The NFL Players Association (NFLPA), the labor union representing the league’s athletes, has filed a lawsuit against DraftKings and may pursue financial damages following the recent shutdown of the gaming company’s non-fungible tokens (NFTs) marketplace.
In late July, DraftKings announced the closure of its Marketplace and the suspension of the Reignmakers fantasy sports game, which was based on NFTs sold in the marketplace. This decision came amidst growing legal challenges. In a civil suit filed on Tuesday in US Federal Court in the Southern District of New York, the NFLPA aims to secure monetary compensation for an “anticipated breach of contract.”
Details surrounding the litigation are limited as related documents are currently sealed by the court. However, a visible cover sheet reveals that David Greenspan, a specialist in antitrust, sports, and complex-commercial litigation with New York-based Winston & Strawn LLP, is representing the NFLPA.
DraftKings had launched its NFT marketplace in July 2021 and later announced a partnership in December 2021 with OneTeam Partners, the group licensing partner of the NFLPA. This agreement provided DraftKings with “licensing rights for active NFL players” to be utilized on the Reignmakers fantasy sports platform.
While identifying the exact financial compensation the NFLPA is seeking from DraftKings is challenging due to the sealed court documents, it is possible the sum could reach $32.39 million. This amount corresponds to the accounts receivable section under OneTeam Partners in the NFLPA’s 2023 annual report. OneTeam, while its own entity and not directly connected to the NFL or the players union, was co-founded by the NFLPA along with its Major League Baseball (MLB) equivalent and RedBird Capital Partners in 2019. OneTeam negotiated both the initial deal between the NFLPA and DraftKings and a December 2022 agreement which allowed for the creation of limited-edition player cards with a superhero twist using Pixel Vault’s intellectual property.
OneTeam’s relationship with the NFLPA appears robust, having also renegotiated favorable financial terms for players from the iconic Madden video game franchise and payments related to trading cards.
The outcome of the litigation between the NFLPA and DraftKings remains uncertain, but the union’s primary role is to protect the use of players’ images and likenesses and secure compensation from such usage. Revenue from these activities and various union investments is used to enhance retirement benefits for players and their families, including health, life insurance, and pensions. DraftKings has maintained a relationship with the NFLPA since before the rise of regulated sports betting in the US.
Despite the legal battle, DraftKings remains one of the official sportsbook sponsors of the NFL, but this relationship is with the league itself, not the players union.
