Last week, US giant DraftKings closed down its NFT Marketplace amid an ongoing class action suit. Customers still holding DraftKings’ Reignmaker digital game pieces were informed that they would be able to return them to DraftKings for cash compensation.
On the latest iGaming Daily, supported by Optimove, Jessica Welman, Editor of SBC Americas, was joined by SBC’s Media Manager, Charlie Horner, to examine why the operator is giving up on NFTs.
On the news, Jess said: “This was not something that took off and was ever a huge thing. NFTs had their moment and very quickly stopped having their moment. I don’t think this was a financial boom for them. They did not really speak about it on earnings calls and it was not something that I think ever fully succeeded,”
She added that the biggest reason for the marketplace shutdown is due to the ongoing legal dispute in the federal courts in Massachusetts.
Plaintiff Justin Dufoe filed a lawsuit against DraftKings, as well as its CEO Jason Robins, North America President Matt Kalish and Chief Transformation Officer Jason Park, in March 2023 and in July a Massachusetts District Court judge denied DraftKings’s motion to dismiss the suit.
In the complaint, Dufoe alleges that the NFT Marketplace and its tokens amounted to unregistered securities.
“I’m not surprised that the judges ruled in this way because there has been this repackaging of NFTs and cryptocurrency more widely as an investment vehicle. For a publicly listed sportsbook to be dabbling in this world, albeit wrapped up in fantasy sports, I’m not surprised they’ve decided to close it down under these circumstances,” explained Charlie.
After a short break, the attention of the podcast then turned to the recent news that the six-time Super Bowl-winning head coach Bill Belichick has teamed up with Underdog Fantasy for a new YouTube show breaking down the action during the upcoming NFL season.
Jess said that she was “shocked” by the news that Underdog was able to bring on board such a big name and added that this signing may help to improve the reputation of the company.
Fantasy sports providers like Underdog and PrizePicks have been embroiled in legal battles regarding the validity of the products they offer and whether they meet state regulations.
She said: “It’s not going to change the mind of regulators, but as the negative press has come out around them I think to the average person you feel a little bit better about taking part in something when you can see professional teams and professional people being associated with it.”
There has long been a partnership between the sports and gaming industry however several deals have not been successful in recent times.
Last month, DraftKings sold VSiN back to its founders after paying approximately $70m for it in 2021, while Dave Portnoy bought back Barstool Sports for $1 from Penn Entertainment after Penn had paid over $500m for the brand.
On why these deals are failing, Charlie said: “I think what a lot of people are finding out is that it probably isn’t as lucrative as they thought a few years ago. I think a lot of it probably has come down to that they compete with the traditional broadcasters who have the right to show the actual games.
“I don’t think DraftKings can incorporate NFL or NBA games into its coverage, they’re just relying on the outside insights of pundits and celebrity names. There’s an over-saturation of content within the sports media market and there’s only so many eyeballs and ears to consume this content, so undoubtedly there’s going to be winners and losers.”
Jess added that the content produced by VSiN was being viewed by those already converted to sports betting and “there wasn’t necessarily the built-in ability to convert new people to DraftKings that was worth $70m”.
