DraftKings Accuses Polygon of Granting Special Favoritism

In November 2023, CoinDesk reported on a controversy involving DraftKings and the cryptocurrency Polygon. In 2021, DraftKings had announced a partnership with Polygon to support non-fungible tokens (NFTs) on its platform. Polygon, based on the Ethereum blockchain, was ranked 21st in market value at the time. However, it has since risen to the 14th position.

The controversy arose when it was revealed that Polygon had paid DraftKings “millions of valuable MATIC tokens” to run a Polygon validator network. This arrangement had not been disclosed to the public, and the validator network is currently non-operational. CoinDesk reported that Polygon had suffered potential losses on the deal, and neither company had commented on the matter.

On-chain data confirmed that DraftKings had received millions of dollars in crypto from Polygon, and then earned millions more through the staking relationship. This preferential treatment of DraftKings was not extended to other network validators.

The controversy raised questions about the nature of the partnership between DraftKings and Polygon. An unidentified Polygon executive stated that DraftKings was not considered an “equal community member” and had received unusually large compensation for running the validator network. This contradicted a statement by Sandeep Nailwal, co-founder of Polygon, which claimed that DraftKings would be an “equal community member.”

Furthermore, the tokens sent to DraftKings were not staked, reducing the rewards accrued by other delegators on the network. Despite being removed from the validator program, DraftKings and Polygon maintained an NFT relationship. DraftKings expressed its intention to be reinstated as a Polygon validator in the future.

The controversy with Polygon has raised concerns about the nature of partnerships between gaming companies and cryptocurrencies, particularly in the context of NFTs and validator networks. It remains to be seen how this controversy will impact the relationship between DraftKings and Polygon moving forward.