Making Sense Of Pro Sports Leagues’ Search For Sports Betting Data Fees: Case Study No. 1

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Sports betting case study 1

In this series, we will explore some of the important case law that is relevant to the sports leagues’ argument that they should be compensated for “data,” “intellectual property,” or whatever other term du jour the sports league executives choose to use. Read the introduction to the series here.

The quest for data rights and fees when it comes to sports betting has been one that has evolved since it first emerged in Indiana in January of 2018. The early wave of requests for one percent integrity fees has died down, with the leagues seeking a smaller cut of all wagers in many states.

The question that many are asking is why should the leagues get paid? What is the foundation of their argument?

The short answer is that their argument’s foundation is built on sand in a typhoon zone. What follows is an overview of one of the cases that is the basis for the long answer.

The case: International News Service v. The Associated Press

Summarizing the case

The International News Service (INS) and the Associated Press (AP) were competitor news services. Just over a hundred years ago, across two days in May, the two companies’ representatives made arguments to the Supreme Court.

The dispute arose when the International News Service, owned by William Randolph Hearst, was banned from using Allied communication lines, including cables, from the front lines during World War I. Hearst’s INS had been banned because the allied leadership felt that INS stories often slanted towards the Axis powers, or were at least not sufficiently pro-Allies.

The New York Times reported that INS argued they had been banned because INS had reported on “the torpedoing of the British battleship Audacious and the naval battle off Jutland [a Danish island],” as well as describing “London as being in flames.” The ban left the AP with a large advantage, and near monopoly to report from the frontline battlefields of France to the United States.

While the INS had effectively been shut out from reporting from the frontlines of the War, that did not force Hearst’s service to look for other sources of information to transmit information. Instead, INS simply relied on AP’s news bulletin boards and early editions of newspapers that contained AP stories. INS would take the stories from the early editions of newspapers on the east coast and would then have their staff writers rewrite them and republish the stories in the regular editions of Hearst’s newspaper empire.

Justice Mahlon Pitney of the Supreme Court described the issue that the court was tasked with unraveling as:

“whether defendant [INS] may lawfully be restrained from appropriating news taken from bulletins issued by complainant or any of its members, or from newspapers published by them, for the purpose of selling it to defendant’s clients.”

Copyright or not?

The case arose not as a copyright claim (this may be an important distinction from sports league arguments that are claiming “an intellectual property right.”). In fact, the AP argued that “news is not within the operation of the copyright act.” Instead, the INS case was centered on the quasi-property right doctrine of misappropriation.

In describing the importance of news not qualifying for copyright protection, Justice Pitney stated:

“But the news element — the information respecting current events contained in the literary production — is not the creation of the writer, but is a report of matters that ordinarily are publici juris; it is the history of the day. It is not to be supposed that the framers of the Constitution, when they empowered Congress “to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries” (Const., Art I, § 8, par. 8), intended to confer upon one who might happen to be the first to report a historic event the exclusive right for any period to spread the knowledge of it.”

The Court framed the issue as one of unfair competition stating: “The question, whether one who has gathered general information or news at pains and expense for the purpose of subsequent publication through the press has such an interest in its publication as may be protected from interference.”

The Court ruled that the AP did possess a quasi-property right in the collection of news, having spent a great deal of time and money in gathering the information, INS was infringing on AP’s interest by representing the information as their own.

A key distinction that the court raised is that while INS was misappropriating the work of the AP, the public was not. It was because the two parties were competitors that the Court found the INS was misappropriating the news that AP had invested resources into gathering.

The dissents

Justice Oliver Wendell Holmes focused on the issue of representation and argued that the actions of INS could have been “corrected by stating the truth, and a suitable acknowledgment of the source is all that the plaintiff can require. I think that, within the limits recognized by the decision of the Court, the defendant should be enjoined from publishing news obtained from the Associated Press for hours after publication by the plaintiff unless it gives express credit to the Associated Press, the number of hours and the form of acknowledgment to be settled by the district court.”

Effectively recommending that the AP should be entitled to a lead in publishing the information that they incurred expense for a “number of hours.”

Justice Brandeis, by contrast, articulated that the case was a matter for Congress to address.

“If a legislature concluded to recognize property in published news to the extent of permitting recovery at law, it might, with a view to making the remedy more certain and adequate, provide a fixed measure of damages, as in the case of copyright infringement.”

Brandeis argued that there was a lack of actionable right in what the AP sought to restrain the INS from doing.

How does this apply to legalized sports betting?

The question that arises in the context of sports betting data is, how does INS v. AP apply?

Well the answer to that is not entirely certain, but we have learned from NBA v. Motorola that at least the Second Circuit Court of Appeals does not consider the NBA to be a business competitor to a company in the business of gathering and disseminating data.

While the sports leagues have certainly expanded their intellectual property holdings since Motorola, it would seem like a stretch to conclude that a sportsbook is relying on the NBA’s labor and investment to compile data necessary to run a book. While the NBA and other leagues certainly facilitate the sporting events that have associated scores, short of sportsbooks repurposing official league data from league-owned sources, the INS case appears to make for an awkward comparison.

The arguments advanced by the leagues is that they have an intellectual property interest in data rights and that sportsbooks should be required to use official data. This position seems awkward when job postings from NFL, NHL and NBA real-time data partner Sportradar US are examined. Sportradar US is presently advertising for a “Live Data Entry” position that involves watching “live sporting events and recording stats in real time.”

This, in itself, would not raise eyebrows except that the position lists the following sports, “football, baseball, basketball, hockey, soccer and more,” which job holders are assigned to monitor, “with a heavy focus on college football and basketball games.” The NCAA, nor Major League Baseball, appear as official partners on the Sportradar site, so it is possible that some of the leagues’ own partners may be engaging in the very activities they seek to exclude sportsbooks from doing.