The Nationwide Soccer League Gamers Affiliation (NFLPA) has filed a lawsuit towards DraftKings Inc., in search of roughly $65 million in damages after the sports activities betting firm abruptly shut down its NFT-based fantasy sports activities platform, Reignmakers.
The lawsuit, filed within the US District Courtroom for the Southern District of New York, alleges that DraftKings breached its licensing settlement with the NFLPA by terminating funds owed beneath the contract.
The settlement allowed DraftKings to make use of the likenesses of NFL gamers in Reignmakers, which enabled customers to buy, commerce, and use non-fungible tokens (NFTs) linked to skilled athletes in fantasy sports activities contests.
DraftKings closed Reignmakers in July, citing “current authorized developments” as the rationale for its resolution. This motion adopted a ruling in Massachusetts federal court docket that denied DraftKings’ movement to dismiss a class-action lawsuit alleging that the NFTs offered on the platform constituted unregistered securities.
The NFLPA argues that the $65 million owed is predicated on minimal ensures specified within the contract, which DraftKings allegedly failed to satisfy.
In response to the grievance, the corporate has not made any funds since August 1, 2024, regardless of earlier obligations. The NFLPA claims that DraftKings’ resolution to halt funds is pushed by the downturn within the NFT market, which has considerably cooled because the heights of its recognition.
DraftKings justified its resolution by referencing a clause within the contract that permits termination if a “authorities, regulatory, or adjudicatory physique” determines that the NFTs are securities. Nevertheless, the NFLPA contends that the court docket ruling in Massachusetts didn’t definitively categorize the NFTs as securities, and due to this fact, the contract stays legitimate.
The lawsuit additionally highlights the substantial compensation acquired by DraftKings executives — over $261 million collectively since 2021 — arguing that this determine is roughly 4x what the corporate owes the NFLPA beneath the licensing settlement.
The case has been assigned to US District Choose Analisa Torres, who has expertise with circumstances involving digital belongings. Her rulings may have broader implications for the authorized therapy of NFTs and different digital collectibles, an space nonetheless fraught with authorized ambiguity.
