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David Purdum, ESPN staff writer
The NFL Players Association has sued the league's official betting partner DraftKings for breach of contract, alleging the sportsbook giant owes it nearly $65 million under a licensing agreement.
The civil lawsuit, filed last week in federal court in the Southern District of New York, claims DraftKings intends to terminate a contract signed in 2021 with the NFLPA that gave the sportsbook the right to use players’ name, image and likeness for its recently closed NFT marketplace and has not paid the remaining minimum guaranteed payments.
NFLPA lawyers did not disclose the exact amount of the suit, but cited the earnings of five DraftKings executives from 2021 — totaling approximately $261.1 million — and said that “the total compensation of just these five aforementioned executives from 2021 is nearly quadruple the compensation DraftKings pays to NFLPA licensees.”
DraftKings and the NFLPA did not immediately respond to ESPN's requests for comment. An NFL spokesperson declined to provide comment to ESPN.
“The motivation behind DraftKings’ decision to repudiate its licensing agreement with Plaintiffs is simple: The once-hot market for NFTs has cooled,” NFLPA lawyers wrote in the complaint. “DraftKings is also facing a civil lawsuit and regulatory investigations into its product. However, buyers’ remorse is not grounds for terminating the contract.”
DraftKings announced in late July that it was shutting down its NFT marketplace due to “recent legal developments” and notified the NFLPA that it was terminating its licensing agreement on July 29, according to a legal filing.
DraftKings is involved in a separate lawsuit in Massachusetts alleging the company violated securities laws with its NFT marketplace. DraftKings cited the recent ruling in the Massachusetts case in saying it is shutting down its NFT marketplace and terminating its contract with the NFLPA.
In the complaint, NFLPA lawyers argued that the Massachusetts decision “determined nothing about the merits of the securities laws” and therefore did not meet the criteria to terminate the contract.
“Ultimately, and despite DraftKings’ best efforts to complicate the matter, this case is exceptionally simple,” the NFLPA’s complaint states. “DraftKings’ inability to profitably commercialize the intellectual property it has licensed does not excuse performance, and DraftKings must pay the amounts owed.”