The National Football League Players Association sued DraftKings (DKNG.O) in New York federal court on Monday, accusing the sports-betting giant of refusing to pay what it owes for using NFL player likenesses on non-fungible tokens.
The NFLPA said DraftKings broke an agreement to license the players' name, image and likeness rights by refusing to continue paying licensing fees after shuttering its NFT trading-card business last month.
"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 lawsuit said. "Buyers' remorse, however, is not a basis to terminate a contract."
A spokesperson for DraftKings declined to comment on the complaint. Attorneys and spokespeople for the NFLPA did not immediately respond to a request for comment.
Boston-based DraftKings partnered with the NFLPA in 2021 to make collectible NFTs of NFL players that could be bought and sold as part of a game on DraftKings' fantasy sports site. The lawsuit said the NFT market had declined "across the board" by the end of the NFL's 2022-2023 season.
The NFLPA said DraftKings threatened to stop offering NFTs that April, after which the union agreed to restructure their contract to expand DraftKings' rights to use player likenesses.
According to the union's complaint, DraftKings said the amended contract allows it to end the agreement if a court determines that the NFTs are securities. A federal judge in Boston said that the tokens may be unregistered securities during the early stages of a separate class-action lawsuit against DraftKings last month.
DraftKings told the NFLPA it was ending its NFT business and terminating their agreement weeks later. The union told the New York court on Monday that the Massachusetts judge's decision did not resolve whether the NFTs are securities under their contract.
The case is National Football League Players Association v. DraftKings Inc, U.S. District Court for the Southern District of New York, No. 1:24-cv-06407.
For the NFLPA: Jeffrey Kessler, Dave Greenspan and George Mastoris of Winston & Strawn
For DraftKings: Not yet available
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DraftKings digital trading cards are securities - Boston judge
