DraftKings and the NFL Players Association (NFLPA) have agreed to settle a legal dispute surrounding the use of NFL player likenesses in DraftKings’ NFT-based fantasy sports platform, Reignmakers. The parties informed the U.S. District Court for the Southern District of New York on Monday that they had reached a settlement in principle. They requested a 60-day pause in the proceedings to finalize the terms of their agreement, according to Reuters.

This lawsuit, filed by the NFLPA in 2024, alleged that DraftKings violated the terms of a licensing agreement established in 2021, which allowed the company to create and sell non-fungible tokens (NFTs) featuring NFL players. The union claimed DraftKings improperly terminated their contract and owed the NFLPA over $60 million.

The Core of the Dispute

DraftKings introduced its Reignmakers platform in collaboration with the NFLPA in 2021. The platform allowed fans to purchase, trade, and use player NFTs in a fantasy sports game. However, as the market for NFTs began to decline, the agreement between the two parties came under strain.

According to the NFLPA, DraftKings threatened in 2023 to discontinue its NFT offerings. This led to a renegotiation of the agreement, which included a clause enabling DraftKings to terminate the contract if NFTs were deemed securities. A Boston federal court later suggested that NFTs could qualify as unregistered securities in a separate class-action lawsuit against DraftKings.

Shortly after this ruling, DraftKings ended the agreement with the NFLPA, prompting the union to file its lawsuit. The NFLPA accused DraftKings of attempting to withdraw from the contract due to a downturn in the NFT market, stating in its complaint, “Buyers’ remorse, however, is not a basis to terminate a contract.”

DraftKings defended its actions, asserting that the termination was permitted under several provisions in the amended agreement. The company also sought to dismiss the lawsuit, arguing that it had not intentionally harmed the NFLPA, a necessary condition for breaching the agreement.

Legal Challenges Beyond the NFLPA Case

The settlement with the NFLPA is not DraftKings’ only legal challenge involving player likenesses. The company has faced similar lawsuits from the Major League Baseball Players Association (MLBPA). The MLB Players Inc. (MLBPI), a subsidiary of the MLBPA, accused DraftKings and other operators of improperly using MLB player images without authorization in betting apps and promotional materials.

In response to the MLBPI lawsuit, DraftKings filed a motion to dismiss, citing First Amendment protections for its use of player likenesses. MLBPI, however, argued that the sportsbooks’ activities did not fall under fair use laws and pushed back against this defense in the Eastern District of Pennsylvania.

While the MLB case remains ongoing, the settlement between DraftKings and the NFLPA marks a significant development in the broader landscape of disputes involving professional athletes’ image rights and the evolving role of NFTs in sports.