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00:00 (upbeat music)
00:02 - Okay, so this is a story that broke late last week,
00:08 early this week about this fighting between draft kings
00:13 and fanatics over proprietary information.
00:16 Now there's a restraining order.
00:18 So catch us up here with this argument
00:21 between the two companies.
00:22 And is there any kind of like prediction how this may end
00:26 or it's still just up to litigation?
00:30 - Yeah, well, first of all, let me say,
00:32 allegedly, allegedly, allegedly, right?
00:34 We talk about these legal cases.
00:36 But basically what DraftKings was trying to allege
00:41 is that this Michael Hermelin,
00:43 the former VIP head at DraftKings,
00:46 concocted this plan to leave for fanatics,
00:50 like over a year plus they're talking,
00:52 they had this in their, he had this in his plans.
00:56 And I love covering the court stuff
00:59 because DraftKings filings are basically full
01:02 of a bunch of yuh-huhs and then Hermelin comes back
01:05 and hits them with, "Nuh-uh."
01:06 Craig, this case is gonna come down to where it's tried
01:11 because it's in two places right now.
01:13 It's in Massachusetts and it's in California.
01:16 Massachusetts just granted the temporary restraining order
01:19 partially against Hermelin.
01:21 And basically, look, it's just a sensical order, right?
01:25 They're saying that, yeah,
01:27 it would cause irreparable harm to DraftKings
01:29 if Hermelin went and did, gave these customers,
01:34 gave confidential information to fanatics about DraftKings,
01:39 especially this week during the Super Bowl.
01:41 So I think most everybody expected that to come down
01:44 when you consider that Hermelin signed it,
01:47 it was said in the papers,
01:48 upwards of 12 non-disclosure agreements in Massachusetts.
01:54 California, on the other hand,
01:56 it invalidates those non-compete agreements
02:01 that he also has.
02:02 So what Hermelin basically did was he got this job
02:07 and then he went and set up his life in California.
02:11 Bought a car, he got his license in California,
02:14 he leased an apartment,
02:16 he's looking at schools and camps for his kids.
02:19 And that's his argument,
02:20 that now he's a California resident.
02:22 And so as a California resident,
02:24 he cannot be held to this non-compete agreement
02:28 that he signed with DraftKings.
02:31 And he's also taking to issue the fact
02:34 that it's in Massachusetts court.
02:36 He never lived in Massachusetts.
02:37 He didn't work for DraftKings in Massachusetts.
02:40 That is where DraftKings is held,
02:42 but also when for DraftKings on this side,
02:45 in all of the paperwork that Hermelin signed,
02:48 it said that the District Court of Massachusetts
02:51 would be the prevailing court
02:52 where any of this was figured out.
02:53 So look, I don't think this is gonna be solved soon.
02:57 I don't think it's gonna be solved quickly.
03:00 You have to imagine that sports betting companies
03:03 would be a little concerned
03:06 if Hermelin does walk away from this scot-free
03:09 and everything in California goes the way he wants it to,
03:12 and he's not held to that non-compete.
03:14 Because you're basically saying,
03:15 well, if you wanna fast track
03:18 leaving a sports betting company
03:20 and getting out of your non-compete for another company,
03:22 just go move to California.
03:24 So there's a lot of moving parts right now.
03:27 Look, everybody that I've spoken to
03:30 within the gaming industry, they love the drama.
03:33 They love seeing this kind of thing unfold.
03:37 'Cause you wonder how many times something like this happens
03:39 that we don't get to see.
03:40 But this is gonna be going on for a little while.
03:43 Now, Hermelin isn't stopped from working for Fanatics.
03:47 That was part of the temporary restraining order
03:50 that DraftKings has proposed,
03:52 but the court struck that
03:53 when they approved the temporary restraining order.
03:56 So Hermelin can go and get to work.
03:59 He's just not allowed to talk about anything from DraftKings
04:02 or give them any information,
04:04 which, again, he shouldn't be anyway
04:06 if we're talking about just being good people here.
04:10 And he has said for the most part
04:12 that he was not going to do that,
04:13 that the files that he accessed
04:15 were while he still worked with DraftKings.
04:17 And that, yeah, it was on his personal cell phone,
04:20 but DraftKings didn't give him a work cell phone.
04:22 And so he was often accessing these kinds of things
04:25 when he was on the road traveling from his cell phone.
04:28 You can see the points being made by each side.
04:31 I just don't think it's clear
04:32 what way this is gonna break yet.
04:34 (upbeat music)
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