DraftKings (NASDAQ: DKNG) Abruptly Shuts Down Its Non-fungible Token Business

DraftKings (NASDAQ: DKNG) has abruptly shut down its non-fungible token business, effective immediately “due to recent legal developments”.

Amidst the recent legal scrutiny surrounding non-fungible tokens (NFTs), DraftKings (NASDAQ: DKNG) has announced the closure of its NFT business, effective immediately. This decision comes after a federal judge permitted a class-action lawsuit against DraftKings to proceed, with plaintiffs arguing that the company's NFTs were unregistered securities.

“After careful consideration, we have 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 stated in an email to its customers, as reported by Coindesk.

The closure of DraftKings' NFT business marks the end of an era for the company, which had initially entered the digital collectibles market in mid-2021. Inspired by the success of projects like NBA Top Shot, DraftKings aimed to merge sports culture with the world of NFTs.

“We saw our ‘golden’ customers embracing digital collectibles, and we wanted to be a part of this space that could become gigantic in the next couple of decades,” DraftKings co-founder Matt Kalish explained in a podcast with Ark Invest last year.

DraftKings' NFT business was centered around an in-house marketplace and began with a Tom Brady-themed collection that quickly sold out. Despite a decline in the broader market's enthusiasm for NFTs by 2022, DraftKings remained engaged in its web3 endeavors through Reignmakers, a fantasy sports game powered by NFTs.

“We were really looking to build the best utility-driven NFT product out there, and we saw some really great momentum in the first few months,” Kalish stated on the Ark podcast.

DraftKings expanded Reignmakers from football to include UFC and PGA, driven by strong internal sales figures for the fantasy sports game. However, this year saw the company facing multiple class-action lawsuits alleging that its NFT sales violated securities laws, a challenge faced by other sports-themed NFT companies as well. In June, NBA Top Shot settled a similar lawsuit with a $4 million payout.

The class action against DraftKings is expected to go to trial, according to court records. As part of the shutdown of its NFT business, DraftKings is offering buyouts to Reignmakers players. Collectors will still be able to access and transfer their collections despite the discontinuation of the platform.

Draftkings last traded at $36.94 on the NASDAQ.

The information provided in this article is derived from Coindesk and the company mentioned. The author does not hold any securities or affiliations with the subject of the story. This is not a piece of financial advice, and you should always conduct your own research and consult a professional before making any investment decisions. The author has no licenses.

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