The Nationwide Soccer League Gamers Affiliation (NFLPA) has filed a lawsuit in opposition to 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 U.S. District Court docket for the Southern District of New York, alleges that DraftKings violated its licensing settlement with the NFLPA by terminating funds due underneath the contract.
The deal allowed DraftKings to make use of NFL gamers' likenesses in Reignmakers, which allowed customers to buy, commerce and use non-fungible tokens (NFTs) tied to skilled athletes in fantasy sports activities competitions.
DraftKings shut down Reignmakers in July, citing “latest authorized developments” as the rationale for its resolution. The motion follows a Massachusetts federal court docket ruling that denied DraftKings' movement to dismiss a category motion lawsuit alleging that 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 line with the criticism, the corporate has not made any funds since August 1, 2024, regardless of its prior obligations. The NFLPA says DraftKings' resolution to cease funds is pushed by the slowdown within the NFT market, which has cooled considerably because the peak of its recognition.
DraftKings justified its resolution by referencing a clause within the contract that enables termination if a “governmental, regulatory or jurisdictional physique” determines that NFTs are securities. Nevertheless, the NFLPA asserts that the Massachusetts court docket's resolution didn’t definitively classify NFTs as securities and, subsequently, the contract stays legitimate.
The lawsuit additionally highlights the substantial compensation obtained by DraftKings executives – greater than $261 million collectively since 2021 – arguing that this determine is roughly 4 instances what the corporate owes the NFLPA underneath the licensing settlement .
The case was assigned to U.S. District Choose Analisa Torres, who has expertise in circumstances involving digital property. Its rulings may have broader implications for the authorized therapy of NFTs and different digital collectibles, an space nonetheless fraught with authorized ambiguity.
