DraftKings Moves to Dismiss NFLPA Lawsuit Over NFT Licensing Dispute

In the New York Southern District Court, DraftKings has moved to have a lawsuit filed by the National Football League Players Association (NFLPA) dismissed.

DraftKings has filed a motion to dismiss a lawsuit brought by the National Football League Players Association (NFLPA) in the New York Southern District Court. The NFLPA is suing DraftKings for more than $60 million, alleging that the company breached their agreement to license NFL players’ names, photos, and likenesses.

The lawsuit stems from DraftKings shutting down its Non-Fungible Token (NFT) business in July 2024, which led to the termination of its licensing deal with the NFLPA. The NFLPA alleges that DraftKings’ actions were financially motivated.

“The impetus for DraftKings’ decision to repudiate its license agreement with Plaintiffs is simple: the once white-hot market for NFTs has cooled down,” the NFLPA states in its complaint. “Buyers’ remorse, however, is not a basis to terminate a contract.”

However, DraftKings maintains that it acted within its rights and that its actions were not malicious.

“As New York courts have repeatedly held, acting out of self-interest alone precludes a finding of bad faith or intentional wrongdoing,” the company stated.

Moreover, DraftKings highlights the growing legal ambiguities surrounding NFTs, including their classification as securities, as a key factor in the dispute. This issue ties into another ongoing case, Dufoe v. DraftKings.

In this case, plaintiff Justin Dufoe accused the company of operating an unregistered securities exchange after losing over $14,000 on NFTs. A judge denied DraftKings’ motion to dismiss the lawsuit in July 2024, heightening regulatory scrutiny.

According to the report from Bloomberg Law, DraftKings argues that recent rulings and regulatory developments made continuing its NFT Marketplace unsustainable.

“This dramatic change in legal and regulatory risk…made it materially impracticable for DraftKings to benefit from the rights granted under the Agreement,” the company stated in its motion.

To provide some background, DraftKings initially launched its NFT platform, Reignmakers, in 2021, partnering with Autograph to offer exclusive digital collectibles. By 2024, however, legal challenges and market declines led the company to close the platform.

“After careful consideration, DraftKings has decided to discontinue Reignmakers and our NFT Marketplace, effective immediately, due to recent legal developments,” a spokesperson said in July.