A fantasy sports case is important for the future of US sports betting
Legal Sports Report

Making Sense Of Pro Sports Leagues’ Search For Sports Betting Data Fees: Case Study No. 7

MLB paying minor leaguers

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: C.B.C. Distribution and Marketing, Inc. v. Major League Baseball Advanced Media

What happened in the case?

Unlike many of the cases examined in this series, in this case, CBC Distribution and Marketing initiated this lawsuit by seeking a declaratory judgment against Major League Baseball Advanced Media (MLBAM). CBC wanted a court “to establish its right to use, without a license, the names of and information about Major League Baseball players in connection with its fantasy baseball products.”

MLBAM filed a counter-claim against CBC, alleging that CBC’s fantasy baseball products were infringing on the rights of publicity of members of the MLB Players’ Association.

CBC sold fantasy sports products, including leagues, from its website and via email. The leagues that CBC managed saw that fans would pay a fee at the beginning of the season and then an additional fee for trades made during the season. Between 1995 and 2004, CBC had a license to use the “names, nicknames, likenesses, signatures, pictures, playing records, and/or biographical data of each player.” In 2005, the MLB Players’ Association, who previously licensed the information to CBC and others, entered into an almost exclusive licensing agreement with MLBAM, which launched its own fantasy baseball product.

MLBAM declined to offer CBC a license for its own fantasy games; instead, CBC was offered a license to promote MLBAM-run fantasy games on MLB.com.

Anticipating that MLBAM would initiate a lawsuit against them, CBC moved first and asked for a declaratory judgment that they were not infringing on the state-law rights of publicity of the players.

Rights of publicity

In Missouri (home to CBC), a claim based on the right of publicity involves three elements:

  1. The defendant used plaintiff’s name as a symbol of his identity
  2. Without consent
  3. And with the intent to obtain commercial advantage

With respect to the first element, the Eighth Circuit Court of Appeals stated:

“Here, we entertain no doubt that the players’ names that CBC used are understood by it and its fantasy baseball subscribers as referring to actual major league baseball players.”

The Eighth Circuit went on to state:

“Because we think that it is clear that CBC uses baseball players’ identities in its fantasy baseball products for purposes of profit, we believe that their identities are being used for commercial advantage and that the players therefore offered sufficient evidence to make out a cause of action for violation of their rights of publicity under Missouri law.”

There was no longer a question as to the second element, as CBC was operating without a license. The Eighth Circuit found a violation of the rights of publicity, but CBC raised a more important argument.

CBC argued that even if there is a right of publicity in fantasy sports information, it is trumped by the First Amendment.

The First Amendment

The Eighth Circuit stated:

“[T]he information used in CBC’s fantasy baseball games is all readily available in the public domain, and it would be strange law that a person would not have a first amendment right to use information that is available to everyone. It is true that CBC’s use of the information is meant to provide entertainment, but “[s]peech that entertains, like speech that informs, is protected by the First Amendment because `[t]he line between the informing and the entertaining is too elusive for the protection of that basic right.’”

MLBAM tried to advance the argument that player names and statistics were not a type of speech protected by the First Amendment, but the court responded:

“We also find no merit in the argument that CBC’s use of players’ names and information in its fantasy baseball games is not speech at all. We have held that “the pictures, graphic design, concept art, sounds, music, stories, and narrative present in video games” is speech entitled to first amendment protection.”

The Eighth Circuit cited another case that it found persuasive, that case found that “the “recitation and discussion of factual data concerning the athletic performance of [players on Major League Baseball’s website] command a substantial public interest, and, therefore, is a form of expression due substantial constitutional protection.”

While CBC walked away a winner from a divided Eighth Circuit, with a dissenting Judge Steven Colloton arguing that CBC had contracted away its rights to raise several of the arguments it did, just how the case will impact sports betting is something we will likely see play out in coming months and years.

How does this apply to legalized sports betting?

Baseball has long been a national obsession, as have baseball statistics. The emergence of fantasy baseball, in all its forms, has normalized a form of gambling. While there are discussions about the connection between fantasy sports and sports gambling, both rely on pieces of information generated from sporting events.

As more and more fantasy games emerge and companies flout industry norms, it appears the key differentiation between sports betting and daily fantasy sports is that DFS is not widely available in Nevada, whereas sports betting is.

CBC is an important case for sportsbooks and the sports betting industry because it established and / or reaffirmed that there is a constitutionally protected right in some of the information necessary to operate a sportsbook.

While the Eighth Circuit ruling is a substantial victory for the sports betting industry, there likely remain some limits on the First Amendment rights, in particular, as we have periodically seen throughout this series, the sports leagues possess data and technology that is proprietary.

Prior to that information entering the public domain, the leagues can likely exclude others from using it. CBC, and the Motorola-STATS case, are formidable case obstacles from two different federal circuit courts that support the broad use and dissemination of many statistics necessary for sportsbook operators with no requirement to compensate the sports leagues.

John Holden
- John Holden J.D. / Ph.D. is an academic. His research focuses on policy issues surrounding sports corruption.
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