DraftKings (NASDAQ: DKNG) and the NFL Players Association (NFLPA) have settled a lawsuit filed by the players union concerning the gaming firm’s now-closed nonfungible tokens (NFTs) marketplace. 

In a letter to Judge Analisa Torres of the US District Court for the Southern District of New York, both parties sought a 60-day postponement of proceedings until March 28, noting they’ve come to an agreement to conclude the litigation.

"'The parties have mediated their dispute and reached a non-binding settlement in principle, subject to the mutual execution of a definitive settlement agreement,” according to the letter. “The parties therefore respectfully request a 60-day stay of this action (including a stay on a decision on Defendants’ pending motion to dismiss) to enable the parties to execute a definitive settlement agreement.”

The letter did not specify the financial details of the agreement, but a legal document revealed last August suggested that DraftKings might owe the NFL labor union up to $65 million. Although it wasn't explicitly mentioned in the document, the NFLPA's counsel made parallels between the five DraftKings executives, such as co-founders Jason Robins (the current CEO), Matt Kalish, and Paul Liberman, and the sum owed to the union, which was roughly $65 million. 

Origin of NFLPA Lawsuit Against DraftKings 

The online sports betting operator launched DraftKings Marketplace in July 2021. In December of that year, the gaming firm reached an agreement with OneTeam Partners, the group licensing associate of the NFLPA, which provided the gaming company "licensing rights for active NFL players" for use on the Reignmakers fantasy sports platform. 

Reignmakers, which also closed with the marketplace, was the fantasy game where players utilized bought NFTs to create legendary sports teams. DraftKings was set to compensate the NFLPA for utilizing players' names, images, and likenesses in the fantasy game. 

In August of last year, the NFL players union initiated legal action against DraftKings, seeking monetary damages for what it termed an “expected breach of contract.” The gaming firm contended that it had justification to modify the NFLPA agreement if NFTs were classified as securities. 

In another NFT case involving DraftKings, a judge determined that the tokens could potentially be unregistered securities; however, the NFLPA contended that this case did not resolve whether NFTs are considered investable securities according to its agreement with the gaming firm. The plaintiffs' counsel would further claim that DraftKings' "buyer's remorse" was not a sufficient justification for terminating the contract. 

Settlement Might Conclude Final NFT Chapter for DraftKings 

DraftKings Marketplace debuted in July 2021 with significant buzz, featuring NFT partnerships with numerous prominent athletes. The timing seemed right as NFT prices were skyrocketing then, but they plummeted shortly after. 

The drop in prices prompted lawsuits, including the previously mentioned case where a Massachusetts judge determined that NFTs could be unregistered securities. NFT prices have not genuinely rebounded, and market liquidity continues to be limited. 

In the midst of legal challenges, Draftkings shut down Marketplace and Reignmakers last July, and the agreement with the NFLPA might signify one of the company's concluding phases in the NFT arena.