DraftKings Agrees to $10 Million Settlement Over NFT Marketplace Lawsuit

DraftKings, the prominent sports betting and gaming company, has reached a $10 million settlement in a class-action lawsuit concerning its non-fungible token (NFT) marketplace. The lawsuit, initiated by buyers of DraftKings NFTs, alleged that the tokens were unregistered securities, leading to significant financial losses for investors.

Key Takeaways

• DraftKings will pay $10 million to settle claims from NFT buyers.

• The lawsuit argued that DraftKings NFTs were unregistered securities under U.S. law.

• The settlement follows the closure of DraftKings' NFT marketplace amid legal challenges.

• The agreement aims to avoid prolonged litigation and associated costs.

Background of the Lawsuit

The class-action lawsuit was filed in March 2023, with lead plaintiff Justin Dufoe claiming he lost approximately $14,000 due to the declining value of DraftKings NFTs. The suit named several key figures from DraftKings, including co-founders Jason Robins and Matt Kalish, as well as Chief Transformation Officer Jason Park.

The plaintiffs argued that the NFTs sold by DraftKings constituted investment contracts, thus falling under the definition of securities. This classification would require DraftKings to register the NFTs with the U.S. Securities and Exchange Commission (SEC), which the company failed to do.

Settlement Details

On February 28, 2025, Judge Denise Casper of the Boston federal court granted a preliminary settlement motion. The $10 million settlement will be distributed among the class members, with Dufoe also seeking a $50,000 award for his efforts in litigating the case, alongside attorney fees that could reach one-third of the settlement fund.

The settlement was reached after extensive negotiations, which included mediation with a neutral third party. The plaintiffs expressed satisfaction with the outcome, stating it would prevent costly litigation that could deplete resources.

Implications of the Settlement

The settlement marks a significant moment for DraftKings, which has faced scrutiny over its NFT offerings. The company had previously shut down its NFT marketplace, citing legal developments as a primary reason. This closure left many NFT investors with assets that had significantly depreciated in value.

The lawsuit and subsequent settlement highlight the ongoing challenges in the NFT market, particularly regarding regulatory compliance and the classification of digital assets. As the market evolves, companies like DraftKings must navigate complex legal landscapes to avoid similar disputes in the future.

Conclusion

DraftKings' $10 million settlement in the NFT class-action lawsuit underscores the risks associated with digital assets and the importance of regulatory compliance. As the NFT market continues to mature, companies will need to ensure that their offerings align with legal standards to protect both their interests and those of their investors.

Sources

• DraftKings settles NFL players union lawsuit over NFT contract, Reuters.

• DraftKings settles class-action lawsuit over NFT marketplace for $10M, Cointelegraph.