DraftKings has yet to file its motion to dismiss the suit brought against it by the NFLPA, but in a recent court filing, the sportsbook operator behind the now-shuttered Reignmaker and NFT Marketplace offered its thoughts on the merits of the claim.
In a letter to Judge Analisa Torres of the Southern New York District Court, DraftKings noted its intent to file a motion to dismiss the suit. In the NFLPA’s claim, the labor union said that DraftKings has no plans to pay any of the remaining $60 million or so the company owes them for the licensing rights of NFL players on DraftKings Reignmaker products.
DraftKings says regulators and courts were questioning NFT product
While the NFLPA described the deal as a money grab and an attempt for DraftKings to capitalize on the NFT zeitgeist while it was at its peak, DraftKings claims in its letters that the company always understood the volatile nature of NFTS, which is why the agreement included “broad termination rights and other contract terms.”
The two parties are at odds over whether a judge denying DraftKings’s motion to dismiss in a class action lawsuit centered on whether or not its NFT marketplace qualifies as an unregulated security counts as a triggering event that allows for the cessation of the deal.
In its letter, DraftKings said that, in addition to the judge’s decision, the company also began receiving regulatory subpoenas as far back as July 2023.
“A growing number of other regulators and courts made or accepted claims that NFTs are securities,” the letter noted.
The operator also argued that the denial of the motion to dismiss forced their hand to shut down Reignmakers and NFT Marketplace, as continued sales ran the risk of resulting in a larger potential damage payment should they lose the suit.
“It was materially practicable for DraftKings to operate its NFT business in a way that would allow it to benefit from the rights granted under the agreement.”
DraftKings and NFLPA remain at odds over contract enforceability
Finally, DraftKings takes exception with the notion they defaulted on a payment, as the Aug. 1, 2024 payment deadline was not when payment was due, rather the date the invoice became “invoiceable”. DraftKings informed NFLPA of its plans to terminate the deal on July 29.
It appears DraftKings is seeking a pre-motion conference with the judge on the issues raised in the letter before filing its motion to dismiss. Currently, fact discovery in the case is due on Feb. 14, 2025.
