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00:03 Great to have you on here, Super Bowl week.
00:05 And what would it be without controversy coming from Las Vegas?
00:07 We'll get to that as well as, hey, so a little back and forth,
00:10 arguing, fighting with fanatics and draft kings.
00:13 Love these sort of drama stories.
00:15 Maybe they'll be on Bravo next week, who knows?
00:17 Yeah, Craig, great to be with you, whether it's 11 o'clock, 12 o'clock.
00:23 And yeah, always fun to talk about some drama going on in the sports betting
00:26 industry, especially ahead of the Super Bowl.
00:29 >> Yeah, all right, so let's start here.
00:30 Fanatics and draft kings in a war of words right now.
00:34 Accusations flying back and forth.
00:36 Catch us up on the story and what the latest is.
00:39 Or I would just ruin it by telling the whole story.
00:41 That's why we have you, Sam.
00:43 >> Yeah, thank you for not spoiling it.
00:46 It's basically, if you haven't heard by now,
00:48 Draft Kings is suing its former head of VIP operations, Michael Hermelin,
00:54 for an alleged year-long plot to steal confidential secrets, business plans,
00:58 and coercing employees to join Fanatic Sportsbook, where he works now.
01:02 And basically taking all the VIP customers over with him.
01:06 Now, if you know anything about VIP customers in the gambling industry,
01:08 whether it's sports betting, casino, that's a huge part of the business for
01:13 the operator.
01:14 You always talk about sort of 90% of the money they make comes from about 10% of
01:19 the people that bet with them.
01:20 And this is like the highest of high net worth individuals.
01:24 The folks that have a ton of money, you want to entertain and know who they are.
01:28 You have all these files on them.
01:29 So they're basically saying this guy took all that information with him to
01:33 Fanatics and resigned last year right before the Super Bowl, which Draft Kings
01:38 said was deliberately timed to kind of hurt them right before their biggest event,
01:41 obviously.
01:42 We have the Super Bowl this year.
01:43 You know, we've talked about how much betting is going to be going on.
01:45 It's huge for companies like this.
01:47 So losing him right before then, they said was part of that plot to take those
01:50 high net worth clients with him.
01:52 It's really a wild story when you get into the nitty-gritty of it.
01:56 Her mail-in came out yesterday and basically says, you know, there was nothing
02:00 going on here except I left one job for a once-in-a-lifetime opportunity, which
02:05 obviously helping Fanatics build out their sports betting business.
02:08 They're obviously a newcomer, but the lawsuit accuses him of making up that he
02:13 had a close friend die pretty much right before he left the company and him saying
02:18 that, hey, I have to go to California to attend services for this guy.
02:23 But Draft Kings says that he actually didn't go to any services.
02:26 What he did when he was in California was meet with Fanatics, go to their offices
02:30 and then try to establish California residency, which is very important because
02:35 in California, they don't recognize non-competes thanks to a law that was
02:38 signed pretty recently.
02:39 So that's part of lawsuit as well him violating that non-compete.
02:42 They said he hastily right before the Super Bowl try to get a license in
02:46 California, signed a lease there, registered to vote so we could establish
02:50 that residency and in fact, had that non-compete not enforced.
02:54 So Fanatics came out and said that, you know, the same thing as from Aylan said
03:00 that, you know, this is kind of bullshit.
03:01 We just had it.
03:02 It's just a guy leaving one company for another company, but Draft Kings alleges
03:06 also, you know, that one of the reasons he left was because he was under
03:09 investigation for workplace misconduct for I believe some sort of sexual
03:15 allegations something of that nature.
03:16 So they said that's another reason he left so hastily.
03:19 So now you had this this process where it's gonna be a lawsuit back and forth
03:23 for the next couple months every day.
03:25 We're getting more information.
03:26 Matt Waters, my colleague, has been great following the news on this.
03:30 So definitely go to legal sports report.com for all the updates here.
03:33 But yeah, the latest being him kind of denying everything and we'll have
03:36 to see, you know, what happens what coordinate ends up in and where it
03:40 all shakes down from here, but certainly a lot of drama ahead of one of
03:43 the biggest events of the year.
03:44 Yeah.
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