Making Sense Of Pro Sports Leagues’ Search For Sports Betting Data Fees: Case Study No. 4

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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.

The quest for data rights and fees 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 .25 percent in New York.

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: Zacchini v. Scripps-Howard Broadcasting Company

About the case

The Zacchini case centers on arguments raised by Hugo Zacchini, who in the 1960s and 70s was famous for his “human cannonball” performance. The performance, which dazzled audiences in the era of Evil Knievel attempting to jump Snake River Canyon, saw Zacchini fired out of a cannon into an awaiting net 200-feet away.

In August and September of 1972, the Human Cannonball was performing in Burton, Ohio, at the Geauga County Fair. His performance was included with the price of admission for fair attendees.

On August 30, 1972, a freelance journalist from the respondent, Scripps-Howard Broadcasting Company, arrived at the fair with handheld video camera in tow. Zacchini asked the reporter not to film his performance. The journalist agreed, but returned the following day with instructions from the local news producer to film the performance. The journalist’s 15-second clip aired on the eleven o’clock news together with what the Supreme Court termed “favorable commentary.”

The lawsuit

Zacchini sued Scripps-Howard alleging that the broadcaster had “showed and commercialized the film of his act without his consent.”

According to Zacchini (and his lawyers), the use of his image and broadcasting of his act infringed on his “professional property,” and he was therefore entitled to compensation. The trial court quickly declared that Zacchini did not have a claim and granted summary judgment for Scripps-Howard. The Court of Appeals of Ohio overturned the grant of summary judgment and found that there was a valid cause of action for appropriation of Zacchini’s “right of publicity.”

The Ohio Supreme Court ruled in favor of Scripps-Howard stating:

“A TV station has a privilege to report in its newscasts matters of legitimate public interest which would otherwise be protected by an individual’s right of publicity, unless the actual intent of the TV station was to appropriate the benefit of the publicity for some non-privileged private use, or unless the actual intent was to injure the individual.”

The Supreme Court of the United States

The key question that the United States Supreme Court sought to resolve in Zacchini was whether the First Amendment (through the Fourteenth Amendment) trumped Zacchini’s right of publicity claims made under a state law doctrine. The US Supreme Court sought only to address the issues regarding the Federal Constitution, not to weigh in on state laws regarding rights of publicity.

In explaining the Court’s view on the First Amendment and news reporting, Justice White cited the famous case of New York Times v. Sullivan:

“’the press has a privilege to report matters of legitimate public interest even though such reports might intrude on matters otherwise private,’ and concluded, therefore, that the press is also privileged when an individual seeks to publicly exploit his talents while keeping the benefits private.’”

White took issue with the Ohio Supreme Court’s analogy between the Zacchini fact pattern and the case of Time, Inc. v. Hill, noting that the media exception allowing for news reporting does not extend to the right to rebroadcast entire performances, protection for reporting of newsworthy events is not unlimited, and some state rights of publicity can be violated by news agencies.

The Supreme Court majority found that there are limits to First Amendment protections for news reporting when the First Amendment is implicated. Justice White stated:

“There is no doubt that entertainment, as well as news, enjoys First Amendment protection. It is also true that entertainment itself can be important news. But it is important to note that neither the public nor respondent [Scripps-Howard] will be deprived of the benefit of petitioner’s [Zacchini] performance as long as his commercial stake in his act is appropriately recognized.”

The win for Zacchini is significant because it established that the First Amendment protections associated with broadcast news are not unlimited.

The sissents

While Zacchini prevailed in the Supreme Court, four justices dissented from the majority’s opinion. The dissenters took issue with the majority’s focus on the broadcast of “a performer’s entire act.”

Justice Powell, who led Justice Brennan and Justice Marshall (Justice Stevens dissented on a separate procedural ground) in dissent, argued that this “entire act” formula was not sufficiently clear to determine when something was exempt news versus compensable infringement on the performer’s rights of publicity.

Justice Powell wrote:

“Although the Court would draw no distinction, I do not view respondent’s action as comparable to unauthorized commercial broadcasts of sporting events, theatrical performances, and the like where the broadcaster keeps the profits. There is no suggestion here that respondent made any such use of the film.

Instead, it simply reported on what petitioner concedes to be a newsworthy event, in a way hardly surprising for a television station— by means of film coverage. The report was part of an ordinary daily news program, consuming a total of 15 seconds. It is a routine example of the press’ fulfilling the informing function so vital to our system. [internal citations omitted].”

The 5-4 split in Zacchini was an important step forward in understanding the scope of the First Amendment in an era of broadcast news.

Now, more than four decades removed from the 1977 decision, we have even more First Amendment jurisprudence to factor into analysis, but Justice White’s majority opinion remains important for our understanding of what rights sports leagues and players’ associations may have in the new world of state-regulated sports betting.

How does this apply to legalized sports betting?

The key question is what does the Zacchini decision add to our understanding of data rights in the legal gambling era?

The most important take away is that the First Amendment right to publish information that is news or newsworthy is not a total shield against compensating those being deprived of their rights or publicity.

This distinction is important, but so is the Zacchini majority’s focus on the rebroadcast of the entirety of the performance. Certainly, broadcasts of sporting events are subject to copyright protections and they cannot be reproduced without the express written consent of the various leagues. But this is a separate issue from the use of numbers generated by games that sportsbooks are interested in (there may be separate issues associated with broadcasting various events, but many of these are addressed through commercial licenses).

It would be difficult to argue with a straight face that the use of performance statistics or scores is somehow compensable with Zacchini as precedent. Certainly, Zacchini is a landmark First Amendment decision, and it may play a role in future litigation between players’ associations and individual athletes seeking to acquire some of any fees from legalized sports betting that leagues or organizations are able to wrangle.

However, its impact on many of the core sources of data used by sportsbooks to generate lines and some props is likely limited. Score, player performance statistics and standings are not factual, they are not reproductions of entire events, and thus the application of Zacchini as an argument supporting sports league arguments for compensation is likely tenuous at best.