The National Football League Players Association (NFLPA) has taken legal action against DraftKings, accusing the bookmaker of violating a licensing agreement.
The association’s charges relate to the DraftKings NFT Marketplace, Reignmakers, which the company opted to close down at the end of July, three years after launching the platform in 2021 at the height of interest in Non-Fungible Tokens (NFTs).
A licensing agreement with the NFLPA enabled DraftKings to use the likenesses of NFL players to create blockchain-based NFT trading cards, which its Reignamkers’ customers could buy, collect and trade.
DraftKings stated last month that it chose to shut down Reignmakers due to legal reasons, with a court case ongoing in which a plaintiff, Justin Doe, is alleging that the NFT marketplace and its tokens amount to unregistered securities. The NFLPA states that it was informed of the decision on 30 July.
However, the NFLPA is accusing DraftKings of having ‘buyer’s remorse’ about getting involved in the NFT market, partly due to Justin Doe’s legal case. However, the fact that the NFT market has quieted down over the past two years is a central part of the NFLPA’s case.
The legal document states: “The impetus for DraftKings’ decision to amputate its licence with plaintiff’s is simple: the once white hot market for NFTs has cooled down. DraftKings is also facing a civil lawsuit and regulatory inquiries into its product.
“Buyers’ remorse, however, is not a basis to terminate a contract. Here, DraftKings –a sophisticated and amply-resourced gaming behemoth – assumed the risks inherent in its product save for carefully negotiated and narrow termination grounds.”
It is hard to deny that NFTs are not all the rage as they once were, particularly in 2021 and 2022, at the time DraftKings decided to launch its platform. A surge in interest during these years saw consumers across various markets, but particularly sports and entertainment, build up collections of digital assets.
This in turn saw the value of NFTs rise exponentially, with some digital assets selling for hundreds of thousands, even tens of millions in some cases. Sports organisations were quick to get in on the action, seeing an opportunity to both generate revenue and engage with fans.
Although NFTs continue to play a role in sports – FIFA and Manchester City announced new NFT initiatives this year, for example – the overall market has slumped drastically, with crypto scandals in 2023 dealing a heavy blow to customer confidence in the markets.
The NFLPA asserts that DraftKings ‘no longer thinks investing in these collectibles is a good bet’. The association asserts that DraftKings owes its players a substantial sum due to the agreement including a guarantee of payments.
Though not stating a specific figure, the complaintaints argue that DraftKings owes around quadruple what its CEO, President of DraftKings North America, President of Global Technology and Product, Chief Legal Officer and Chief Finance Officer were paid since Reignmakers’ 2021 launch.
The NFPLA’s lawsuit states that Jason Robins (CEO) was paid $82.1m, Matt Kailish (President – North America) was paid $62.5m, Paul Liberman (President – Global Technology and Product) $62.5m, R. Stanton Dodge (CLO) $27m and Jason Park (CFO) $27m during the three year period – when these figures are added together and quaruled, it suggests that the NFLPA believes its players are owed in excess of $60m.
