Former President and Co-founder Matthew Kalish’s company could receive up to $30 million in marketing funds from DraftKings.
A filing with the Securities and Exchange Commission (SEC) by DraftKings outlines a partnership with Kalish’s company, FaZe Media, operating as HardScope. Essentially, HardScope could manage agreements between DraftKings, podcast hosts, and digital content creators to promote the gaming brand, earning commissions for their services.
“The HardScope Agreement provides that the aggregate amount of service fees payable by the Company under the HardScope Agreement may not exceed $30.0 million during the three-year term of the HardScope Agreement, and that HardScope’s commission may not exceed 14% of the related service fee,” as per the regulatory document.
Kalish departed DraftKings in November and officially left in March but retains a board position at the company.
Initiation of Dealings with Kalish’s Company Preceded His Exit
Collaboration with a former employee’s company is a common practice in Corporate America, allowing corporations to engage with ex-staffers’ enterprises without conflict of interest. Therefore, DraftKings’ partnership with Kalish’s HardScope is not unusual.
Concerns regarding corporate governance arise due to the arrangement with HardScope initiated prior to Kalish’s departure from the company being announced.
The SEC filing mentioned an agreement between DraftKings’ subsidiaries and HardScope, granting DraftKings rights to personal services and likeness use during promotion.
“Under the Marketing Arrangement, the Company agreed to pay HardScope fees based on the specific services, rights and deliverables purchased, with the aggregate amount payable to HardScope not to exceed $600,000,” according to the filing. “During fiscal year 2025, the Company incurred $150,000 under the Marketing Arrangement.”
The audit committee at DraftKings approved the transactions with Kalish’s company.
Rationale Behind DraftKings/HardScope Partnership
The collaboration between DraftKings and Kalish’s HardScope may raise some eyebrows, but it serves a practical purpose as HardScope focuses on connecting companies with Gen Z, a key demographic for sportsbook operators.
“We turn creators into next gen media moguls. We unlock Gen Z for brands. We turn moments into movements,” stated Kalish on his LinkedIn profile.