Draftkings has shorted some of their most loyal players millions with blatant exclusions to Reignmakers' "conclusion payments".
Draftkings appears to have completely disregarded all non-cash prizing when calculating compensation. This is an egregious omission given the sudden and forced nature of the shutdown of the Draftkings Marketplace and the Reignmakers game play.
“This was Draftkings’ decision, and their decision alone. There was no court order or legal ruling that forced these closures as far as we know.” complained one verified account holder.
Another popular player was quoted as saying “We are 100% victims.”
While a third stated he believed “Someone needs to be held accountable, and victims deserve swift and fair compensation for the funds that they were conned out of by a massive publicly traded entity.”
It quickly becomes clear when speaking with players that the vast majority feel they were both taken advantage of, as well as shortchanged on their compensation, given Draftkings handling of the product closure.
Keep in mind, Draftkings was still selling packs, loading crafts, allowing secondary market purchases, and telling customers contests would be posted shortly the morning of the shutdown. Players were buying collectibles and planning their lineups for the week’s UFC and PGA contests until the very end.
Draftkings failed to offer any compensation for non-cash prizing
The largest issue, and the reason we are asking Draftkings to immediately add additional compensation for account holders, is that Draftkings failed to offer any compensation for non-cash prizing.
So, items like experience/trip contest prizing, prize pack contest (for player collectibles with utility in the upcoming seasons of Reignmakers), as well as guaranteed crafts and other compensation were completely ignored.
This is a very significant part of the valuation for most holders, especially those that were early investors or those who believed in the long-term vision of the Reignmakers team, as the biggest hit was taken by collectors who owned a large number of collectibles eligible for “prior years” contests.
As many of you are aware, a large portion of the prizing for these prior years contests consisted of prize pack cards which were set to be 20% of the entire mint count for the upcoming NFL season.
Additionally, these guaranteed card payouts had a clearly established cash value as Draftkings had themselves been attaching specific FMV numbers to each and every card a player won during a calendar year and reporting those numbers on a player’s 1099.
Therefore, we believe Draftkings clearly owes players additional compensation immediately.
What Exactly Does Draftkings Owe?
We’ve worked with some players to break down the estimated amount missing from compensation payments.
We believe a conservative estimate is $5.3 million dollars. With approximately $1.8 million due to UFC collectible holders, approximately $1.1 million for PGA collectible holders, and approximately $2.4 million for NFL collectible holders. With just shy of 50% of that money being allocated to PY card holders for the in-season sports. Obviously 100% of the NFL payout would go to PY card holders.
And, even with those substantial estimates, we are still completely ignoring the implied floor valuations from promised crafts for the upcoming 2024-2025 seasons, as well as assumed utility for the remaining 2-3 seasons beyond 2025 when considering the game's "five-year plan".
So you could certainly make an argument that the numbers presented above are actually far too conservative.
It is our belief that this money is firmly owed to users, based on Draftkings’ repeated insistence that the game was on a long term, minimum five year plan.
We also believe that based on the precedent set forth with the compensation to players from Pennsylvania and Connecticut in late 2022, as well as the potential utility lost for long term holders for contests beyond the 2025 season, that Draftkings should offer a make good sum to each player as a show of good faith.
After discussion with a number of collectible holders, our suggestion is that Draftkings should offer each player the greater of:
- 20% of their net marketplace spend in 2024
or - 10% of their net marketplace spend since the inception of Reignmakers in the summer of 2022
Will they make it right?
** Breakdown of total remaining UFC prizing distributions assumes the same number of events will be scheduled in Nov-Dec 2024 as were in 2023. If this is not the case, the expected numbers could be reduced, but even in that instance the reduction would be nominal. In no way did Draftkings compensate users fully for non-cash prizing.