Legal Battle in Sports Betting over Former DraftKings VP

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00:00All right, so our next story is one that it seems to have at least one company in the

00:09sports betting space salty at another.

00:11Basically, an employee goes from one to the other, you know, signs initially it looks

00:16like with a non-compete, and now the other company wants to enforce this.

00:19So tell us more about the story.

00:20I don't want to ruin it.

00:21By the way, you can read it again at legalsportsreport.com.

00:24Do you think that there is a leg to stand on with this non-compete?

00:27And why is there such a battle with this one individual?

00:31You know, Craig, there's such a battle right now because VIP is so important when it comes

00:36to sports betting.

00:37We saw earlier this year, maybe one or two customers shift from one book to another in

00:42New Jersey, and it had a substantial impact.

00:46So when Fanatics hired Michael Hermelin away from DraftKings to be the head of their VIP

00:52program, which is what he was doing at DraftKings, Fanatics thought that they had it in the bag

00:56that this was a guy who was really doing well for DraftKings.

01:00DraftKings had kept him on and gave him bonus after bonus to keep him and his team, and

01:06Fanatics got him.

01:07The only problem with that is that he had a non-compete.

01:10He attempted to go around that by moving to California and saying, you know, look, California

01:16doesn't allow these non-competes, and tried to rely on some case law that basically didn't

01:23hold up in appeals court.

01:25They were trying to say that he should not be prevented from working in California.

01:31The rest of the U.S., fine, but not in California where he's based out of.

01:35The appeals court essentially said, well, that doesn't exactly pass the smell test because

01:41California does not have legal online betting or gambling or online casino.

01:49So naturally, the nature of his business would take him outside of California then

01:54to have relationships and build relationships with customers that do not live in California

02:00and would be betting on Fanatics in another state.

02:04So they found that this is correct, that he should be boxed out of working in the sports

02:11betting VIP category for Fanatics.

02:14Now he is clear to do other things, and Fanatics is not just a betting company, right?

02:19They have VIPs in other areas.

02:22So I would have to assume that Mr. Hermelin is working some area of that VIP program that

02:29touches on, you know, the thousands of other things that Fanatics does.

02:33But he technically is not allowed to work with sports betting VIP customers until February

02:401 of this upcoming year.