DraftKings to Pay $10 Million to Settle NFT Securities Class-Action Lawsuit

DraftKings, the popular sports betting and fantasy sports company, has agreed to a $10 million settlement to resolve a class-action lawsuit

DraftKings, the well-known sports betting and fantasy sports company, has agreed to a $10 million settlement to resolve a class-action lawsuit. The suit targeted the company’s now-defunct non-fungible token (NFT) platform, DK Marketplace, and an allegedly unlawful sale of unregistered securities.

The lawsuit, which began in March 2023, arose from claims that DraftKings sold unregistered securities in the form of NFTs, potentially leaving numerous buyers in financial jeopardy.

The case, which was filed by lead plaintiff Justin Dufoe, focused on DraftKings’ Reignmakers NFTs and argued that they qualify as investment contracts. This determination would fall under U.S. securities law, specifically based on the Howey Test.

The Howey Test, a legal standard used by courts to classify transactions, is used to decide if a transaction constitutes a security.

You can learn more about the Howey Test from the U.S. Securities and Exchange Commission (SEC) here:

The lawsuit had reached a turning point in July 2024 when U.S. District Judge Denise Casper, applying the Howey Test, found that the NFTs could be viewed as securities, a decision that significantly advanced the lawsuit.

After this ruling, DraftKings announced the shutdown of its NFT platform, leaving thousands of users with illiquid assets that had seen a dramatic drop in value since their initial purchase.

The $10 million class-action settlement, which was reached earlier this year and received preliminary approval on February 28, 2025, will see funds distributed to individuals who bought, sold, or held DraftKings NFTs.

This period of time ranges from August 11, 2021, to the final judgment date in the class action.

According to reports by both Cointelegraph and SBC Americas, this could potentially impact more than 175,000 investors.

After deducting administrative expenses and attorneys’ fees, the remaining settlement funds will be shared with eligible class members in a manner that reflects the period for which they held DraftKings NFTs.

Additionally, lead plaintiff Justin Dufoe is set to receive a $50,000 service award for his role in representing the class.

Earlier this year, DraftKings closed its NFT platform, known as DK Marketplace, and announced it was shutting down its Reignmakers fantasy football NFT collection.

The company stated that the decision was made following “recent legal developments,” which likely alludes to the class-action lawsuit.

This move left thousands of users with illiquid assets that had dwindled drastically in value since their peak. With no platform for resale or trade and the NFTs remaining closed out from secondary market trading, users who had invested in the NFTs were left with little recourse.

The closure of the NFT platform also came shortly after DraftKings reached a separate undisclosed settlement in January 2025 with the NFL Players Association (NFLPA).

The NFLPA had sued DraftKings in December 2023 for using NFL player likenesses in its Reignmakers NFTs without paying the required royalties.

The lawsuit, filed in a California court, alleged that DraftKings’ actions were in violation of a 2020 California law. This legislation mandates that individuals must provide consent for the commercial use of their likeness and be compensated accordingly.

You can learn more about the NFLPA at their official site:

The case began when the NFLPA sent a cease-and-desist letter to DraftKings in October 2023, asserting that DraftKings had been notified as early as 2021 about the need for a license agreement to use players’ likenesses. Despite this, DraftKings allegedly continued using the likenesses without authorization.

If you are a U.S. resident who purchased, sold, or held a DraftKings NFT through DK Marketplace during the defined class period, you may be eligible to claim part of the settlement.

Claimants should keep an eye on official notifications or updates via legal settlement portals. Details about claim submission deadlines and methods will be published following final approval of the settlement by the court.

This case adds to a growing list of legal actions targeting cryptocurrency and NFT platforms over alleged breaches in securities regulations.

The lawsuit arises as regulators, including the SEC, are increasing scrutiny of digital assets to classify them in accordance with U.S. securities law.

This case also highlights the pressing need for consumer protection in the fast-evolving landscape of digital finance.

To stay informed about digital asset regulations and investor guidance, visit the Federal Trade Commission (FTC):

DraftKings’ $10 million payout marks a significant moment in the unfolding legal saga surrounding non-fungible tokens (NFTs) and digital assets.

While DraftKings has not admitted any wrongdoing and the case could still proceed to trial if the settlement is not approved, the agreement signals a partial financial resolution for those affected by the now-