NFLPA, DraftKings Agree $10 Million NFT Settlement

Sports-betting giant, DraftKings, has reached a settlement with the National Football League Players Association (NFLPA) in a lawsuit regarding the use of NFL player likenesses, according to a joint filing in a New York federal court. The two parties informed the court that they had settled the case in principle and requested a pause in proceedings while they finalise their agreement.

Boston-based DraftKings partnered with the NFLPA in 2021 to introduce a line of collectible non-fungible tokens (NFTs) featuring NFL players.

These digital assets were integrated into a fantasy sports game, allowing users to buy and sell them. However, the partnership soured in 2023 when DraftKings threatened to halt the NFT offerings, leading the union to renegotiate their contract.

The NFLPA’s lawsuit, alleged that DraftKings attempted to terminate their agreement despite the contract being amended.

The core issue stemmed from a legal debate over whether NFTs constitute unregistered securities. A federal judge in Boston had previously ruled that the tokens could be considered securities in a separate class-action lawsuit against DraftKings last year.

According to the lawsuit, DraftKings notified the NFLPA that it was shutting down its NFT operations and terminating their licensing agreement shortly after the judge’s ruling.

The union argued that the judge’s decision did not definitively establish whether the NFTs were securities under their specific contract terms.

As part of the settlement, DraftKings has agreed to pay a USD$10 million fee, which will be distributed to pay class members, attorney fees, and expenses.

The payment will also compensate investors affected by DraftKings’ NFT Marketplace.

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