Lawsuit Centers Around Failed DraftKings NFT Market
While DraftKings Sportsbook is a major NFL sponsor, this lawsuit centers around the industry giant’s failed NFT market. The company invested significantly in opening an NFT marketplace, but the market has crashed since then. As a result, DraftKings closed their NFT marketplace and now wants to leave their contract with the NFLPA.
The NFLPA’s deal with DraftKings involved using the names, images, and likenesses of the league’s players on NFTs. A monthly payment plan was set up to satisfy the deal, but now the sports betting and DFS giant wants out.
"The impetus for DraftKings' decision to repudiate its license agreement with Plaintiffs is simple: the once white-hot market for NFTs has cooled down," attorneys for the NFLPA wrote in the complaint. "DraftKings is also facing a civil lawsuit and regulatory inquiries into its product. Buyers' remorse, however, is not a basis to terminate a contract."
NFT Marketplace Fallout Continues
The DraftKings NFT marketplace closed last month primarily due to a lawsuit the company was facing in Massachusetts. The Bay State sued DraftKings over the controversial offering, claiming the company violated security laws. Given the decline of NFTs and the cost of the lawsuit, DraftKings chose to shut the marketplace down.
While the decision to cut the marketplace seems wise, the NFLPA lawsuit could lead to the failed platform costing the company even more money.
Losses Pilling up for DraftKings
In addition to the NFT fallout, DraftKings’ sportsbook has also come under fire. They recently suffered a public embarrassment when they announced they would add a surcharge to winnings in four markets. Public outcry and a lack of support for other operators forced them to reverse course just days later, but the damage to their reputation was already done.
DraftKings also recently lost a motion to dismiss another case in Massachusetts. Several bettors brought this lawsuit, claiming the advertising around its welcome bonus was intentionally misleading. That is a bad sign for DraftKings, who could face similar lawsuits if this one is lost.