Sports betting giant DraftKings seeks to dismiss the New York Southern District Court lawsuit the National Football League Players Association (NFLPA), brought against the sportsbook, as Bloomberg Law reported.
In August, the NFLPA sued DraftKings for more than $60 million, accusing the company of breaking their agreement to license NFL players’ name, image, and likeness rights. DraftKings shuttered its Non-Fungible Token (NFT) business a month earlier and subsequently terminated its contract with the NFLPA, refusing to continue paying licensing fees.
"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, continuing, "Buyers' remorse, however, is not a basis to terminate a contract."
DraftKings argued it didn't harm the NFLPA intentionally, a required factor to prove the company violated the agreement.
“As New York courts have repeatedly held, acting out of self-interest alone precludes a finding of bad faith or intentional wrongdoing.”
Dufoe case ongoing
The company also pointed to legal uncertainty surrounding NFTs, particularly whether they qualify as regulated securities. This issue is central to another ongoing class-action lawsuit, Dufoe v. DraftKings, which is proceeding after a judge rejected DraftKings' request to dismiss the case.
“This dramatic change in legal and regulatory risk – the Dufoe decision, the regulatory subpoenas to DraftKings, and the growing number of other regulators and courts that made or accepted claims that certain NFTs are securities – made it materially impracticable for DraftKings to benefit from the rights granted under the Agreement,” the motion said.
This case began in March 2023, when plaintiff Justin Dufoe argued DraftKings violated federal securities laws by operating an unregistered securities exchange after he lost more than $14,000 on NFTs. In July 2024, a judge denied DraftKings's motion to dismiss the lawsuit, leading the company to shut down its NFT Marketplace shortly after.
“After careful consideration, DraftKings has decided to discontinue Reignmakers and our NFT Marketplace, effective immediately, due to recent legal developments,” a spokesperson said in July.
DraftKings launched the venture in 2021 as a place for customers to buy, sell, and trade digital collectibles. The company also partnered with the NFT platform Autograph to distribute exclusive content.
Not the only one
The NFLPA case is not DraftKings’ only recent legal battle with one of the “Big Four” sports leagues. In September, the Major League Baseball Players Association (MLBPA) filed a lawsuit against DraftKings and other sports betting companies for using players’ names, images and likenesses without their permission. The union also sued FanDuel, bet365, and Underdog Fantasy. DraftKings and bet365 are seeking to have the lawsuit dismissed.
“For professional athletes, the ability to control the commercial use of their names, images, and likenesses is a crucial return on their substantial career investment,” the MLBPA said.
