In a significant development in sports and cryptocurrency, DraftKings has settled a lawsuit with the National Football League Players Association (NFLPA). This lawsuit arose after allegations that DraftKings failed to compensate the NFLPA for the use of player likenesses in its non-fungible tokens (NFTs). The resolution of this dispute comes shortly after DraftKings opted to close its NFT marketplace in July 2023.
The settlement was announced in a joint letter sent to New York federal Judge Analisa Torres on January 27, which stated that both parties had mediated the situation successfully. The letter requested a 60-day stay to finalize a definitive settlement agreement, with a deadline set for March 28. While the details of the settlement remain undisclosed, the NFLPA was reportedly seeking damages around $65 million prior to the agreement.
In 2021, DraftKings partnered with the NFLPA to create collectible NFTs of NFL players. These NFTs were designed to be utilized in a fantasy sports game called Reignmakers. However, complications arose when a federal judge ruled that these NFTs could be classified as securities under the Securities Act and Exchange Act. Following this ruling, DraftKings ceased payments to the NFLPA, citing the right to terminate their contract.
Notably, the lawsuit comes just weeks before the NFL Super Bowl, scheduled for February 9 in New Orleans, Louisiana. The Super Bowl has historically featured crypto-related advertisements from prominent exchanges, yet the previous year saw no such promotions due to the collapse of FTX.
The NFT sector has experienced fluctuations, with sales reportedly increasing by 2.3% year-on-year, totaling $8.9 billion in 2024, although these figures remain considerably lower than the peak of $23.7 billion in 2022. This recent resolution further emphasizes the ongoing evolution and adaptation of financial regulations impacting the sports and cryptocurrency industries.
