DraftKings Reaches Agreement with NFLPA, Pauses Lawsuit

Sports betting powerhouse DraftKings has reached an agreement with the National Football League Players Association (NFLPA), potentially ending the legal battle between the two parties. The court proceedings will be put on hold while the operator wraps up its negotiations with the association.

Buyers’ Remorse Is Not a Basis to Terminate a Contract

The NFLPA, for context, took DraftKings to court for failing to pay for its rights to use NFL player likenesses. This related to an earlier agreement to mint an NFL-themed non-fungible token line, which was available to the players of a fantasy sports game.

As interest in NFTs declined, however, DraftKings considered stopped offering the product and the NFLPA agreed to amend the existing contract. However, DraftKings argued that the new contract allowed it to end the deal if a court determined that the NFTs were securities. After a separate lawsuit implied that the NFTs might be “unregistered securities,” the sportsbook ended its NFT business and terminated the contract.

The NFLPA, however, insisted that the lawsuit in question did not definitively confirm whether DraftKings’  NFL-themed NFTs were securities. In its lawsuit, the NFLPA said that, while DraftKings’ decision to cease its NFT offering is understandable, considering the waning interest in such products, “buyers’ remorse is not a basis to terminate a contract.”

According to a new filing by DraftKings and the NFLPA, the two parties have reached an agreement in principle. As a result, they have asked the New York federal court to put the lawsuit on hold until they finalize their settlement.

DraftKings Is Dealing with Another Lawsuit

In the meantime, DraftKings faces a separate legal challenge over alleged player exploitation. This class action was submitted in the Southern District of New York earlier this month and is led by Clara De Leon and Eric W. Mirsberger Jr.

The plaintiffs insist that DraftKings’ Crown NY Gaming subsidiary leveraged deceptive marketing to manipulate consumers into spending more. These included controversial “risk-free bets” and “deposit matches” promotions, which failed to deliver what they promised.

According to the plaintiffs, DraftKings purposefully misled consumers with these promotions, encouraging them to play more and more regularly. The complaint stated that such offerings expose vulnerable groups to danger, increasing the risks of gambling harm.

To make matters worse, the complaint alleged that DraftKings leveraged player data to single out and target consumers with addictive tendencies. Such players were reportedly assigned VIP Hosts who would encourage further betting by offering gifts, exclusive experiences and personalized free bets.

DraftKings Faces Tax Hike in Maryland

The legal battle comes as DraftKings and its main rival, FanDuel, face possible difficulties in Maryland, which has planned tax hikes for gambling. According to Deutsche Bank, DraftKings’ cash flow may suffer from a $30 million hit if the tax changes are approved.

In addition to that, further trouble may await as Maryland’s tax hike is likely to prompt similar measures in other states.

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