DraftKings, NFLPA Agree to Settle NFT Lawsuit

Posted on: January 28, 2025, 02:43h. 

Last updated on: January 28, 2025, 02:43h.

DraftKings (NASDAQ: DKNG) and the NFL Players Association (NFLPA) reached a settlement in a suit brought by the players union relating to the gaming company’s now defunct nonfungible tokens (NFTs) marketplace.

NFLPA
The NFL Players Association (NFLPA) logo. The union and DraftKings settled a lawsuit. (Image: Beckett)

In a letter to Judge Analisa Tores of the US District Court for the Southern District of New York, the two sides requested a 60-day stay of action running through March 28, adding they’ve reached an agreement to end the litigation.

The parties have mediated their dispute and reached a non-binding settlement in principle, subject to the mutual execution of a definitive settlement agreement,” according to the letter. “The parties therefore respectfully request a 60-day stay of this action (including a stay on a decision on Defendants’ pending motion to dismiss) to enable the parties to execute a definitive settlement agreement.”

Financial terms of the accord weren’t mentioned in the letter, but a legal document unsealed last August implied DraftKings could owe the NFL labor group as much as $65 million. That wasn’t overtly stated in the document, but counsel for the NFLPA drew comparisons between the for five DraftKings executives, including co-founders Jason Robins (currently chief executive officer), Matt Kalish, and Paul Liberman, and the amount owed to the union and that pay was approximately $65 million.

Root of NFLPA Suit Against DraftKings

The online sportsbook operator rolled out DraftKings Marketplace in July 2021. In December of that year, the gaming company an agreement with OneTeam Partners, the group licensing partner of the NFLPA, that granted the gaming company “licensing rights for active NFL players” to be used on the Reignmakers fantasy sports platform.

Reignmakers, which was also shuttered with the marketplace, was the fantasy game in which participants used purchased NFTs to build mythical sports rosters. DraftKings was to pay the NFLPA for use of players’ names, images, and likenesses in the fantasy game.

Last August, the NFL players union filed suit against DraftKings, demanding financial compensation for what it described as an “anticipated breach of contract.” The gaming company argued that it had grounds to amend the NFLPA contract if NFTs were deemed to be securities.

In a separate NFT case against DraftKings, a judge ruled that the tokens may be unregistered securities, but the NFLPA argued that case did not settle whether or not NFTs qualify as investable securities under the terms of its contract with the gaming company. Counsel for the plaintiffs would go onto assert that DraftKings’ “buyer’s remorse” wasn’t adequate reason to end the contract.

Settlement Could Be Final NFT Chapter for DraftKings

DraftKings Marketplace launched in July 2021 with considerable fanfare, including NFT agreements with a slew of well-known athletes. The timing appeared appropriate because NFT prices were soaring at the time, but they cratered soon after.

Those price declines invited litigation, including the aforementioned case in which a Massachusetts judge ruled NFTs may be unregistered securities. NFT prices have yet to recover in earnest and liquidity in the market remains thin.

Amid the legal headaches, Draftkings pulled the plugs on Marketplace and Reignmakers last July and the settlement with the NFLPA could represent one of the company’s final chapters in the NFT space.