DraftKings is being sued over the alleged infringements of two patents around the mechanics of sports betting.
Winview, a subsidiary of Toronto-based gaming company Engine Media, filed a copyright lawsuit Wednesday evening.
It was filed with the District Court in New Jersey.
What is DraftKings being sued for?
- Equalizing latency
The latter point refers to technology that ensures live betting customers see the same odds at the same time.
As the lawsuit puts it:
“An individual in New Jersey using a satellite dish network may experience a three second delay compared to an individual in California using a cable network.
“Recognizing that these latencies need to be accommodated in order to maintain user enjoyment and fairness for all participants, the inventors described and claimed technical solutions to these problems.”
DraftKings is now using similar solutions, the suit claims. DraftKings declined to comment.
Uphill battle for Winview?
Winview did not say why it is targeting DraftKings specifically, though it does highlight the company’s micro-markets like: “How will the next at-bat end?”
The company is seeking the recovery of damages and “other appropriate relief.”
Industry consultant Joe Brennan noted Winview faced an uphill battle because its patent applies to the feed of the event, not the event itself.
Feed or event?
As a result, DraftKings could argue its markets are based on the event itself and not covered by the patent.
“That’s the fundamental truth,” Brennan told LSR. “Due to the latency of the TV broadcast, if a betting operator was basing their markets on what they see on TV, they would get past-posted.”
Past-posting occurs when bettors have live data before the sportsbook operator and bet accordingly.
Market reactions to the suit
$DKNG was relatively unmoved, ticking down 0.8% Thursday. Engine Media’s share price, under ticker $GAME, climbed around 18%.
The company is also due to ring the Nasdaq Closing Bell on Thursday to mark its listing on the exchange. Tom Rogers, executive chairman of Engine Media, said:
“Winview is an important operating unit of Engine Media, providing cash games of skill as part of the viewing experience of both traditional sports and esports.
“In addition, Winview has a growing portfolio of 80 issued United States patents, many of which relate to mobile sports betting and online gaming technologies. We will continue assessing how we can protect our intellectual property.”
Winviw’s own products ask similar micro-market questions like “Will the runner on second score?”
More patent problems on the way?
Patents might play a big role in US sports betting going forward.
It is easier to patent various sports betting mechanics than in European markets.