Editor’s Note: On Feb. 22, the US Court of Appeals for the Seventh Circuit — a court one level below the Supreme Court — will hold a hearing in a lawsuit filed by three ex-college football players against DraftKings and FanDuel.
In a three-part series, Legal Sports Report probes the case and explains its potential implications for both daily fantasy sports and traditional sports betting.
This third and final installment asks what role, if any, the First Amendment could play in scenarios where certain types of sports bets could be restricted under new laws currently being considered in multiple states. Part one of the series is here and part two is here.
Someone should set an over-under on the number of times the phrases “First Amendment” or “free speech” are uttered during the upcoming hearing in the fantasy sports case involving DraftKings and FanDuel.
Throughout the lawsuit brought by three ex-college football players against the two largest DFS operators, both sides have differed wildly as to whether free speech protections under the US Constitution’s First Amendment apply when a fantasy company offers contests without the explicit pre-approval of the underlying athletes who perform on the field.
Both DraftKings and FanDuel have argued forcefully in favor of the First Amendment as a defense against the plaintiffs’ allegation that the underlying DFS contests featuring real-life names and playing statistics violate Indiana’s right of publicity law.
And in what appears to be a state-by-state march towards sports betting legalization, it remains an open issue whether the free speech arguments in the current fantasy case will have implications if certain states or individual sports leagues try to legislatively restrict the types of sports wagering that can be offered.
“Sports leagues must be able to opt-out of betting,” stated a joint NBA-MLB statement circulated during lobbying efforts earlier this month in West Virginia.
Put differently, could a licensed sportsbook point to the First Amendment as a shield when offering a prop bet on the number of points a professional basketball player will score during a game if the player himself — or the league he plays in — objects?
Free speech according to DraftKings and FanDuel
Both DFS companies made consistent First Amendment arguments in defending the current case, invoking CBC Distribution and Marketing vs. Major League Baseball Advanced Media.
“The court should adopt the CBC court’s holding that fantasy sports are protected speech,” wrote FanDuel’s lawyers in a 2016 brief. “[T]he games—and, in particular, the alleged use of plaintiffs’ names in them—are themselves a form of speech protected by the First Amendment.”
DraftKings’ arguments tracked along similar lines.
“[T]he law is clear that the First Amendment protects entertainment and gaming as a form of speech,” wrote lawyers for DraftKings in a 2016 court filing. “[T]he Constitutionally-protected interest in creating expressive works such as fantasy games outweighs the interests protected by the private right of publicity.
“Fantasy sports are recognized as protected speech under CBC.”
To rebut the DFS operators’ legal arguments, the plaintiffs in the case have, among other things, cited a US Supreme Court case that may foreclose the possibility altogether.
“[T]he activity underlying the relevant advertising—gambling—implicates no constitutionally protected right,” concluded justices in the 1993 United States vs. Edge Broadcasting case.
Moving forward, whether DraftKings and FanDuel’s views on free speech are shared by some or all of the sports leagues who own equity stakes in one of the DFS companies is unknown.
That time the NCAA sent a letter
A useful case study on league-initiated moves to restrict offerings in the sports gaming space occurred three years ago, when the NCAA sent a series of letters to executives at DraftKings and FanDuel.
“[W]e believe that your product should not be offered in the college space for a variety of reasons,” wrote NCAA vice president Mark Lewis on Oct. 20, 2015. “[We] sent each of your organizations a letter…specifically requesting that you cease and desist offering fantasy sports games on college sporting events because they were inconsistent with our values, by-laws, rules and interpretations regarding sports wagering, as well as possibly a violation of UIEGA [sic], PAPSA [sic], and various state laws.”
A FanDuel executive responded six days later.
“[T]he NCAA has no legal basis for requiring FanDuel to stop offering such contests,” wrote FanDuel’s Christian Genetski, who cited the CBC legal decision in his reply. “The issue has been litigated and resolved.”
FanDuel — and DraftKings — later opted to discontinue offering DFS contests involving college sports.
PASPA and the First Amendment
There were only fleeting mentions of free speech concerns — in the context of media coverage of point spreads and related gambling information — when Congress held hearings on the Professional and Amateur Sports Protection Act in 1991.
But post-hearing responses from the two sports leagues who are currently spearheading state-level sports gambling lobbying efforts provide a narrow (and dated) glimpse into how the NBA and Major League Baseball viewed the First Amendment’s reach on an ancillary issue connected to sports wagering.
“The NBA opposes wagering on NBA games,” stated former NBA Commissioner David Stern in response to questions posed by Sen. Chuck Grassley (R-Iowa) after the June 23, 1991, hearing on Capitol Hill. “We would actively support any legislation that would prohibit the media from carrying point spreads on our games, if such legislation were permissible under the First Amendment.”
Former MLB Commissioner Fay Vincent answered the questions similarly.
“We do not approve of newspapers carrying odds or point spreads on professional sports,” responded Vincent. “We do not, however, have the ability or the inclination to affect the editorial content of those newspapers.
“The First Amendment applies fully to the coverage of sporting events.”
While in line with DraftKings and FanDuel, the First Amendment-related responses by Stern and Vincent do not squarely fit when considering free speech protections vis-à-vis restrictions on otherwise permissible sports wagering.
An unsettled question
There is no legal case directly on point as to whether the First Amendment arguments of the type made by DraftKings and FanDuel would extend beyond the fantasy context and cross into the rapidly-changing status of traditional sports betting.
The closest any legal decision got occurred 11 years ago.
The 2007 CBC case provided some guidance on whether league-directed restrictions on the scope of sports gaming could be enforced, but that case pertained only to player names and historical data like the type of numbers featured in newspapers box scores or on the back of trading cards.
Indeed, a sports betting legal case involving real-time data — think split-second score changes or next-gen data gleaned from microchips placed in football helmets — remains a hypothetical.
But if the free speech points made by both DFS companies carry the day in the current case, they could extend — in perhaps unintentional ways — to inevitable debates about whether any near-future legalized sports betting should be subject to the pre-approval of athletes, player unions, sports leagues or regulators.
