Players And Unions Unite In Legal Action Against DFS Sites

Indiana Hoosiers football game

Recently, the conversation surrounding the legal status of real-money gaming has understandably shifted significantly toward sports betting. Naturally, the spotlight is shining particularly bright on New Jersey.

However, Indiana is also shaping up as the setting for some potential legal fireworks in the near future. The Indiana Supreme Court has agreed to hear a class-action lawsuit originally brought by three college athletes against daily fantasy sports companies DraftKings and FanDuel in 2016.

Oral arguments will take place on June 28 in Indianapolis.

Background of DFS case

The major plaintiffs in this case are former college football players Akeem Daniels, Cameron Stingily, and Nicholas Stoner. Their complaint is that the two DFS operators used their names and likenesses unlawfully in their respective contest offerings. The plaintiffs are asking for $5 million in damages. The complaint extends beyond the three players to college athletes in multiple sports across DFS contests.

The DFS industry leaders initially scored a victory in the case in September 2017. Judge Tanya Pratt of the U.S. District Court, Southern District of Indiana granted a dismissal for the defendants. Her ruling stated DraftKings and FanDuel did not violate the players’ rights under Indiana’s right of publicity statute as alleged.

Predictably, the players next took their case to the U.S. District Court of Appeals for the Seventh Circuit in February 2018. In considering the case, the state’s three appellate judges opted to punt a central aspect of it to the state’s Supreme Court.

Specifically, the appellate division is asking the higher court to definitively address the following question:

Whether online fantasy-sports operators that condition entry on payment, and distribute cash prizes, need the consent of players whose names, pictures, and statistics are used in the contests, in advertising the contests, or both.

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Big guns weigh in on plaintiffs’ behalf

Chief Justice of Indiana Loretta H. Rush encouraged the filing of amicus briefs on both sides ahead of oral arguments. Subsequently, some heavy hitters officially weighed in on the plaintiffs’ behalf.

The list of groups filing briefs in support of the plaintiffs is as follows:

  • Major League Baseball Players Association
  • Major League Soccer Players Association
  • National Basketball Association Players Association
  • National Football League Players Association
  • National Hockey League Players Association
  • U.S. women’s national soccer team Players Association
  • Women’s National Basketball Association Players Association

In court papers, they argue the sites utilize the athletes’ likenesses in a profit-making enterprise. As such, the fantasy sports operators “infringe upon plaintiffs’ statutory publicity rights and are not within any statutory exemption.”  Do note that college sports-based DFS contests were eventually discontinued by both DraftKings and FanDuel due to general legal concerns though. However, the lawsuit centers on the period when these contests were still being offered.

The insertion into the case of entities that cumulatively represent the overwhelming majority of U.S.-based professional athletes certainly has the potential to carry great weight with the Court.

On their end, both DraftKings and FanDuel continue to argue that First Amendment rights enable their use of player names, likenesses, and statistics. Moreover, they emphasize all of these are already widely available in the public domain without any fee.

With several similarities, many are comparing this case to CBC Distribution and Marketing vs. Major League Baseball Advanced Media in 2007. The issue at the heart of that litigation was also whether a fantasy sports operator could use player names and statistics without remuneration. The case went as high as the appellate court level. Notably, the plaintiffs ultimately prevailed on First Amendment grounds.

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Potential for wide-ranging implications

The outcome of the case is likely to impact more than just the current set of plaintiffs and defendants. With sports betting set to become progressively legalized in states across the country, the issue at hand will eventually surface in that arena, as well.

For starters, online sports betting is also expected to be part of a legalized sports betting framework in many states. The format of those digital platforms will be exceedingly similar to the one that plaintiffs argue has enabled DFS operators to violate their rights of publicity.

Additionally, DraftKings and FanDuel are set to develop their own sportsbooks in the near future. The latter’s purchase by Paddy Power Betfair on Wednesday makes that even more of a certainty. In-game betting options such as player props will utilize player likenesses and statistics. This is not that different from how the companies use these likenesses in DFS contests.

It’s also worth noting that pro sports leagues have been heavily lobbying around the country for intellectual property-based compensation in their own right with respect to sports betting. The likes of the NBA and MLB are angling for states to require sports betting operators to utilize the league’s official game data and statistics when grading wagers. Moreover, they’re asking operators to pay a licensing fee for use of said data.

And there are potential ramifications on the DFS side of the equation, too. A victory by the plaintiffs would presumably open the door for each of the professional sports leagues to make licensing/royalty-based claims of their own. The fact that both DraftKings and FanDuel already have marketing agreements at both the league and team levels with many of these entities adds another intriguing layer to that scenario.

Photo by john j. klaiber jr / Shutterstock.com

Juan Carlos Blanco

About

Juan Carlos Blanco has served as a freelance writer for a wide variety of online publications and websites, with an intensive focus on fantasy sports. An avid daily fantasy sports player himself, he’s provided analysis and comprehensive coverage of the MLB, NBA, NFL and CFL, while also reporting on news and developments in the daily fantasy sports and online gaming industries.