- DraftKings has announced the immediate termination of its Polygon-powered NFT experience, Reignmakers
- The decision has been communicated to users through an email reviewed by Decrypt
- Reignmakers has faced legal challenges and market downturns, leading to its sudden end
Fantasy sports giant DraftKings has announced the sudden termination of its Polygon-powered NFT experience, Reignmakers. This decision, effective immediately, was communicated to users on Tuesday through an email reviewed by Decrypt and followers several legal challenges over the effort. Launched in 2021, Reignmakers never really took off and suffered with the downturn in the NFT market in 2022, although a recent lawsuit against the enterprise finally caused it to pull the plug.
Securities Allegations Spook DraftKings
DraftKings stated that “recent legal developments” had caused it to kick Reignmakers into touch, with its associated NFT marketplace also being discontinued. Users now have the option to “relinquish those game pieces” for a cash payment or transfer them to a self-custodial wallet, where they will sit as nothing more than digital memorabilia.
Reignmakers, launched on Polygon in 2021, allowed users to engage in fantasy sports contests across football, golf, and mixed martial arts. The value of these NFTs fluctuated based on athletes’ performances and could be traded on a specialized marketplace.
However, a recent ruling in a Massachusetts federal court has led to the termination of Reignmakers and its NFT marketplace: a class action lawsuit filed in March alleged that Reignmakers NFTs were offered as unregistered securities under the Howey Test, a legal framework for assets.
DraftKings sought to dismiss the lawsuit, but Judge Denise Casper allowed the case to proceed to trial, finding that the plaintiffs had “plausibly alleged that DraftKings’ NFTs satisfy three prongs of the Howey test,” indicating an investment of money in a common enterprise with profits expected from the efforts of others.
In order to fend off potential action from other entities, notably the Securities and Exchange Commission, which could still come, DraftKings has chosen to chutter the project with immediate effect.
Users Can Keep Items or Cash In
DraftKings wrote in the email, “We extend our heartfelt thanks to all of you who made Reignmakers special,” emphasizing that the decision was “not made lightly.” The announcement came just a day after DraftKings had promoted Reignmakers competitions on social media.
In the statement, DraftKings confirmed that NFTs and “Reignmakers digital game pieces” would remain accessible and transferable during the discontinuation process. The company assured its community that it would continue to provide updates as it follows “the right course of action.”
This development follows a trend in the NFT industry, as seen in June when Dapper Labs, the company behind NBA Top Shot, settled a $4 million lawsuit with holders of its NFTs, who claimed the assets were unregistered securities.
DraftKings highlighted its commitment to innovation, stating that Reignmakers and the NFT marketplace “saw immediate success upon launch.” According to CryptoSlam data, DraftKings NFTs achieved $280 million in total sales across various sports, with a peak of $21 million in sales last September as the NFL season began.
While some DraftKings NFTs fetched thousands of dollars on the secondary market, including a top sale of $70,000 three years ago, the majority were sold for modest amounts.
