DraftKings Settles NFT Lawsuit for $10M

DraftKings, a leading online sports betting and fantasy sports platform, has agreed to a $10 million settlement to resolve a lawsuit alleging it sold unregistered securities through its non-fungible token (NFT) marketplace. The settlement, if approved, will provide compensation to individuals who traded NFTs on DraftKings' platform between August 11, 2021, and the final judgment date.

The lawsuit, filed in March 2023, accused DraftKings of violating federal and Massachusetts securities laws by selling unregistered securities through its NFT platform and operating DK Marketplace as an unregistered securities exchange. According to the plaintiffs, DraftKings generated revenue from initial NFT sales and took a 5% commission on secondary market transactions.

In July 2024, U.S. District Judge Denise J. Casper rejected DraftKings' motion to dismiss, allowing all claims to move forward. Following the ruling, DraftKings shut down its NFT marketplace, rendering many NFTs illiquid and leaving investors frustrated with the company's partial compensation offer. After extensive negotiations, including third-party mediation, the lawsuit resulted in a proposed $10 million settlement.

This controversy is not an isolated incident for DraftKings. In a separate but related dispute, the company faced legal action from the National Football League Players Association (NFLPA) over unpaid royalties linked to NFTs featuring player likenesses. DraftKings had partnered with the NFLPA in 2021 to create collectible NFTs for its fantasy sports game Reignmakers. Following a federal court ruling that categorized NFTs as securities, DraftKings stopped paying royalties in 2023, citing legal concerns. The NFLPA sued DraftKings in August 2024, seeking damages reportedly up to $65 million. In January 2025, just weeks before the Super Bowl, DraftKings and the NFLPA reached a mediated settlement in principle.

Once a booming sector, the NFT market has struggled in recent years due to declining sales, regulatory scrutiny, and shifting investor sentiment. However, recent trends suggest a potential rebound as the industry adapts to a more regulated landscape. NFT sales have dropped sharply from their 2021 peak, with total sales reaching $8.83 billion in 2024, a