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MLB The Show

23 Feb 2018

MLB: Why the league won't challenge state sports betting laws in court

(Photo Credit: Arturo Pardavila III)

MLB and the NBA are putting the "full-court press" or "charging the third baseman," whichever analogy might be preferable, on state legislatures across the nation right now. What they're lobbying for is a cut of revenue from potential legalized sports betting in those states.

The reason they are pushing so hard in the legislatures is that the sales pitch they are making to legislators wouldn't hold up in court. As made clear by NBA commissioner Adam Silver last month, sporting events are viewed as "intellectual property" to which the leagues own the rights. Silver argues that the NBA deserves to be paid for its cost of operating the games that are wagered upon and for sharing the content created with sportsbooks.

A similar argument already failed

Inconveniently for Silver, MLB, and the NBA, MLB has always tried making that argument in a very similar application in court. The 2006 case CBC Distribution v. Major League Baseball shows just how flimsy the argument is. CBC, who was an operator of fantasy sports contests, sued MLB in 2004 when the license it had purchased from MLB to operate fantasy games based on its "intellectual property" expired. MLB tried to bar CBC from continuing to offer the games without a renewal of the license.

In the case, U.S. Magistrate Judge Mary Ann Medler ruled that CBC's use of player names and records in its games represented fair use under the First Amendment to the Constitution of the United States of America. The ruling was upheld by the 8th Circuit Court of Appeals and the Supreme Court refused to take up an appeal.

How making the same argument regarding sports betting is worse

Regarding wagers placed upon the outcome of a singular sporting event, the claim sportsbooks violate MLB's or the NBA's intellectual property rights or right of publicity laws is even more paper-thin. The information crucial to those transactions isn't as detailed as how an individual player fared in his at-bats or how many rebounds he recorded. It's as simple as the final scores of games.

To appear consistent on their insistence they be compensated for every use of that information, MLB and the NBA would have to take legal action against every person on social media who shared a score of one of their games without cutting them a check, every local television station who creates a graphic containing scores of local professional teams during its broadcasts, etc. If sharing player statistics and names in a betting venture is protected by the First Amendment, then the sharing of team names and game scores has the same protection.

This argument also ignores the tremendous boost in interest regarding MLB's and the NBA's games that sports betting could bring. Even if MLB and the NBA could prove that sports books using team names and game scores without paying a fee represented an economic loss that would easily be outweighed by the value of all the additional eyes and social media banter on the games generated by wagers upon their outcomes.

This is why even if several states enact sports betting laws without provisions that require sports books to pay a cut of their revenues to MLB and the NBA, neither league will challenge those laws in court. This precedent also creates a path for sportsbooks to challenge laws which include those provisions. 

Unlike baseballs off the bat of New York Yankees outfielder Giancarlo Stanton or a basketball in the hands of reigning NBA Slam Dunk Contest champion Donovan Mitchell, this argument of MLB and the NBA in court won't fly.

Should states include provisions which require sports books to pay leagues like MLB part of their revenue? Let us know in the comments below.