While New York and Florida have been stealing plenty of the “will-they-or-won’t-they-legalize-online- sportsbooks” chatter this year, Ohio legislators have been taking a workman-like approach to the issue, spending nine weeks on hearings from interested parties before crafting a bill.
Among those interested parties were Ohio’s professional sports teams, plenty of which sent representatives to Columbus to make their pitch. And while they all want in on the action, they also have been repeatedly asking for something else: that any bill regarding sports betting mandates the sportsbooks have to get their statistics from official league data.
Why? Money, money, and more money.
“There is a large monetary component in it,” said Marc Edelman, a professor of law at the Zicklin School of Business, Baruch College, City University of New York. “And most views of existing intellectual property law makes clear that anybody is allowed to collect sports data from games and resell that data to third parties. This matter is very well settled.”
And yet there are the leagues in Ohio, asking for what amounts to monopoly rights to their data. Some legislatures have granted this, at least in part, with Illinois and Tennessee mandating sportsbooks use official league data for live and prop bets.
Data mandate contradicts law
But to Edelman, who co-authored (along with John T. Holden of Oklahoma State) “Monopolizing Sports Data” for a forthcoming edition of the William & Mary Law Review, legislatures that allow this to happen are flying in the face of established law.
“As recently as three years ago, a traditional intellectual property scholar would say it was absurd for a pro sports league to be able to prevent a third party from self-collecting data from games and then selling it to third parties,” Edelman said. “However the lobbying efforts of pro sports in recent years have convinced certain states, such as Illinois, to create such rights.”
Should the gambling industry be required to use league-approved "official data"? Britain's data collection experience provides a preview of the battles to come in the United States. https://t.co/ML3E5nkyXr
— The New York Times (@nytimes) July 3, 2018
Edelman said this matter was settled at the federal level back in the days of beepers.
In 1994, Motorola introduced SportsTrax in tandem with the Toronto Blue Jays. It was a beeper-type device that kept fans abreast of the pitch-by-pitch goings-on at Major League Baseball games. The 1994-95 baseball strike hampered the rollout of the device — which retailed for $149 — but Motorola then debuted a similar product, along with Sports Team Analysis and Tracking Systems (STATS), for the NBA.
They were promptly sued, and Manhattan federal court found in favor of the league, but then the U.S. Second Circuit Court of Appeals dismissed the majority of the claims the NBA had made, thereby paving the way for beeper manufacturers the world over — and third party sports data collection firms — to be able to collect sports statistics with impunity.
“The court found it was entirely permissible, as long as an individual party collects its own data, that it is allowed to resell that data,” Edelman said.
But sports leagues sensed an opportunity post-PASPA, and are seeking to convince state legislatures to give them full rights to their data.
All about the Benjamins
“A very large part of this is if the leagues are able to gain exclusive rights, they will gain an additional revenue stream,” Edelman said. “I don’t doubt there are secondary reasons, including maintenance of control over information that may indeed matter to sports leagues, but the primary driver here is to acquire an additional revenue stream where under normal intellectual property conditions the league would have to compete with third party collectors.”
And while the law isn’t on their side, it’s certainly proving — at least in two states so far — to be worth the ask.
— Sports Handle (@sports_handle) February 6, 2020
But Edelman cautions state legislatures that by granting exclusive rights, they are going well beyond the law.
“A state legislature is allowed to create new intellectual property rights even where such rights do not naturally exist under state or federal law,” he said. “So it certainly would be permissible for, say, the Ohio state legislature to grant intellectual property right over sports statistics to teams and/or leagues that host sporting competitions within the state of Ohio.
“But leaving aside whether it is permissible, it would seem to be very poor public policy to grant an additional intellectual property rights and curtail free market competition for the collection and sale of statistics, especially when numerous court cases have made clear that under traditional doctrines of intellectual property law, sports teams do not enjoy a monopoly over the collection and licensing of their own game statistics.”
A new push by the leagues
Sports leagues haven’t always been so adamant about their statistics; Edelman points out sports betting has been legal in Nevada since 1961 and the leagues never made peep one about the dissemination of data.
“The concerns that are being addressed by pro sports leagues today are concerns that arise primarily in how to most justly allocate the revenues from the emerging world of sports gambling,” he said.
In short: Things are a lot bigger, and as a result, a lot more potentially lucrative in the sports betting world than they ever have been, and the leagues don’t want to get shut out.
And while Edelman believes the best course of action is state legislatures allowing free market competition, he also recognizes that once the train starts rolling, it’s difficult to stop.
“The pro sports lobby has been very successful in being able to obtain new, special intellectual property rights as a matter of state law,” Edelman said. “For those that oppose state efforts to grant additional intellectual property rights, the best course of action would be to challenge these bills before they are implemented, rather than challenging them after the fact.”