When trying to monetize real-time data for use in sports betting, the NBA and Major League Baseball may look to golf for guidance.
Golf?
Fourteen years ago, the PGA Tour won a federal lawsuit in a case named Morris Communications v. PGA Tour that could play a role in the sports betting legalization movement, especially after the US Supreme Court issues its decision in the pending New Jersey sports betting case.
The 2004 legal win also provides a noteworthy backdrop to the PGA Tour’s recent decision to publicly announce its support for regulated sports betting.
The court case may even put the PGA Tour in a potentially stronger position than other sports leagues — particularly the NBA and Major League Baseball, both of whom have lost high-profile lawsuits pertaining to data rights — when it comes to increasingly-popular live betting options fueled by real-time developments from sporting events as they occur.
Background on the 2004 case
The PGA Tour was sued by Morris Communications, a media company in the newspaper business.
Morris claimed that the PGA Tour — the governing body for the highest level of men’s professional golf in the U.S.—violated federal antitrust laws through the tour’s compilation and sale of “real-time golf scores on the Internet.” Morris alleged that the PGA Tour was monopolizing the market for such scores through its Real-Time Scoring System (“RTSS”).
The PGA Tour defended the case by positing that it had a “valid business justification” for including certain restrictions with the RTSS.
The case eventually made its way to the US Court of Appeals for the Eleventh Circuit, a federal appellate court one level below the Supreme Court.
“[T]he only real issue before us is whether PGA’s restrictions and prohibitions regarding Morris’s ability to sell compiled real-time golf scores to third parties violates [antitrust laws],” wrote Judge Joel F. Dubina.
Court rules in PGA Tour’s favor
Judge Dubina penned a unanimous decision on March 31, 2004, in favor of the PGA Tour.
“In this case, PGA met its business justification burden by showing that it seeks to prevent Morris from ‘free-riding’ on PGA’s RTSS technology,” wrote Judge Dubina for a unanimous three-judge panel.
Judge Dubina explained his reasoning:
The compiled real-time golf scores acquired through RTSS are not a product that Morris has a right to sell because they are a derivative product of RTSS, which PGA owns exclusively. We agree with the district court that PGA ‘has a right to sell or license its product, championship golf, and its derivative product, [compiled] golf scores, on the Internet in the same way the [PGA] currently sells its rights to television broadcasting stations.’ If Morris wishes to sell PGA’s product, it must first purchase it from PGA.
Judge Dubina concluded “that a company — even a monopolist company — that extends time and money to create a valuable product does not violate antitrust laws when it declines to provide that product to its competitors for free.”
Rejected by the Supreme Court
Morris filed a last-ditch appeal to the Supreme Court on August 26, 2004.
In its petition for review, Morris hired Donald B. Verrilli — who would later serve as US Solicitor General and argue against New Jersey in the first iteration of the sports betting case now pending at the Supreme Court — to handle its appeal.
Verrilli made two arguments. First, he reiterated the same antitrust argument as before.
Second, he added an intellectual property-related claim.
“There is no copyright in ‘raw facts’ because Congress made a deliberate policy choice that facts must be in the public domain and free for all to use—even if a party has invested labor to compile those facts,” wrote Verrilli. “Thus, there should be no state law right to prevent ‘free riding’ on the compilation of raw facts (or other public domain information) because the copyright laws preempt any such purported right.”
The PGA Tour waived its right to respond to Morris’s petition to the Supreme Court.
The Supreme Court denied Morris’s request for review on October 4, 2004, ending the case.
Gauging the impact of the case now
Earlier this week, the PGA Tour publicly announced that it “supports the regulation of sports betting” and that the tour is “aligned with the NBA and MLB in this area.”
Winning the 2004 lawsuit puts the PGA Tour in a unique position moving forward.
Unlike the NBA and Major League Baseball — sports leagues that have lost court cases about ownership and use of sports data — the PGA Tour is armed with a favorable legal decision if the tour starts actively lobbying for desirable state laws or attempting to commodify data for sports betting purposes.
Indeed, the PGA Tour issued a request for proposal (RFP) two years ago in connection with sports betting data. RFPs can be used to facilitate a bidding-like process for certain services. The PGA Tour’s RFP was first reported by Bloomberg.
There has been no public announcement about the result of the golf tour’s RFP.
But other sports leagues — particularly those who are pushing for state-level sports betting bills mandating the use of real-time data from a single pre-approved provider — will likely look to the PGA Tour’s win in the earlier court case for a blueprint of what they could do.
