After three years of ups and downs, DraftKings is officially out of the NFT business. The sports betting operator shuttered it Reignmakers and its NFT Marketplace this week after a judge in a Massachusetts District Court judge allowed a lawsuit alleging that the compamy’s NFT Marketplace was peddling unregistered securities to move forward.
Plaintiff Justin Dufoe first filed the suit against the NFT Marketplace last March, but had been hung up awaiting a judge’s decision to dismiss the case entirely. Unfortunately, for DraftKings, Judge Denise J Casper ruled that the case had merit and could proceed.
Judge Dufoe used a three-point test in deciding whether or not the NFT Marketplace was an investment vehicle. That test asked whether or not there was a cash investment involved; did it involve a common enterprise; and did that effort rely on the efforts of a third party. In her ruling, she explained that all three factors were present in the NFT Marketplace.
That motion prompted DraftKings to call a quit to their entire NFT effort, which most revolved around a DFS-style game involving NFT tokens.
DraftKings announced the shutdown in a letter, “To our Reignmakers and Marketplace community” saying, After careful consideration, DraftKings has decided to discontinue Reignmakers and our NFT Marketplace, effective immediately, due to recent legal developments. This decision was not made lightly, and we believe it is the right course of action.”
DraftKings’ NFT investors will not be left holding a worthless investment (unlike most NFT investors). The company is offering a refund on its NFTs based on their full value.