DraftKings Faces $65 Million Lawsuit from NFL Players Association
Date: 2024-08-28 Author: Alex Crawford Categories: SPORTS BETTING
Earlier this month, the National Football League Players Association (NFLPA) filed a lawsuit against online gaming and betting leader DraftKings, accusing it of violating a licensing agreement. The lawsuit stems from the company’s decision to shut down its non-fungible token (NFT) marketplace and popular NFT game, Reignmakers.
The NFLPA and DraftKings entered into a licensing agreement in 2021 that covered the use of the intellectual property of more than 2,000 NFL players, allowing DraftKings to offer NFTs to its customers for participation in daily fantasy sports tournaments.
However, after announcing the closure of its NFT marketplace and Reignmakers, DraftKings stopped paying the NFLPA, which the NFLPA claims is a breach of contract. The NFLPA lawsuit claims that DraftKings' decision violates the agreements reached.
Specifically, the association notes: "DraftKings required the right to use the names, images, and likenesses of NFL players to create its products. They were obligated to pay significant guaranteed amounts to obtain that license. However, DraftKings now believes that investing in these collectibles is no longer profitable."
The NFLPA is demanding payment of guaranteed amounts
The plaintiffs also noted that while the NFT market was once popular, it has lost its relevance, which is one of the reasons why DraftKings decided to stop its activities in this area. The association also cited the civil lawsuit and increased regulatory scrutiny that DraftKings is facing in connection with this decision.
Importantly, the NFLPA believes that changing market conditions are not sufficient grounds for terminating the contract. The NFLPA acknowledged that DraftKings tried to protect itself with “elaborate and narrowly tailored termination provisions.” In response, the NFLPA demanded that the payments required by the license agreement be honored.
“Market disappointment is not grounds for termination,” the NFLPA said in its lawsuit.
The portion of the lawsuit that describes the minimum guaranteed payments was sealed. However, the NFLPA pointed to the salaries of five senior DraftKings executives, noting that their combined compensation is approximately four times the amount the company owes the NFLPA.
Based on the information provided in the lawsuit, the amount the NFLPA is seeking is approximately $65 million. The plaintiffs also specified that DraftKings’ debt covers five licensing periods through 2027, but the exact amounts for each period were also sealed.
