Sports betting and the protections of "enhanced" sports data in the US
Gaming analysts have projected that annual legal sports wagering revenues will exceed $5.7 billion by 2024, peaking at $10.4 billion across all 50 states assuming all states legalize online sports wagering.[1] Even in the midst of the coronavirus disease 2019 (COVID-19) pandemic, sporting events are going live again and sports wagering revenues are recovering. Indeed, more states are expected to legalize sports wagering so the revenues can be taxed to cover COVID-19 state budget deficits.
A supply of reliable, available data is the fuel needed for sportsbooks to create and compile odds, bet types, and risk management products. An essential legal question, yet to be fully resolved, is whether the rightsholders whose games generate the data may exercise proprietary rights in such data, monetize it, and protect the data from unauthorized use.
“Basic” v. “enhanced” data after National Basketball Ass’n v. Motorola
Three legal vehicles are currently available to protect sports data. While federal copyright law does not protect facts such as sports data from being copied and used once made public, some states’ misappropriation laws do prevent free-riding on the costly investments of others in generating valuable, time-sensitive information. Yet federal copyright law preempts this state law where the “misappropriation” is the copying and use of facts that have already been made public in broadcasts. State trespass laws allow teams to control by contract certain activities of patrons inside the arena (including prohibiting real-time broadcasting of events), but teams find it hard to control activities outside the arena.
The seminal case of National Basketball Ass’n v. Motorola, Inc., 105 F.3d 841 (2nd Cir. 1997) highlights such shortcomings. The federal court found: basic statistics gleaned from watching a broadcast are facts not protectable by copyright law, even though broadcasts are copyrighted; and a pager service could legally provide updated statistics from NBA games without league authorization, thus providing “purely factual information which any patron…could acquire from the arena without any involvement from the director, cameraman or others who contribute to the originality of the broadcast.”[2] The court held that the NBA could not assert a New York state misappropriation claim, because the claim was preempted by the Copyright Act.
However, the court in National Basketball Ass’n suggested that state misappropriation law may protect time-sensitive game data that a league or team gathers from within an arena or stadium, using specialized camera feeds and data collection devices not seen in game broadcasts. State misappropriation law in theory protects enhanced data against free-riding by others seeking to profit from the sale or use of such data and would likely not be preempted by federal law. Current examples of such enhanced data systems include SportVU tracking data gathered during NBA basketball games, the NFL’s Next Gen Stats based on the use of radio-frequency identification (RFID) technology, and MLB Statcast data.
Different than basic data, enhanced data is growing in popularity and fundamental to wagering on certain proposition or “prop” bets as well as in-game bets. Enhanced data goes beyond simple game scores or spreads; it requires the deployment of specialized equipment and/or use of a proprietary technology not readily available to the public, and it is this proprietary technology that is used to capture either in-game data or other unique data sets not accurately determined from merely watching a game broadcast (eg, velocity or trajectory of a ball).
Possible legal approaches for protection of enhanced data in the US
Although nearly half of the states have legalized retail or mobile sports wagering on an intra-state basis, a uniform legal approach to the protection of enhanced sports data is still far from clear. As suggested by National Basketball Ass’n, state misappropriation claims directed to unauthorized use of enhanced sports data may not be preempted by copyright law and may permit injunctive relief against the use. However, such protection may require protracted, costly litigation with a favorable outcome to the sports proprietor being less than certain – and not all states have recognized misappropriation as a viable theory of recovery.
Bipartisan federal legislation was introduced at the end of 2018 that would require sportsbook operators to use data provided by or officially licensed by sports leagues to determine the outcome of sports wagers for a set number of years. Drafted by now-former Senator Orrin Hatch (R-UT, Ret.) and co-sponsored by Senator Chuck Schumer (D-NY), S3793 would create a data monopoly in favor of the leagues, allowing them to charge a fee for “official” data used to settle sports bets.[3] While this draft legislation has sat dormant since its introduction, S3793 would subject all state sports wagering legislation to federal approval, including existing sports betting legislation and if enacted, states would likely mount a legal challenge. In any event, even with bipartisan support, Congress is unlikely to consider any form of sport wagering legislation until after the 2020 elections and COVID-19 is contained.
Conclusion
The legal framework for enhanced sports data appears to be in place, but, absent nationwide statutory protection, the rights to such data will have to be determined on a case-by-case and state-by-state basis.
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[1] GamblingCompliance (2019, May 13) “U.S. Sports-Betting Market to Hit $5.7bn by 2024.” Retrieved from: https://gamblingcompliance.com/premium-content/insights_analysis/us-sports-betting-market-hit-57bn-2024#:~:text=Twelve%20months%20on%20from%20the,to%2034%20states%20by%202024.
[2] National Basketball Ass’n v. Motorola, Inc., 105 F.3d at 847 (citing National Basketball Ass’n v. Sports Team Analysis and Tracking Systems, Inc., 939 F.Supp. 1071, 1094 (S.D.N.Y., September 3, 1996).
[3] 115th Congress, 2d Session, 2.3793-Sports Wagering Market Integrity Act of 2018. Introduced in Senate (12/19/2018). Retrieved from: https://www.congress.gov/bill/115th-congress/senate-bill/3793/text.
