Case Filed Regarding NFT Licensing Issue
The National Football League Players Association (NFLPA) sued DraftKings in federal court in New York on August 26. According to the union, the sportsbook has not paid for the use of NFL players’ likenesses on non-fungible tokens (NFTs). The lawsuit alleges that after terminating its NFT trading-card business last month, DraftKings stopped making payments in violation of their license agreement.
Justifications Put Up for Contract Termination
The NFLPA claims that the cooling off of the once-bustling NFT industry had an impact on DraftKings’ decision to terminate the licensing arrangement. The complaint refutes DraftKings’ unsubstantiated contention that contract termination is justified by the current market downturn. But buyers’ regrets, as the complaint puts it, “is not a reason to terminate a contract.”
The History of DraftKings’ Partnership with the NFLPA
Boston-based DraftKings and the NFLPA first collaborated in 2021 to create collectable NFTs with NFL players. The fantasy sports marketplace at DraftKings offered these NFTs for sale and trade. According to the lawsuit, the NFT market had experienced a considerable downturn at the conclusion of the NFL’s 2022–2023 season.
Modifications to Contracts and Legal Issues
The NFLPA agreed to change their contract in April to give DraftKings more rights to utilize player likenesses after the company threatened to stop supplying NFTs. But according to the union’s complaint, DraftKings terminated the agreement based on a recent preliminary ruling by a federal judge that suggested NFTs would be regarded as unregistered securities. This decision is a component of a class-action lawsuit that DraftKings in Boston is now facing.
Conflict Regarding NFT Status and Contractual Duties
DraftKings notified the NFLPA of its decision to discontinue the NFT business and to break their agreement after the judge’s remarks. The NFLPA contends that the judge’s judgment was made too soon and that it does not prove beyond a reasonable doubt whether the NFTs are securities as defined by their contract.
