Sports gambling giant DraftKings is shutting down its non-fungible token (NFT) business following recent legal challenges. The decision comes just a week after the company sold its streaming outlet VSiN back to Musburger Media, signaling a broader downsizing strategy.
The closure of DraftKings’ NFT marketplace, known as Reignmakers, was announced in an email to customers. “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,” an email statement reads.
This move follows a significant legal setback for DraftKings. A judge recently allowed a class action lawsuit to proceed, with plaintiffs alleging that DraftKings’ NFTs were unregistered securities. This lawsuit is one of many legal challenges faced by NFT platforms, as the market grapples with regulatory scrutiny.
DraftKings entered the NFT space during the token mania of 2021, even partnering with Tom Brady’s NFT company in 2022. Despite the market’s downturn in 2022, DraftKings continued to support its Reignmakers platform, a fantasy sports game where users could invest in NFTs and compete in daily fantasy sports contests.
However, the NFT market has faced increasing legal challenges. Earlier this year, NBA Top Shot settled a lawsuit for $4 million over similar accusations regarding unregistered securities. DraftKings now faces a similar lawsuit, which appears to be headed for trial after a judge denied a motion to dismiss the case.
As part of the shutdown, DraftKings is offering buyouts to Reignmakers players while ensuring that NFT collectors can still access their collections.