The National Football League Players Association (NFLPA) has filed a lawsuit against DraftKings (DKNG.O) in a New York federal court, accusing the sports-betting giant of breaking an NFT contract. The lawsuit, filed on Monday, alleges that DraftKings refused to pay what it owes for using NFL player likenesses on non-fungible tokens (NFTs).
According to the NFLPA, DraftKings breached an agreement to licence the players' names, images, and likeness rights by halting payments after closing its NFT trading-card business last month. The lawsuit claims that DraftKings’ decision to terminate the contract was motivated by the cooling of the once-hot NFT market. "Buyers' remorse, however, is not a basis to terminate a contract," the lawsuit states.
A spokesperson for DraftKings declined to comment on the complaint. Meanwhile, attorneys and spokespeople for the NFLPA have not yet responded to requests for comment. DraftKings, based in Boston, had partnered with the NFLPA in 2021 to create collectible NFTs of NFL players available for purchase and trading on DraftKings' fantasy sports platform.
The NFLPA’s lawsuit notes that the NFT market had experienced a decline across the board by the end of the NFL’s 2022–2023 season. The union claims that DraftKings threatened to cease offering NFTs in April 2023. In response, the NFLPA agreed to restructure their contract to extend DraftKings' rights to use player likenesses.
According to the NFLPA’s complaint, DraftKings argued that the amended contract allowed it to terminate the agreement if a court deemed the NFTs as securities. A federal judge in Boston had previously indicated that the tokens might be considered unregistered securities during the early stages of a separate class-action lawsuit against DraftKings last month.
DraftKings subsequently informed the NFLPA that it was ending its NFT business and terminating the agreement. The NFLPA has told the New York court that the Massachusetts judge's decision did not resolve the issue of whether the NFTs are securities under their contract.
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