On Wednesday (20 August) the NFL Players Association (NFLPA) filed a lawsuit against DraftKings and its parent company DK Crown Holdings, Inc in US District Court for the Southern District of New York stemming from DraftKings' July shutdown of the Reignmaker NFT.
The NFLPA is seeking damages for an “anticipated breach of contract”, claiming that it provided DraftKings with intellectual property rights licensing for NFL players. The product allows consumers to buy NFTs for use in fantasy sports contests.
Most documents around the lawsuit are under seal and the docket does not indicate when the seal may be lifted. The NFLPA’s attorney filed a court order asking to file redacted documents. David Greenspan, an antitrust, sports and complex-commercial litigator with the New York City firm Winston & Strawn LLP, is listed as the NFLPA counsel.
Greenspan has previously worked with athletes and has won multiple anti-trust class-action lawsuits against the NCAA. Those cases centred around the NCAA’s “pay for play” model and NIL issues.
DraftKings, based in Boston, is a sports betting partner with the NFL. It launched an NFT marketplace in August 2021 and billed it as opportunity for collectors. Consumers were able to purchase the NFTs and ultimately moved them into a digital wallet or sell them on DraftKings’ secondary NFT marketplace. The NFTs were created by Autograph.
DraftKings was not the only tech company to launch NFTs. But the excitement around the products peaked and faded quickly. The bookmaker last month abruptly shut down its NFT business on 30 July, according to Yahoo! Finance, citing legal issues.
NFTs subject of a Massachusetts’ lawsuit
“After careful consideration, DraftKings has decided to discontinue Reignmakers and our NFT Marketplace, effective immediately, due to recent legal developments. This decision was not made lightly and we believe it is the right course of action,” the company said in a statement at that time.
There is another active lawsuit surrounding the NFT business in Massachusetts. At issue is whether or not the NFTs are considered securities and if selling them violates SEC rules.
When DraftKings launched the line, it did so with the belief that NFTs had the potential to grow into a “gigantic” business, co-founder Matt Kalish told Yahoo!.
