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DraftKings Seeks to Dismiss NFL Players Association Lawsuit

Ziv Chen

Last Updated: November 27, 2024 1:06 PM EST • 1 min 57 sec read.

In this photo illustration the DraftKings logo seen displayed on a smartphone as we look at the dismissal of the NFLPA lawsuit against the daily fantasy sports and gambling giant.
In this photo illustration the DraftKings logo seen displayed on a smartphone. Photo by Rafael Henrique / SOPA Images/Sipa USA.

One of our best sports betting sites is facing a legal battle with the NFL Players Association (NFLPA), the labor union representing players from across the league.

In August, the NFLPA sued DraftKings for more than $60 million in the New York Southern District Court. However, legal research company Bloomberg Law has revealed that earlier this week, the sports betting giant to dismiss the lawsuit and its damage claims.

The NFLPA alleges that DraftKings unlawfully terminated an agreement granting the company rights to use NFL players' names, images, and likenesses for its now-defunct Non-Fungible Token (NFT) Marketplace. DraftKings shut down its NFT business in July 2024, following which it refused to continue paying licensing fees to the NFL. However, DraftKings contends that it did not intentionally harm the company, which is a requirement for the company to be in violation of the agreement. 

"The impetus for DraftKings' decision to repudiate its license agreement with Plaintiffs is simple: the once white-hot market for NFTs has cooled down," said the NFLPA in the lawsuit. "Buyers' remorse, however, is not a basis to terminate a contract."

However, DraftKings fought back in its motion: “DraftKings exercised its broad termination rights to terminate the parties’ agreement. DraftKings’ termination was expressly permitted by several provisions in the agreement, including because the legal and regulatory landscape for NFTs had changed dramatically, making it “materially impracticable” for DraftKings to benefit from its rights under the agreement,” 

“When they entered the agreement, these highly sophisticated parties knew NFTs faced an uncertain and evolving legal and regulatory environment,” wrote DraftKings.

The rise and fall of DraftKings’ NFT Marketplace

DraftKings launched its NFT Marketplace back in 2021. It was based on the Ethereum blockchain and supported by Polygon Technology. In March 2022, the company expanded with Reignmarkers, its NFT-based fantasy sports platform. However, by July 2024, DraftKings announced it was shutting down its NFT operations due to what it described as “recent legal developments.”

A company spokesperson remarked, “After careful consideration, DraftKings has decided to discontinue Reignmakers and our NFT Marketplace, effective immediately, due to recent legal developments.”

This followed another class-action lawsuit brought against DraftKings by plaintiff Justin Dufoe, who is leading the lawsuit on behalf of a class of other DraftKings users. In March 2023, he claimed that DraftKings’ NFTs, on which he lost over $14,000, were investment contracts and are, therefore, securities under both the Securities Act of 1933 and the Securities Exchange Act of 1934. DraftKings also filed a motion to dismiss this lawsuit, but a judge denied the company’s request.

With the motion to dismiss rejected, the case progresses toward a potential trial, which could contribute to the evolving legal framework surrounding the application of securities laws to NFTs.

Founded in 1956, the NFLPA has its headquarters in Washington, D.C., and is led by president Jalen Reeves-Maybin and executive director Lloyd Howell Jr. DraftKings was established in Boston in 2012 and is the second-biggest sports betting company in the United States by market share, behind FanDuel.

Written By:
Ziv Chen
Ziv has over two decades of experience in the igaming and sports betting industry, having served in senior marketing and business development positions with both B2C and B2B companies, including Playtech and Microgaming. In 2019, Ziv decided to pursue his passion for writing and became a fulltime industry journalist, covering casino, sports, and gambling business news. He’s specialties include casino games and technology, US state gambling regulation, company performance, as well as gambling affiliates and marketing. As a Pitt graduate, Ziv is a diehard fan of all Pittsburgh sports teams, with the Steelers at the top of the list. In his free time, he enjoys reading crime fiction, biographies (mainly of sports personalities, but not only) and American history. Ziv’s Favorite quote: “We're going to pursue perfection, knowing full well we won't catch it, but we're going to relentlessly chase it," Mike Tomlin, Pittsburgh Steelers Head Coach.