The National Football League Players Association (NFLPA) has filed a lawsuit against DraftKings Inc., seeking approximately $65 million in damages after the sports betting company abruptly shut down its NFT-based fantasy sports platform, Reignmakers.
The lawsuit, filed in the US 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 agreement allowed DraftKings to use the likenesses of NFL players in Reignmakers, which enabled users to purchase, trade, and use non-fungible tokens (NFTs) linked to professional athletes in fantasy sports contests.
DraftKings closed Reignmakers in July, citing ârecent legal developmentsâ as the reason for its decision. This action followed a ruling in Massachusetts federal court that denied DraftKingsâ motion to dismiss a class-action lawsuit alleging that the NFTs sold on the platform constituted 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 the complaint, the company has not made any payments since August 1, 2024, despite previous obligations. The NFLPA claims that DraftKingsâ decision to halt payments is driven by the downturn in the NFT market, which has significantly cooled since the heights of its popularity.
DraftKings justified its decision by referencing a clause in the contract that allows termination if a âgovernment, regulatory, or adjudicatory bodyâ determines that the NFTs are securities. However, the NFLPA contends that the court ruling in Massachusetts did not definitively categorize the NFTs as securities, and therefore, the contract remains valid.
The lawsuit also highlights the substantial compensation received by DraftKings executives â over $261 million collectively since 2021 â arguing that this figure is roughly 4x what the company owes the NFLPA under the licensing agreement.
The case has been assigned to US District Judge Analisa Torres, who has experience with cases involving digital assets. Her rulings could have broader implications for the legal treatment of NFTs and other digital collectibles, an area still fraught with legal ambiguity.
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