US Sports Law Year in Review (2017/18) – Part 13: Sports betting and daily fantasy sports

Friday, 29 June 2018

This article originates from the paper entitled Sports Law Year in Review 1, which gives a high level overview of key sports law developments in the United States between 15 May 2017 – 30 April 2018.

For ease, we’ve broken down the paper into its respective chapters, which will be published in turn as follows:

Agents and agent regulation
Leagues – labor matters
Leagues – non-labor matters
Contracts
Torts
Individual sports
College, high school and youth sports
International and Olympic sports
Title IX/Gender equity and civil rights;
Intellectual property and broadcasting
Personal injury, health and safety
Stadiums and venues
Sports Betting/Daily Fantasy Sports;

It was drafted under the supervision on Professor Mattew Mitten and Professor Gabriel Feldman, and was presented at the Sports Lawyers Association Conference in Washington DC. The SLA, a non-profit, international, professional organization whose common goal is the understanding, advancement and ethical practice of sports law. Each year in May the SLA hosts an Annual Conference at which the above topics are presented and debated.

LawInSport would like to thank the SLA and in particular Professor Mitten and Professor Feldman for permitting the republication of this work.

Sports betting and daily fantasy sports

Federal Agencies

The two most popular paid daily fantasy sports websites, FanDuel and DraftKings, called off a proposed merger after federal regulators sued to prevent the merger. The Federal Trade Commission filed suit in D.C. Federal court to stop the merger, claiming that it would have create a company that controlled more than 90% of the paid daily fantasy sports market. Originally announced in November 2016, the planned merger was met with antitrust scrutiny and concerns about the legality of daily fantasy sports contests.

Study

A majority of Americans support the legalization of sports betting according to a study released by the American Gaming Association in May 2017. The survey, which was conducted by Greenberg Quinlan Rosner Research, shows that 55 percent of those polled supported making sports betting legal while 35 percent opposed the idea. 10 percent were undecided. However, very few of the participants actually understood the current state of the law, with only 38 percent of them realizing that sports betting is not legal in most of the country.

NBA

The NBA’s Assistant General Counsel Dan Spillane called for the legalization of sports betting during his testimony in front of a New York State Senate committee in January 2018. Spillane explained that the NBA’s position on sports betting has “evolved” since the 1992 passing of the Professional and Amateur Sports Protection Act, a federal law that prohibits states from legalizing sports betting. According to Spillane, the league has studied the issue of sports betting over the years and now believes that a regulated sports gambling system would provide fans a safe and legal alternative to the sports betting black market. Spillane also laid out what he said are five components that the NBA wishes to see included in possible sports betting legislation – detection and prevention of improper conduct; a one percent fee on total bets to go to the leagues; give leagues the right to restrict the types of wagers allowed on their sports; provide consumer protections; and authorize betting on mobile platforms.

Lawsuits - FanDuel and DrafKings

The United States Court of Appeals for the Seventh Circuit asked the Indiana Supreme Court in March 2018 to help it make a decision in a class action publicity suit brought against daily fantasy sports companies FanDuel and DraftKings. Two former Northern Illinois University football players and a former Indiana University football player filed the suit in Indiana state court in 2016 on behalf of nearly 3,000 former college football and basketball players. The plaintiffs claim that FanDuel and DraftKings act as illegal gambling sites that wrongfully profit off of the plaintiffs’ names, likeness, and statistics. The case was dismissed by the United States District Court for the Southern District of Indiana with the judge finding that the players’ performance and statistics are exempt from Indiana’s right-to-publicity statute because the material is “newsworthy” and of “general or public interest.” However, the Seventh Circuit found that the exceptions to the right-to-publicity statute are for material that has “newsworthy value” or is used in connection with “the reporting of an event” of general or public interest. The court could not find any Indiana case law interpreting these phrases of the statute, so it certified a question to the Indiana Supreme Court as to “whether online fantasy-sports operators . . . need the consent of players whose name, pictures and statistics are used in the contests.” According to the panel, the broadness of the question is intentional so that the Indiana Supreme Court can consider all relevant matters and arguments. See Daniels v. FanDuel, Inc., 884 F.3d 672 (7th Cir. 2018).

FanDuel and DrafKings both agreed to split a $2.6 million fine to settle an investigation by the Massachusetts Attorney General’s Office for “unfair and deceptive practices.” The investigation, which began in 2015, focused on the two companies’ business models and operations which the AG’s Office found did not adequately protect consumers. Shortly after the probe was initiated, Massachusetts enacted a set of regulations designed to protect daily fantasy sports consumers. Those restrictions include a 21-year-old age requirement for players, a monthly deposit limit, a prohibition on extending credit lines, and the creation of beginner contests from which experienced players are barred. Massachusetts Attorney General Maura Healy praised both companies to conforming to these regulations and for their cooperation in the investigation.