NFLPA Suit Against DraftKings Could Stem from Defunct NFT Product

Posted on: August 21, 2024, 06:48h. 

Last updated on: August 22, 2024, 09:55h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

The NFL Players Association (NFLPA), the labor union for the league’s athletes, filed suit against DraftKings (NASDAQ: DKNG) and could seek financial damages relating to the recent closure of the gaming company’s nonfungible tokens (NFTs) marketplace.

NFLPA
The NFL Players Association (NFLPA) logo. The union is suing DraftKings. (Image: Beckett)

In late July, the online sportsbook operator announced the closure of DraftKings Marketplace and the halting of Reignmakers fantasy sports game that was based on the NFTs sold in the marketplace amid mounting legal challenges. In a civil suit filed in US Federal Court in the Southern District of New York on Tuesday, the NFL players union said it wants monetary compensation for an “anticipated breach of contract.”

More details on the litigation are sparse because related documents are currently sealed by the court. A cover sheet is visible and that document indicates David Greenspan, an antitrust, sports, and complex-commercial litigator with New York-based Inston & Strawn LLP, is representing the NFLPA.

DraftKings launched the NFT marketplace in July 2021. In December 2021, the gaming company announced an agreement with OneTeam Partners, the group licensing partner of the NFLPA, that granted the gaming company “licensing rights for active NFL players” to be used on the Reignmakers fantasy sports platform.

NFLPA Could Be Seeking $32 Million from DraftKings

With the court documents currently sealed, identifying how much the NFLPA is seeking from DraftKings is tricky, but it’s possible that amount is $32.39 million.

That’s the amount attributable to OneTeam Partners listed in the accounts receivable section of the NFLPA’s 2023 annual report. OneTeam is its own entity and isn’t directly tied to the NFL or the players union. However, the NFLPA joined its Major League Baseball (MLB) equivalent and RedBird Capital Partners in founding the licensing company in 2019.

OneTeam brokered the initial deal between the NFLPA and DraftKings as well as a December 2022 accord under which “select professional football players into limited-edition player cards with a superhero twist using Pixel Vault’s signature intellectual property,” according to a DraftKings statement.

OneTeam’s relationship with the NFLPA  appears strong as the former renegotiated favorable financial terms for players stemming from the iconic Madden video game franchise, as well as payments relating to trading cards.

Why NFLPA is Taking a Hard Line

How the litigation between the NFLPA and DraftKings plays out remains to be seen, but the union protecting use of players’ images and likenesses and deriving compensation from such usage is one of its primary functions.

Revenue generated from those pursuits and the union’s various investments is used to bolster retirement benefits for players and their families, including health and life insurance and pensions. DraftKings has had a relationship with the union since before the proliferation of regulated sports betting in the US.

The gaming company is also one of the official sportsbook sponsors of the NFL, but that relationship is with the league itself, not the players union.