DraftKings Settles NFT Securities Lawsuit For $10 Million

According to Cointelegraph, DraftKings has agreed to a $10 million settlement to resolve a securities class-action lawsuit involving its non-fungible tokens (NFTs). The lawsuit was initiated by buyers of NFTs sold through DraftKings' now-closed marketplace. On February 28, 2025, Judge Denise Casper of the Boston federal court granted a preliminary settlement motion filed by lead plaintiff Justin Dufoe and the class on February 26. The settlement will distribute $10 million among the class action members. Dufoe plans to request a $50,000 award for his involvement in the case, along with attorneys' fees amounting to one-third of the settlement fund plus litigation expenses. The lawsuit, which began in March 2023, alleged that the NFTs sold by DraftKings were investment contracts under U.S. law and were therefore unregistered securities. The settlement aims to avoid prolonged and costly litigation. DraftKings co-founders Jason Robins and Matt Kalish, along with Jason Park, the company's chief transformation officer, were also named in the suit. Dufoe claimed to have incurred a $14,000 loss by selling DraftKings NFTs at a loss and holding devalued NFTs. DraftKings attempted to dismiss the lawsuit in September 2023, arguing that the NFTs did not qualify as investment contracts under the Howey test. However, Judge Casper ruled in July that the NFTs could be considered securities. Following the closure of its NFT marketplace, DraftKings began settlement discussions with the class group, which culminated in an all-day mediation involving extensive negotiations before a neutral third party. The class group described the settlement as an "outstanding result" that would prevent further costly litigation. They estimated "realistic and supportable damages" to range from $18 million to $58 million, with the settlement representing 26% of the midpoint of potentially recoverable damages, which they considered an excellent recovery under the circumstances. This is the second NFT-related lawsuit DraftKings has settled in 2025. In January, the company reached a settlement with the National Football League Players Association over a lawsuit accusing DraftKings of not compensating for the use of NFL player likenesses in NFTs. The details of that settlement remain undisclosed, but the suit was stayed until March 28 to finalize the agreement.