The NFL Players Association (NFLPA), the labor union that represents the players in the league, asserted in recently released court filings that DraftKings (NASDAQ: DKNG) owes it almost $65 million as a result of the sportsbook operator's nonfungible tokens (NFTs) marketplace having just closed.

The court sealed relevant records when word leaked last week about the NFLPA's lawsuit against the gambling company. However, there was conjecture that DraftKings would owe the union $32.39 million, as that sum was mentioned in the NFLPA's 2023 annual report's accounts receivable section. The marketing firm OneTeam Partners, which arranged the original agreement between DraftKings and the NFLPA, was named by the union as the source of that amount.

The players' union's legal representation does not expressly claim that the organization is entitled $65 million in the contract. Instead, the plaintiffs' attorneys draw attention to the pay that five DraftKings executives—including co-founders Jason Robins, who serves as the company's chief executive officer—have received since 2021. They point out that the amount owed to the union is four times what was given to these five executives.

"All told, the compensation of just these five aforementioned officers since 2021 is approximately quadruple of what DraftKings owes to the NFLPA licensors,” according to the legal filing.

Apart from Kalish, Liberman, and Robins, the NFLPA also identified former CFO Jason Park and Chief Legal Officer R. Stanton Dodge as other executives. The recurrent thread throughout all five cases is that the majority of their pay during the previous few years came from sales of the company's common shares.

DraftKings/NFLPA Rift Could Be Affected by NFT Class Action

The operator of the online sportsbook revealed in late July that the DraftKings Marketplace would be closing and that the Reignmakers fantasy sports game, which was based on the NFTs offered on the marketplace, would be discontinued. The decision was reportedly made in response to US District Judge Denise Casper's decision last month to allow a class-action lawsuit against the gambling firm arising from problems with the NFT marketplace to proceed.

Lead plaintiff Justin Dufoe filed that lawsuit in March 2023 in US District Court in Boston, saying he lost $14K trading in NFTs on DraftKings Marketplace. The labor organization disputes the NFLPA's claim that the gambling firm is trying to exploit Casper's decision as fulfillment of a termination clause in their contract with the union.

The gaming firm knew the NFT pact wasn't a risk-free agreement, according to the NFLPA, which also stated that "buyer's remorse" isn't a good excuse to terminate a contract.

“At the end of the day, and despite DraftKings’ best efforts to muddy the waters, this case is extraordinarily simple. DraftKings’ inability to profitably commercialize the intellectual property it licensed does not excuse performance, and DraftKings must pay what is due,” according to the union’s legal document. Counsel for the players union added the group renegotiated terms of the pact with DraftKings although it was under no legal obligation to do that.

Reignmakers Got Off to a Hot Start, But NFT Collapsed

During the height of the NFT mania in 2021, DraftKings introduced Reignmakers, its NFT marketplace. Participants in the Reignmakers fantasy game would purchase digital goods licensed by the NFLPA to use in the game, which operated similarly to typical fantasy sports.

The acquisition served as a kind of entrance fee, and the strategy was successful for a while. However, after the 2022 “cryptocurrency winter,” NFT values fell sharply in early 2023, deterring players from forking over cash for Reignmakers. The NFLPA alleged that DraftKings had concerns over the licensing agreement's economics and that the gaming business failed to make a corresponding payment to the union in April 2023 when NFT pricing declined and market liquidity vanished. In the court document, the payment's amount was redacted.

The union's attorneys assert that since the beginning of this month, the gaming company has not made any payments to the union and that DraftKings' decision to drop the NFT business has no influence on the company's financial responsibilities to the NFLPA.

The NFLPA is requesting that the US Federal Court in the Southern District of New York order DraftKings to pay any outstanding amounts owed under the modified licensing agreement—amounts that have been redacted in the filing—as well as to reimburse the union for legal and court fees.