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In response to a class action lawsuit regarding its Reignmakers NFTs, DraftKings has agreed to a $10 million settlement. The plaintiffs, who bought these digital assets, claimed the business broke both federal and state securities laws. In the U.S. District Court of Massachusetts, they submitted a motion for preliminary approval, describing the settlement as “fair, reasonable, and adequate.”
The lawsuit started in March 2023 when plaintiffs argued that DraftKings’ NFT offers ought to have been subject to securities regulations. In July 2024, Judge Denise J. Casper denied the Boston-based sports betting company’s move to dismiss the case, allowing it to continue. Both parties came to an agreement following a year and a half of litigation and protracted negotiations.
The motion stated, “After a year and a half of vigorous litigation, the Parties have negotiated, at arm’s length, a proposed Settlement of all claims in the above captioned litigation (the “Action”) for $10 million in cash. This outstanding result was reached only after a thorough investigation of the claims, fully briefing.”
Following its unsuccessful attempt to dismiss the case, DraftKings decided to exit the NFT space entirely. The company abruptly shut down its NFT Marketplace and discontinued Reignmakers, citing legal challenges. In a statement, DraftKings explained,
“After careful consideration, DraftKings has decided to discontinue Reignmakers and our NFT Marketplace, effective immediately, due to recent legal developments. This decision was not made lightly, and we believe it is the right course of action.”
If the settlement gains court approval, those who purchased DraftKings NFTs between August 11, 2021, and the final judgment date will be eligible for compensation. The funds will cover payments to affected individuals and legal expenses, with DraftKings unable to claim any unallocated money.
This marks the second legal settlement related to DraftKings’ NFT operations. After shutting down its marketplace, the company also settled a lawsuit with the NFL Players Association. The NFLPA had accused DraftKings of breaching an agreement regarding the use of player names, images, and likenesses on NFTs. That case concluded with a settlement in January.