NFLPA Sues DraftKings for $65 Million Over NFT Deal

The NFL Players Association filed a lawsuit in federal court against DraftKings alleging breach of contract and approximately $65 million owed to the union. DraftKings is an official betting partner of the NFL.

The players’ association’s complaint centers on a deal the union made with DraftKings to use players’ NIL (name, image, and likeness) in its NFT marketplace. DraftKings closed down the marketplace in July, a week after selling back VSiN, “due to recent legal developments.” DraftKings is being sued over allegations that its NFT marketplace violated securities laws, and a Massachusetts judge denied the company’s motion to dismiss the case this summer.

The NFLPA’s suit says DraftKings ended their agreement July 29, but it still owes the union money.

“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 suit reads. “DraftKings is also facing a civil lawsuit and regulatory inquiries into its product. Buyers’ remorse, however, is not a basis to terminate a contract.”

So why did DraftKings think it could get out of the deal in the first place? According to the suit, DraftKings said the Massachusetts judge’s ruling “constitutes ‘a determin[ation] that the NFTs sold on [sic] Marketplace are securities,’” which would trigger a clause in its contract with the NFLPA to end the deal if a “government, regulatory or adjudicatory body” finds the NFTs are securities. The NFLPA says the ruling doesn’t make a definitive decision either way, so those payments shouldn’t be stopped.

News of the lawsuit first broke last week. The lawsuit was unsealed Monday in the Southern District of New York.

Representatives for both DraftKings and the union declined to comment.

The NFLPA never outright stated the $65 million figure. Instead, it listed five executives, and said their combined income since 2021 (about $261.1 million) is “roughly quadruple” what DraftKings owes the union.