DraftKings Inc., the leading sports betting company, has officially received final court approval for its $10 million settlement with NFT buyers, marking the resolution of a legal dispute surrounding allegations that its nonfungible tokens (NFTs) violated securities laws.
In a ruling issued Wednesday, U.S. District Judge Denise J. Casper of the District of Massachusetts granted final approval of the deal, stating it is “in all respects, fair, reasonable, and adequate to the settlement class.” The approval brings closure to a case filed by lead plaintiff Justin Dufoe, who alleged that DraftKings’ NFTs constituted unregistered securities and led to financial losses for purchasers.
Under the DraftKings $10M deal NFT buyers final approval settlement, approximately 26% of the midpoint of estimated damages—ranging between $18 million and $58 million—will be recovered by eligible class members.
The court also approved attorney fees totaling over $3.33 million, along with nearly $53,000 for litigation expenses. Dufoe was awarded a $50,000 service award in recognition of his role in the case.
Filed in early 2023, the lawsuit claimed DraftKings’ NFT drops gave purchasers a reasonable expectation of profits, based on the company’s continued control of the platform and marketplace. Plaintiffs contended that the inability to move NFTs off the DraftKings platform left them entirely reliant on the company’s management—meeting the criteria of the Howey Test, which determines whether a product qualifies as a security.
While DraftKings sought to dismiss the suit, arguing the NFTs did not meet the definition of securities, Judge Casper denied the motion in July 2024, allowing the case to proceed and ultimately leading to this settlement.
Attorneys representing the NFT buyers included firms Berman Tabacco, Kirby McInerney LLP, Hannafan & Hannafan Ltd., and G. Dowd Law LLC. DraftKings was represented by WilmerHale and Sullivan & Cromwell LLP.
