Did A Supreme Court Just Indirectly Deal Another Blow To The Pro Sports Leagues?

Juan Carlos Blanco October 31, 2018 916 Reads
Supreme Court Indiana

Not much has gone the way of the plaintiffs in Murphy vs. NCAA with respect to sports betting since, oh, about May 14.

On that day, the Supreme Court cleared the path for legalized single-game sports betting outside of Nevada with a decision to strike down the Professional and Amateur Sports Protection Act (PASPA).

Over the subsequent five-plus months, five states – New Jersey, West Virginia, Mississippi, Delaware, and New Mexico – have either passed sports betting legislation or leveraged existing law to begin offering single-game sports betting. Pennsylvania and Rhode Island are on deck.

None of these jurisdictions have incorporated the leagues’ requests for integrity or data usage fees into their laws. All that had active sportsbooks prior to October (New Mexico’s one sportsbook went live earlier in the month) have already begun reaping the benefits of sports betting in the form of tax revenue, to varying degree.

DFS operators’ right to royalty-free game data

Then, on Oct. 24, the Indiana Supreme Court likely set some critical precedent with an opinion in Daniels vs. FanDuel — a suit brought by three former college football players against both FanDuel and DraftKings. In considering the plaintiffs’ position, the Seventh Circuit Court of Appeals requested guidance from the state’s Supreme Court on the question of whether the DFS operators’ use of the players’ likeness and statistics for paid-entry contests violated the state’s “right to publicity” law. The higher court’s unanimous opinion read, in part:

In short, we answer this question narrowly and find online fantasy sports operators that condition entry to contests on payment and distribute cash prizes do not violate the Indiana right of publicity statute when those organizations use the names, pictures, and statistics of players without their consent because the use falls within the meaning of “material that has newsworthy value,” an exception under the statute.

Both Legal Sports Report’s Eric Ramsey and PlayUSA’s Bart Shirley provide thorough background on the case. But at this point, let’s hone in on this latest outcome. Does the Supreme Court’s opinion have potential ramifications beyond the current litigation, which incidentally, is yet to be officially adjudicated?

Important legal precedent set?

Apologies in advance for the cringe-worthy pun, but it’s a pretty sure bet that it will.

State lawmakers and sportsbook operators alike have railed against the pro sports league’s requests for both integrity and official data usage fees over the past several months. The validity of an argument for the latter is what appears to be potentially impacted by this opinion.

A pivotal component of the plaintiff’s argument in the case involved the use of their official game statistics within the DFS operator’s college football product without their consent, and by extension, remuneration.

With an assertion that those same figures are publicly available in all manner of print and online publications subsequent to a game’s conclusion – and therefore do not subject any particular party to a compensatory obligation – the Court seems to be largely cutting the legs off a significant portion of the pro sports leagues’ “official data” position (which also includes the separate argument that using official data is the only way to ensure integrity with respect to the wagering taking place on their games).

Granted, Daniels v. FanDuel is a case that solely centers on the use of these players’ statistics in college football daily fantasy sports contests. Yet there happens to be synergy with sports betting in multiple ways:

  • The first is the most obvious — DFS and sports betting are both real-money-based gaming activities that rely on statistics (in slightly different ways) to determine winners and payouts.
  • Additionally, DraftKings and FanDuel now operate sportsbooks that naturally didn’t exist when the case was initiated, or even when it was first dismissed in September 2017 and subsequently appealed by the players.
  • And, the argument of the plaintiffs in Daniels v FanDuel does, at its essence, mirror the crux of the pro sports leagues’ position on their proposed official data usage fees — that an operation profiting in part from the use of data generated during their sanctioned contests must give up a cut of the proceeds.

Leverage likely gained against pro sports leagues’ data demands

The legislators and industry operators that will continue to balk at the leagues’ demands will doubtlessly deploy Wednesday’s opinion to their full advantage. And, as a Supreme Court opinion – albeit a state-level one – it has the potential to carry enough weight so as to serve as a formidable obstacle.

Truth be told, even more ammunition resides a bit further back in legal annals. In reaching its decision, the Indiana Supreme Court partly relied on the findings in the significant CBC Distribution and Marketing, Inc. v. Major League Baseball Advanced Media, Inc. case in 2007.

In that litigation, the U.S. Court of Appeals for the Eighth Circuit upheld a lower court’s decision that CBC (a season-long fantasy contests provider) had a First Amendment right to utilize players’ likenesses and statistics in their product, given that the information used was already “readily available in a public domain”.

Technically, the First Amendment argument as specifically put forth by the defendants in Daniels v. FanDuel was not directly validated in the decision just rendered. However, the fact that the players’ statistics are widely available was. Just as important, the fact that this data was used for commercial purposes was confirmed as irrelevant with respect to whether there was a violation of the statute in question.

Indeed, the use of official statistics in for-profit endeavors such as newspapers and magazines naturally predates the internet and DFS contests by decades. The widespread digital presence of that same information since the early 1990s without express financial obligation has set further precedent.

The potential wide-reaching ramifications of the case are already envisioned by at least one authority on sports-related legal matters.

“While the ruling is a big win for DraftKings and FanDuel, the Indiana Supreme Court decision will likely have broader implications,” said Ryan Rodenberg, an associate professor at Florida State University. “A lawsuit about whether the First Amendment pertains to the dissemination of betting data is inevitable and this case will likely be looked to as persuasive precedent down the road.”

Clearly, this latest court decision – the first of its kind in a post-PASPA landscape – could be the most influential yet.

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