NFLPA Sues DraftKings, Possibly for Dropping NFT Marketplace
The National Football League Players Association (NFLPA) has initiated legal proceedings against DraftKings alleging an anticipated breach of contract.
A DraftKings banner ad for its Reignmakers program before it was closed last month. (Source: DraftKings)
LISTEN TO THIS ARTICLE:The suit is still protected, but it could be linked to DraftKings' recently discontinued non-fungible token (NFT) product, Reignmakers. The lawsuit, which was filed in the Southern District Court of New York on Tuesday, remains largely shrouded in mystery due to the sealed filings. However, according to the cover sheet of the filing, the NFLPA seeks reparations for what is described as an "anticipated breach of parties' contract" or a potential actual breach by DraftKings.
While the exact details are yet to be confirmed, there is speculation that the dispute may revolve around the contractual agreement between the NFLPA and DraftKings regarding Reignmakers. This speculation arises amidst the abrupt cessation of the NFT product by DraftKings at the start of August.
Historically, the NFLPA had entered into two separate agreements with DraftKings pertaining to Reignmakers. These deals were publicly announced in December 2021, with an additional superhero-themed collaboration unveiled in December 2022.
Financially, these agreements are significant, with the NFLPA reportedly owed approximately $32.4 million by OneTeam Partners, as stated in the NFLPA's 2023 annual report. OneTeam Partners, which describes itself as the commercial rights holder for eight Players Associations and numerous college athletes, played a pivotal role in brokering the initial agreement between the NFLPA and DraftKings.
The NFLPA's involvement with OneTeam Partners extends beyond the financial transaction, as the association is listed as one of the founding partners. This relationship underscores the complexity of the current legal situation, given OneTeam's facilitation of the deals between the NFLPA and DraftKings.
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Sep 18, 2024The End of Reignmakers
DraftKings shuttered Reignmakers following a series of legal challenges, including a class action lawsuit that alleges the company's NFTs were unregistered securities. The lawsuit, which was allowed to proceed by a federal judge, has raised significant questions about the regulatory status of NFTs and their classification as securities.
The NFT marketplace by DraftKings was launched in mid-2021 amidst a surge in popularity for digital collectibles. The platform, built on the Polygon network, featured a Tom Brady-themed collection that quickly sold out, signaling a strong market interest. However, the enthusiasm waned as the broader NFT market faced volatility and declining interest in plain NFTs. Despite these challenges, DraftKings continued to innovate with Reignmakers, a fantasy sports game utilizing NFTs, which initially showed promising momentum.
Legal issues began to surface when plaintiffs in the class action lawsuit argued that DraftKings' NFTs constituted unregistered securities. The company's motion to dismiss the case was denied by a Massachusetts federal judge, leading to increased scrutiny and pressure.
In response to these developments, DraftKings opted to discontinue its NFT operations and focus on its core business areas. The company has also offered buyouts to "Reignmakers" players and assured that NFT collectors will retain the ability to access and transfer their collections.
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