The National Football League Players Association (NFLPA) has filed a lawsuit against DraftKings, seeking $65 million in damages after the sports betting company was abruptly shut down. NFT based fantasy sports platformthe kingmakers.
The suit, filed in the U.S. District Court for the Southern District of New York, alleges that DraftKings breached its licensing agreement with the NFLPA by terminating payments owed under the contract.
The deal allowed DraftKings to use the likenesses of NFL players in Reignmakers, which allowed users to buy, trade and use non-fungible tokens (NFTs) associated with professional athletes in fantasy sports.
DraftKings shut down the Reignmakers in July, according to “Recent legal developments” as the reason for his decision. The move follows a ruling in Massachusetts federal court that denied DraftKings' request to dismiss a class action lawsuit alleging that NFTs sold on the platform involved unregistered securities.
The NFLPA argues that the $65 million owed is based on minimum guarantees specified in the contract, which DraftKings allegedly failed to meet.
According to this complaint, the company has not made any payments since August 1, 2024, despite previous commitments. The NFLPA claims that DraftKings' decision to stop payments is due to a slump in the NFT market, which has declined significantly since its peak in popularity.
DraftKings justified its decision by citing a clause in the contract that allows for termination if “a governmental, regulatory or arbitral body” determines that the NFTs are securities. However, the NFLPA contends that the court ruling in Massachusetts did not definitively classify NFTs as securities, and therefore, the contract remains valid.
The suit also alleges substantial compensation received by DraftKings executives — more than $261 million in total through 2021 — nearly four times what the company owes the NFLPA under the licensing agreement.
The case has been assigned to US District Judge Annalisa Torres, who has experience in cases involving digital assets. His rulings could have broader implications for the legal treatment of NFTs and other digital assets, an area still fraught with legal uncertainty.
