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Gambling on Sports Data: Protecting Leagues’ High- Level Data from Sportsbooks

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Gambling on Sports Data: Protecting Leagues’ High- Level Data from Sportsbooks GAMBLING ON SPORTS DATA: PROTECTING LEAGUES’ HIGH- LEVEL DATA FROM SPORTSBOOKS AARON FELD* The Professional and Amateur Sports Protection Act of 1992 helped define the legal status of sports betting throughout the United States by ef- fectively outlawing sports gambling nationwide. In 2018, the United States Supreme Court struck down the Act in Murphy v. NCAA, thereby providing state legislatures the opportunity to legalize sports gambling subject to their own restrictions. Though Congress cannot commandeer state law- making, Congress can, and likely will, regulate sports gambling directly, leaving state and federal legislatures as well as sports leagues and gam- bling operators struggling to determine the appropriate way forward. Commissioners across various professional leagues not only assert a property interest in the sporting event and its resulting data, but are also concerned that the laws surrounding ownership of sports data fail to ade- quately restrict the unlicensed collection and utilization of such data while duly presenting a threat to the integrity of the sport. As sports data has become an integral component for sportsbooks in facilitating their opera- tions, sportbooks refute the notion that leagues maintain exclusive rights in the collection and exploitation of such data. With the effective legalization of sports gambling creating a sudden premium on sports data, the question of how such data should be sourced, regulated, monitored, and purchased is now at the forefront of legislative battles. This Note distinguishes the types of sports data generated from sport- ing events and the methods by which such data can be collected, refined, processed, and commercialized. It explores the state and federal legislative sports betting proposals and analyzes the problem of competing interests between professional sports leagues and sportsbooks seeking to facilitate gambling activity. Finally, this Note argues that federal legislation should be used to solve the data rights issue and effectively balance the interests of the leagues and sportsbooks. * This Note is dedicated to my parents, Marla and Neal, for their constant love and support as well as for instilling in me their passion for learning and education. Thank you to the editors, members, and staff of the University of Illinois Law Review for all their hard work. 341 342 UNIVERSITY OF ILLINOIS LAW REVIEW [Vol. 2020 TABLE OF CONTENTS I. INTRODUCTION ........................................................................................ 343 II. BACKGROUND: GENERATION OF SPORTS GAMBLING, DATA COLLECTION, AND ITS UTILIZATION ....................................................... 346 A. Types of Sports Data ....................................................................... 346 1. Event and Performance Data .................................................. 346 2. Raw and Refined Data ............................................................. 347 B. Market Participants and Their Utilization of Official and Unofficial Sports Data ............................................................. 348 1. Private Companies ................................................................... 348 2. Sportsbooks .............................................................................. 349 a. Generic Betting Options ................................................. 349 b. In-Game Betting Options ............................................... 350 c. Engineering Odds ........................................................... 350 3. Leagues .................................................................................... 351 4. Individual Teams ..................................................................... 351 5. Official and Unofficial Data .................................................... 351 C. The Value and Commercialization of Sports Data ......................... 352 1. Value of Sports Data to the Leagues, Teams, and Cities ......... 352 2. Value of Sports Data to the Gambling Industry ...................... 353 3. Value of Sports Data to the Media and Gaming Industry ....... 354 D. Match Fixing ................................................................................... 355 E. Leagues Seek Legislative Assistance .............................................. 356 1. Policies and Procedures .......................................................... 356 2. Integrity Fees ........................................................................... 357 3. Data Rights .............................................................................. 358 4. Partnership Agreements .......................................................... 359 F. The Proposed Federal Sports Betting Bill ...................................... 360 1. Protecting Integrity Through Central Oversight ..................... 360 2. Restricting Wagers ................................................................... 361 3. Data Mandate .......................................................................... 361 III. ANALYSIS ................................................................................................ 362 A. Rights to Games .............................................................................. 362 1. National Basketball Association v. Motorola, Inc. .................. 362 2. C.B.C Distribution & Marketing, Inc. v. Major League Baseball Advanced, L.P. .......................................................... 364 3. Morris Communications Corp. v. PGA Tour, Inc. .................. 365 4. Foreign Case Law .................................................................... 366 B. Refined Data and its Proprietary Nature ....................................... 368 IV. RECOMMENDATION ................................................................................. 369 A. Sports Wagering Oversight Body ................................................... 370 B. Official Data Mandate for Settling Wagers .................................... 371 No. 1] GAMBLING ON SPORTS DATA 343 C. Ownership Rights in Refined and Processed Data ......................... 371 1. Incentive for Agreements ......................................................... 372 2. Failure to Reach an Agreement ............................................... 373 V. CONCLUSION ........................................................................................... 374 I. INTRODUCTION It has become a common occurrence in Britain for stadium security person- nel to find mysterious “fans” furiously tapping on their cellphones or speaking nonstop into an earpiece.1 These mysterious fans, often wearing hoodies to con- ceal their identity and earpieces, display an intense focus while curiously show- ing no emotion for one team or the other.2 Unbeknownst to the ordinary fans and event personnel, these are unofficial data scouts, or data thieves, enlisted by sportsbooks or other operators in the gambling industry to transmit data out of the sporting event.3 Britain has long been struggling with this shadowy cat-and-mouse game over the use of sports data between gambling operators (“sportsbooks”) and the professional sports bodies that govern the competition of its teams (collectively, the “leagues”).4 This conflict could very well serve as a preview of the battles to come in the United States over the methods by which sports data should be col- lected and whether sportsbooks ought to compensate the leagues for use of sport- ing events’ resulting data.5 Sports data plays a pivotal role in operations for many in the sports indus- try. The data resulting from sporting events is often broadcasted for fan engage- ment and used by leagues for analyzing performance and potential trade options.6 Some of this data, however, is highly refined and processed data that can only be generated from software developed and financed by the leagues.7 As copyright protection is only available under certain circumstances, the law is murky regarding sports data ownership. This forces event holders to rely on other prop- erty rights and contractual agreements to institute rights over statistical facts and information.8 1. James Glanz & Agustin Armendariz, When Sports Betting is Legal, the Value of Game Data Soars, N.Y. TIMES (July 2, 2018), http://www.nytimes.com/2018/07/02/sports/sports-betting.html. 2. Id. 3. Id. 4. Id. 5. Id. 6. See Christian Frodl, Commercialisation of Sports Data: Rights of Event Owners Over Information and Statistics Generated about their Sports Events, 26 MARQ. SPORTS L. REV. 55, 63–65 (2015); R.J. Anderson, How Statcast has Changed MLB and Why Not Everybody Seems at all that Happy about it, CBS SPORTS: MLB (June 6, 2017), http://www.cbssports.com/mlb/news/how-statcast-has-changed-mlb-and-why-not-everybody-seems- all-that-happy-about-it/. 7. John Holden, Can Leagues Own Data Rights When it Comes to US Sports Betting?, LEGAL SPORTS REP. (May 29, 2018, 5:00 AM), http://www.legalsportsreport.com/20745/leagues-and-fees-in-sports-betting/ [hereinafter Holden, Can Leagues Own Data Rights]. 8. Frodl, supra note 6, at 56. 344 UNIVERSITY OF ILLINOIS LAW REVIEW [Vol. 2020 Though legal uncertainty exists surrounding ownership rights, commis- sioners across various professional leagues assert a property interest in the sport- ing event and its resulting data.9 The leagues argue that the laws surrounding sports data ownership fail to adequately restrict the unlicensed collection and utilization of such data while duly presenting a threat to the integrity of their industry.10 Moreover, leagues contend that
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