The $10 million class action lawsuit DraftKings agreed to settle regarding its NFTs and a fantasy-based gaming product is being objected by a Massachusetts GOP committeeman.
According to court documents filed in the U.S. District Court for the District of Massachusetts, state Republican National Committeeman Brad Wyatt submitted a formal objection to the proposed plan of allocation for a DraftKings NFT suit initially filed in 2023.
He is not doing so as a political stance, but rather because he is one of the members of the class and believes the agreement on how individual compensation is calculated is unfair.
The settlement comes as a result of plaintiff Justin Dufoe’s lawsuit against DraftKings and key leadership alleging that the Boston-based sports betting and fantasy company of offering customers NFTs and tokens through its marketplace that amounted to unregistered securities. The lawsuit centered around DraftKings’ NFTs and Reignmakers, a fantasy-based gaming product that leveraged the operator’s NFTs to compete against other players.
DraftKings debuted its NFT marketplace in 2021 with Reignmakers launching a year later.
DraftKings closed NFT Marketplace after ruling
After the court denied the operator’s motion to dismiss, DraftKings shuttered operations of its NFT marketplace and Reignmakers, allowing customers who held Reignmakers digital game pieces to return them to DraftKings for cash compensation.
Judge Denise J. Casper determined Dufoe’s claims had merit using the Howey Test, which looks at investments of money and their expectations of profits from their promotion. Not long after the ruling, DraftKings agreed to settle the suit in February.
GOP member opposes settlement’s allocation formula
Wyatt, a class member of the lawsuit holding one of the largest collection of DraftKings NFTs, formally objected to the settlement’s terms. The committeeman, elected to a four-year term in July 2024, takes issue with the settlement’s allocation formula to recover losses with prize receipts failing to fairly offset harm by class members.
The formula agreed upon in the settlement includes a provision where the amount people won in Reignmakers fantasy contests, which utilized DraftKings NFTs, as he believes they are not material to the lawsuit, which is primarily about whether the DraftKings NFTs run afoul of the law.
“Including these prize receipts does not offset the economic harm suffered by class members as the proposed settlement regarding the purchase and sale of NFT securities on DraftKings Marketplace is unrelated to potential realized or unrealized prize receipts from playing in DraftKings fantasy sport skill-based contests,” Wyatt wrote in his objection.
Wyatt wants payout to focus on value of NFTs, not fantasy results
In an email to SBC Americas confirming he filed the objection, Wyatt offered some insight into what he hopes to achieve.
“I’m not looking for a larger settlement from Draftkings. Rather, I’m hoping that that the plan of allocation be more evenly distributed among all the players based on Marketplace purchases/sales, and not take into consideration the skill based utilization of the NFT’s in Reignmaker fantasy contest prizes.”
In his objection, Wyatt proposed a revised formula that offers a “more equitable distribution of damages among class members” while adhering to securities law principles.
Dufoe and his counsel considered their settlement with DraftKings to be fair and reasonable before Wyatt’s formal objection. Earlier this year, Dufoe’s council estimated that there are more than 175,000 potential class members in the class action based on discovery.
It now rests with the court to determine whether or not to order the parties revise settlement details in the wake of Wyatt’s objection.
As the GOP Committeeman for the state, Wyatt serves as a major liason between the state and the Republican National Party. He was elected to the role in 2024 and is partway through a four-year term.
SBC Americas reached out to DraftKings for comment on the matter and will update this story if the operator responds.
