DraftKings and NFLPA reach agreement amid legal disputes

Anchal Verma January 29, 2025
DraftKings and NFLPA reach agreement amid legal disputes

DraftKings, an American gambling company, has reached an agreement with the National Football League Players Association (NFLPA), possibly bringing their legal battle to an end. The dispute revolved around an NFT deal, with the NFLPA accusing DraftKings of backing out unfairly. While this settlement is a relief for the company, DraftKings is still entangled in another lawsuit over alleged deceptive marketing and faces a potential tax hike in Maryland.

This case started when sportsbook giant DraftKings withdrew its NFL-themed NFTs from the market. Although both parties initially agreed to a deal on the creation of NFTs, permitting DraftKings to use the likenesses of NFL players for its fantasy game, the sportbook had an interest in terminating the deal when the market for NFTs began declining.

DraftKings argued that if NFTs were considered unregistered securities, the company had the right to cancel the contract. A separate lawsuit suggested that this might be the case, leading DraftKings to shut down its NFT business. However, the NFLPA countered that the lawsuit did not provide a definitive ruling on whether the NFTs were securities. The association insisted that DraftKings had no valid reason to break the contract, stating that “buyers’ remorse is not a basis to terminate a contract.”

Now, the two sides have reached an agreement in principle and have asked the New York federal court to put the lawsuit on hold while they finalise the settlement.

DraftKings faces new lawsuit over player exploitation

Even as DraftKings moves past its battle with the NFLPA, it faces fresh legal trouble. A new class-action lawsuit, filed in New York, accuses the company of using deceptive marketing tactics to encourage excessive gambling.

The lawsuit, led by Clara De Leon and Eric W. Mirsberger Jr., claims that DraftKings misled customers with promotions such as “risk-free bets” and “deposit matches.” According to the plaintiffs, these offers were not as beneficial as they seemed, pushing players to spend more money.

Besides that, the class action complaint alleged that DraftKings targeted individuals with addictive traits. The firm purportedly utilized player information to identify its most vulnerable customers, assigning VIP Hosts that persuaded the players to gamble more using gifts, VIP experiences, and customised free bets.

Maryland tax hike could hurt DraftKings

If this was not enough, there is also proposed tax increase which DraftKings is facing; the government seems to be trying to raise taxation on gambling issues. This impacts DraftKings in the same way it does on its main rival FanDuel.

According to Deutsche Bank, the tax hike could cost DraftKings around $30 million. Analysts warn that if Maryland pushes forward with the increase, other states may follow, putting additional strain on the company’s revenue.

What’s next for DraftKings?

Despite its legal and financial hassles, DraftKings remains one of the most powerful names in sports betting. It’s increasingly facing lawsuits and higher taxes, however, and so has to tread very carefully to continue on the upward trajectory.

The settlement with the NFLPA is a step in the right direction, but DraftKings will need to address consumer trust issues and regulatory risks to stay ahead in the game.

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