By Blake Brittain
Jan 27 (Reuters) - Sports-betting giant DraftKings DKNG.O has resolved a lawsuit brought by the National Football League Players Association for allegedly failing to pay for using NFL player likenesses, according to a joint filing on Monday in New York federal court.
The NFLPA and DraftKings told the court that they had settled the case in principle and asked for a pause while they finalize their agreement. Spokespeople and attorneys for the parties did not immediately respond to requests for comment and more information.
Boston-based DraftKings partnered with the NFLPA in 2021 to make collectible non-fungible tokens of NFL players to buy and sell in a fantasy sports game. The NFLPA alleged that DraftKings threatened to stop offering the NFTs in 2023, after which the union agreed to restructure their contract.
According to the union's complaint, DraftKings said the amended contract allows it to end the agreement if a court determines that the NFTs are securities. A federal judge in Boston said that the tokens may be unregistered securities in a separate class-action lawsuit against DraftKings last year.
DraftKings told the NFLPA it was ending its NFT business and terminating their agreement weeks later. The union said in its lawsuit that the Massachusetts judge's decision did not resolve whether the NFTs are securities under their contract.
"The impetus for DraftKings' decision to repudiate its license agreement with Plaintiffs is simple: the once white-hot market for NFTs has cooled down," the lawsuit said. "Buyers' remorse, however, is not a basis to terminate a contract."
DraftKings responded that the termination was "expressly permitted by several provisions in the agreement."
The case is National Football League Players Association v. DraftKings Inc, U.S. District Court for the Southern District of New York, No. 1:24-cv-06407.
For the NFLPA: Jeffrey Kessler, Dave Greenspan and George Mastoris of Winston & Strawn
For DraftKings: Orin Snyder, Grace Hart, Jacob Spencer and Matthew Benjamin of Gibson Dunn & Crutcher
(Reporting by Blake Brittain in Washington)
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