the now Fanatics president of VIP Michael Hermalyn can provide to his employer, after a judge found he likely misappropriated DraftKings trade secrets.

The order fell short of DraftKings’ request for Hermalyn to be barred from working with Fanatics altogether, as requested by its attorneys.

US District Judge Julia Kobick’s order will enforce Hermalyn’s non-compete obligations, preventing him from working with Fanatics for the 12-month maximum period permitted under Massachusetts law.

Hermalyn is also barred from soliciting DraftKings employees, using confidential information or destroying documents containing this information.

A DraftKings spokesperson told NEXT.io: “Today’s ruling by the Court is another victory for DraftKings in its effort to hold Mr. Hermalyn accountable for his brazen attempt to clone DraftKings’ successful VIP program by stealing DraftKings’ employees and trade secrets.

“In reaching this result, the court rightly saw through Mr. Hermalyn’s lies and deception, noting that the evidence suggests that Mr. Hermalyn “struggled with candour to the court” and describing his testimony as ‘not credible,’ ‘evasive,’ and ‘[a]t best…highly misleading.’

“DraftKings looks forward to continuing to prosecute its claims against Mr. Hermalyn to ensure he is held fully accountable for violating his legal obligations.”

‘Secret plan’ to steal confidential information

The case dates to February, when Hermalyn and Fanatics first sued DraftKings to have his non-compete declared illegal under Californian law.

DraftKings filed a 49-page federal lawsuit in response, accusing Hermalyn of a “secret plan” to steal confidential information.

The online sports betting and DFS operator deepened the accusations in March, requesting the court order an injunction to enforce the non-compete.

The suit detailed an alleged plot that culminated in the executive stealing DraftKings’ plans for the Super Bowl.

A Fanatics spokesperson responded: “The court’s order is preliminary, and Mike eagerly awaits his opportunity to present his case on the merits based on a full record. 

“It’s unfortunate that DraftKings’ cheap attempt at petty retribution against a former employee – who simply wanted to take advantage of a better opportunity for himself and his family – will now undoubtedly continue to be used to instill fear and intimidation across DraftKings’ entire employee base.

“Those employees, now scared into staying in that toxic culture, will be the real losers in this case.

“We’re also a bit dismayed at the breadth of the court’s ruling in light of the FTC’s [Federal Trade Commission] recent rulemaking designed to promote employee mobility and free competition – but Mike is committed to advocating for what is fair and just in the final resolution of this matter.”

Fanatics’ VIP programme has been in the spotlight in recent weeks following a huge uptick in the operator’s New Jersey revenue.

According to Eilers & Krejcik Gaming, Fanatics achieved a 23.5% market share in the state in March 2024, equating to around $20m in GGR.

This, they said, was VIP driven, resulting largely from a single high-value customer betting with Fanatics.

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