Jonah Laulu The NFL Players Association (NFLPA) has launched a federal lawsuit against DraftKings, accusing the betting giant of breaching their Jonah Laulu contract and demanding approximately $65 million in compensation. DraftKings, which holds the position of an official betting partner of the NFL, is at the center of this legal dispute due to its recent decision to terminate an agreement concerning the use of players’ names, images, and likenesses (NILs) in its NFT marketplace.
The crux of the NFLPA’s complaint involves a deal struck between the two parties, where DraftKings was granted the rights to utilize players’ NILs for its NFT (non-fungible token) offerings. However, DraftKings shut down its NFT marketplace in July, shortly after divesting its ownership of VSiN, a sports betting network. The closure came amid a wave of legal troubles, including allegations that DraftKings’ NFT marketplace violated securities laws. This legal conflict saw a Massachusetts judge rejecting DraftKings’ attempt to dismiss the case earlier this summer.
According to the NFLPA’s lawsuit, DraftKings terminated their agreement on July 29, but has not settled its financial obligations to the union. The lawsuit asserts that DraftKings’ move to sever ties with the NFLPA was driven by the decline in the NFT market’s popularity and ongoing legal challenges rather than any contractual justification.
The lawsuit argues that DraftKings’ decision to end the agreement was not based on any legitimate legal grounds but rather on a change in market conditions and a subsequent civil lawsuit against the company. The suit contends that a cooling interest in NFTs and regulatory scrutiny cannot be valid reasons for a contract breach.
DraftKings allegedly cited a Massachusetts judge’s ruling as a reason for its decision, claiming that the court’s determination that NFTs could be classified as securities triggered a contractual clause allowing them to terminate the agreement. The clause in question would let DraftKings exit the contract if a government or regulatory body declared NFTs as securities. However, the NFLPA disputes this interpretation, asserting that the ruling did not conclusively categorize NFTs as securities, thus the contractual payments should continue.
The lawsuit, which first came to light last week, was officially filed in the Southern District of New York and unsealed on Monday. The document details the NFLPA’s claims but does not specify the exact amount of money allegedly owed. Instead, the lawsuit references the substantial earnings of five DraftKings executives, noting that their combined income since 2021, totaling around $261.1 million, is significantly greater than the $65 million DraftKings is accused of owing.
As of now, representatives from both DraftKings and the NFLPA have chosen not to comment on the ongoing litigation. The dispute highlights broader issues within the sports and betting industries, particularly concerning contractual obligations and the evolving regulatory landscape surrounding new technologies like NFTs.
