DraftKings, the popular sports betting and fantasy sports company, has agreed to a $10 million settlement to resolve a class-action lawsuit concerning its now-defunct non-fungible token (NFT) platform, DK Marketplace. The lawsuit alleged that DraftKings sold unregistered securities in the form of NFTs, leaving many buyers at financial risk.
Background: NFTs and the Lawsuit
The class-action lawsuit was filed in March 2023 by lead plaintiff Justin Dufoe, who argued that DraftKings’ Reignmakers NFTs qualified as investment contracts under U.S. securities law, specifically based on the Howey Test. This legal standard is used by courts to determine whether a transaction qualifies as a security.
You can learn more about the Howey Test from the U.S. Securities and Exchange Commission (SEC) here:
🔗 https://www.sec.gov/corpfin/framework-investment-contract-analysis-digital-assets
Legal Turning Point
In July 2024, U.S. District Judge Denise Casper denied DraftKings’ motion to dismiss the case. The judge applied the Howey Test and found that the NFTs could reasonably be treated as securities, giving the lawsuit significant legal weight.
Following this decision, DraftKings shut down its NFT platform, leaving thousands of users with illiquid assets that dropped drastically in value.
The $10 Million Settlement
The $10 million class-action settlement was preliminarily approved on February 28, 2025. According to court filings, the money will be distributed among individuals who bought, sold, or held DraftKings NFTs between August 11, 2021, and the final judgment date.
This could involve more than 175,000 investors, according to reports from Cointelegraph and SBC Americas.
After deducting legal fees and administrative expenses, the settlement funds will be shared proportionally among eligible class members. Lead plaintiff Justin Dufoe is also expected to receive a $50,000 service award for representing the class.
DK Marketplace Closure and Fallout
DraftKings cited “recent legal developments” as the reason for shutting down its NFT marketplace, a move that left Reignmakers NFTs illiquid and virtually worthless. With no platform for resale or trade, users who had invested in the NFTs were left with little recourse.
This closure also came shortly after DraftKings reached a separate undisclosed settlement in January 2025 with the NFL Players Association (NFLPA), which had sued the company for using NFL player likenesses in Reignmakers without paying royalties.
More about the NFLPA can be found at their official site: 🔗 https://www.nflpa.com/
Who Qualifies for Compensation?
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 settlement approval by the court.
The Bigger Picture: Regulation and Investor Risk
This case adds to a growing list of legal actions targeting crypto and NFT platforms over alleged securities violations. It underscores increasing regulatory scrutiny of digital assets and reinforces the need for consumer protection in evolving financial markets.
To stay informed about digital asset regulations and investor guidance, visit the Federal Trade Commission (FTC):
🔗 https://www.consumer.ftc.gov/features/feature-0038-cryptocurrency-scams
Final Thoughts
DraftKings’ $10 million payout marks a significant moment in the legal landscape surrounding NFTs and digital assets.
While the company has not admitted wrongdoing, the settlement offers partial financial redress to affected users and sets a precedent for how courts may treat NFT-based products in the future.
As digital finance continues to evolve, this case serves as a strong reminder to investors: do your due diligence, understand the risks, and follow regulatory developments closely.
For more on class action procedures and consumer rights, check the official U.S. Courts Class Action Info Page:
🔗 https://www.uscourts.gov/services-forms/class-action
This article has been carefully fact-checked by our editorial team to ensure accuracy and eliminate any misleading information. We are committed to maintaining the highest standards of integrity in our content.
