By using NFL players’ intellectual property (IP) without their consent, the NFL Players Association (NFLPA) claims DraftKings has breached their contract and is suing the sports betting giant. For this expected breach of contract, the NFLPA is seeking damages.
The lawsuit is about NFTs, or non-fungible tokens, that DraftKings offered to customers to use in fantasy sports contests. Although DraftKings is accused of abusing their license to leverage NFL player IP, the NFLPA says they gave DraftKings the proper permission to do so.
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The NFLPA’s legal representatives have submitted a motion to seal key records, even though many elements of the case are private. The NFLPA is being represented by veteran sports and antitrust attorney David Greenspan of Winston & Strawn LLP. Having already won multiple antitrust class-action lawsuits against the NCAA over its “pay for play” model and NIL (name, image and likeness) issues, Greenspan has a proven track record of success in such cases.
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DraftKings’ NFT marketplace opened in August 2021, which is the NFL’s primary sports betting partner. These NFTs were available for purchase, and customers could exchange them on DraftKings’ secondary market. However, the excitement over NFTs soon died down, and in July 2024 DraftKings abruptly ended its NFT operations, claiming legal issues.
DraftKings is dealing with legal issues in Massachusetts in addition to the NFLPA lawsuit over whether its NFTs should be considered securities. The Massachusetts Securities Division is investigating if any SEC rules were violated in the sale of these NFTs.
DraftKings did not make the decision to end its NFT business lightly, the company said. Legal complexities and regulatory uncertainty forced them to abandon their dream of making NFTs a significant business.
