NFLPA Alleges DraftKings Owes it $65 Million In NFT Case
The NFL Players Association (NFLPA), which represents NFL athletes, claims that DraftKings owes them about $65 million following the recent shutdown of the company’s non-fungible tokens (NFTs) marketplace, according to newly unsealed court documents.
When news first broke about the NFLPA’s lawsuit against DraftKings, the court had sealed the related documents. At that time, it was speculated that DraftKings might owe the union $32.39 million, a figure listed in the NFLPA’s 2023 annual report as receivables tied to OneTeam Partners, the agency that brokered the original deal between DraftKings and the NFLPA.
The legal documents don’t explicitly state that the NFLPA is owed $65 million. Instead, the union’s lawyers argue that this amount is roughly four times the combined compensation of five top DraftKings executives, including co-founders Jason Robins, Matt Kalish, and Paul Liberman, since 2021.
The other executives mentioned in the filing are former CFO Jason Park and Chief Legal Officer R. Stanton Dodge. Most of their recent compensation has come from selling company stock, a trend that continues today.
NFT Class Action Could Have Implications In DraftKings/NFLPA Rift
The NFLPA’s claims are linked to the closure of DraftKings Marketplace and the suspension of Reignmakers, a fantasy sports game based on NFTs sold in the marketplace. This decision is believed to be connected to a recent ruling by US District Judge Denise Casper, allowing a class action lawsuit against DraftKings related to its NFT marketplace to proceed.
The class action lawsuit, filed in March 2023, centers on a lead plaintiff who claims to have lost $14,000 trading NFTs on DraftKings Marketplace. The NFLPA argues that DraftKings is using the lawsuit as a reason to terminate its agreement with the union, a justification the NFLPA disputes.
Reignmakers Started Hot, Pinched By NFT Collapse
DraftKings launched its NFT marketplace and Reignmakers in 2021 at the height of the NFT craze. Reignmakers participants would purchase digital NFLPA-licensed collectibles for use in the fantasy game that functioned akin to traditional fantasy sports.
The purchase acted as an entry fee of sorts and the plan was successful for awhile, but following the “cryptocurrency winter” of 2022, NFT prices plunged in early 2023, discouraging players from shelling out cash for Reignmakers. As the NFT prices wilted and liquidity in the market evaporated, the NFLPA said DraftKings expressed concern about the economics of the licensing agreement and that the gaming company didn’t make a related payment to the union in April 2023. The amount of that payment was redacted in the court filing.
The union contends that DraftKings’ failure to successfully commercialize the intellectual property it licensed doesn’t absolve it of its financial obligations. Despite renegotiating the contract terms, the NFLPA claims DraftKings has not made the required payments since the start of August 2023.
The NFLPA is now seeking a court order to force DraftKings to pay all outstanding amounts under the amended licensing agreement and cover the union’s legal fees.
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