The NFL Players Association (NFLPA) has alleged that DraftKings is ducking out on payment obligations for its NFT player licensing agreement.
The NFL Players Association (NFLPA) has alleged that DraftKings is ducking out on payment obligations for its NFT player licensing agreement.
According to the NFL players’ trade union, DraftKings said it would no longer make payments to it on 30 July.
This came the day after the sports betting operator announced it was shutting down its Reignmakers product, which had allowed users to buy NFTs to compete in DFS-style contests.
DraftKings had agreed in 2021 to license the intellectual property of all 2,000+ NFL players from the NFLPA as part of the offering.
The labour union’s attorneys said: “At the end of the day, and despite DraftKings’ best efforts to muddy the waters, this case is extraordinarily simple.
“DraftKings’ inability to profitably commercialise the intellectual property it licensed does not excuse performance, and DraftKings must pay what is due.”
The case was initially filed under seal in the Southern District of New York, although media speculation had linked the lawsuit to the NFT agreement.
NFLPA seeking around $65m from DraftKings
While the exact total the NFLPA is seeking from the operator is unknown, the civil complaint implies the amount is around $65m.
The complaint highlighted the total compensation of five of the business’ top executive officers since 2021, and said these amounted to approximately 4x what it owed to the NFLPA’s licensors.
The total works out at around $65.3m after the calculation is made.
When cancelling the agreement, DraftKings highlighted a clause in the contract which would allow it to terminate the deal if a regulatory body or government ruled the products to be securities.
The business highlighted the Massachusetts District Court’s denial of its motion to dismiss as proof this had occurred.
The NFLPA meanwhile said the court’s decision did not determine anything regarding the merits of the securities claims.
DraftKings had highlighted “certain legal developments” as the reason it would be closing down its Reignmakers offerings.
The NFLPA’s lawyers added: “The impetus for DraftKings’ decision to repudiate its license agreement with plaintiffs 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.
“Conversely, the NFLPA Licensors protected themselves against the risks associated with DraftKings’ novel product by securing minimum guaranteed payments.”