NFL Players Union Sues DraftKings Over $65M NFT Deal Dispute

The NFL Players Association is suing DraftKings for allegedly breaching a licensing agreement tied to its NFT platform, Reignmakers, and claims DraftKings owes them approximately $65 million

The National Football League Players Association (NFLPA) has filed a lawsuit against the sports betting giant DraftKings, accusing the company of breaching their licensing agreement related to DraftKings’ NFT platform, Reignmakers. The lawsuit, filed on August 26 in the Southern District Court of New York, alleges that DraftKings owes the NFLPA roughly $65 million.

The NFLPA claims that DraftKings unlawfully terminated their agreement on July 29, 2024, despite the ongoing contractual obligations. The dispute centers around the use of NFL players’ names, images, and likenesses (NIL) in DraftKings’ NFT marketplace.

According to the lawsuit, DraftKings cited a July ruling by a Massachusetts judge, which classified the platform’s digital trading cards as securities, as the basis for ending the contract. The company argued that this ruling triggered a clause in their agreement, allowing them to terminate the deal if a government or regulatory body determined that the NFTs are securities.

However, the NFLPA contends that the ruling does not definitively classify the NFTs as securities, and therefore, DraftKings is still obligated to fulfill its payment commitments. The NFLPA’s lawsuit highlights that DraftKings’ decision appears motivated by the cooling NFT market and ongoing legal challenges rather than any legitimate contractual basis.

The NFLPA legal action follows a broader trend of disputes in the intersection of sports and NFTs. Earlier this year, in June 2024, Dapper Labs, the creator of NBA Top Shot, settled a class action lawsuit over claims that their NFTs constituted illegally offered securities, paying out $4 million. Additionally, in 2022, Nike sued StockX for allegedly reselling counterfeit NFTs of their branded sneakers.

As the legal landscape surrounding NFTs continues to evolve, this case could set a significant precedent for future licensing agreements involving digital assets.

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