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NFLPA sues DraftKings for $65M over Reignmakers NFT dispute

NFLPA sues DraftKings for $65M over Reignmakers NFT dispute

GrafaGrafa2024/08/29 02:40
By:Mahathir Bayena

The National Football League Players Association (NFLPA) has filed a lawsuit against DraftKings Inc., seeking approximately $65 million in damages.

The lawsuit was filed in the US District Court for the Southern District of New York, alleging that DraftKings breached its licensing agreement with the NFLPA.

DraftKings had an agreement to use the likenesses of NFL players in its Reignmakers platform, an NFT-based fantasy sports platform where users could buy, trade, and use NFTs linked to professional athletes in fantasy contests.

DraftKings abruptly shut down Reignmakers in July 2024, citing “recent legal developments” as the reason for its decision.

The decision to close Reignmakers followed a ruling in a Massachusetts federal court that denied DraftKings’ motion to dismiss a class-action lawsuit. The lawsuit alleged that the NFTs sold on the platform were unregistered securities.

The NFLPA argues that DraftKings owes $65 million based on minimum guarantees specified in their contract, which DraftKings allegedly failed to honor.

According to the NFLPA, DraftKings has not made any payments since August 1, 2024, despite being obligated to do so under the contract.

DraftKings defended its actions by referencing a contractual clause that allows termination if a “government, regulatory, or adjudicatory body” determines that the NFTs are securities.

The NFLPA, however, contends that the court ruling in Massachusetts did not definitively categorise the NFTs as securities, and therefore, the contract should still be valid.

The lawsuit also highlights that DraftKings executives have received over $261 million in compensation since 2021, a figure the NFLPA argues is roughly four times what the company owes under the licensing agreement.

The case has been assigned to US District Judge Analisa Torres, who has experience with cases involving digital assets.

The outcome of this case could have significant implications for the legal treatment of NFTs and other digital collectibles, an area currently marked by legal uncertainty.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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