DraftKings in $65M Payment Battle with NFL Players Association

Earlier this month, the NFL Players Association (NFLPA) decided to take the leading gaming and betting operator, DraftKings, to court over an alleged breach of a licensing contract. The lawsuit stemmed from the American betting giant’s decision to shut down its non-fungible token (NFT) marketplace and Reignmakers, a popular NFT-based fantasy sports game.

DraftKings and the NFLPA entered into a licensing contract back in 2021. The important deal covered the intellectual property of over 2,000 NFL players. The contract enabled DraftKings to offer its customers NFTs which can be purchased for DFS competitions.

However, with the announcement of the shutdown of its NFT Marketplace and Reignmakers, DraftKings decided to discontinue its payments to the NFLPA, the Association claimed in its lawsuit. The Association argued that DraftKings’ decision was in breach of their contract.

As described by the NFLPA: “To build its products, DraftKings needed the right to use the name, image and likeness of NFL players. It Committed substantial guaranteed payments to Plaintiffs for a license to do so. But DraftKings no longer thinks investing in these collectibles is a good bet.”

The Association Claims DraftKings Owes Minimum Guaranteed Payments

Additionally, the plaintiffs explained that while the NFT market was once popular, things have now cooled down, which is one of the reasons why DraftKings decided to discontinue its NFT product. The NFLPA also pointed to a civil lawsuit as well as regulatory scrutiny the betting operator is facing in light of its decision.

Importantly, the Association argued that the changes in buyers’ opinions were not a valid reason to cancel the contract. The Association acknowledged that DraftKings tried to protect itself through “carefully negotiated and narrow termination grounds.” In response, the NFLPA sought to protect itself by requesting minimum guaranteed payments under the licensing contract.

“Buyers’ remorse, however, is not a basis to terminate a contract,“

reads the lawsuit filed by the NFLPA

The part of the legal claim where the NFLPA describes the minimum guaranteed payment is redacted. Still, the Association pointed to the remuneration of five high-ranking execs at DraftKings, explaining that their compensation is approximately four times what the company owes to the NFLPA.

Based on the figures pointed out in the legal claim, a sum of approximately $65 million comes to mind. Diving further into the minimum guaranteed payments, the plaintiffs outlined five licensed periods through 2027. Still, the sum owed for each period was redacted.