This SportTechie Legal article was written by Jody MacDonald, a specialist sports lawyer and Partner at Charles Russell Speechlys based in the United Kingdom.
Last week, MLB became the latest U.S. sports organization to announce a commercial partnership in the burgeoning space of official betting data. What conclusions can we draw from these recent deals and what lies ahead for the leagues as they seek to commercialize their newest asset?
First, commercializing official betting data is not entirely new territory for U.S. sports. The NBA and the NHL have both had exclusive deals with Sportradar for distribution of their official betting data outside the U.S. since 2016 and 2015, respectively. MLB and the NFL have also had international official data distribution partnerships in the same period, and even though those deals didn’t include supply for betting, both leagues have likely been tracking the opportunity closely for some time. Despite the understandable excitement around U.S. sports betting, until the market fully develops, the majority of the value in U.S. leagues’ official betting data distribution rights will lie overseas.
An interesting feature of all the partnerships announced to date is that within the U.S., the leagues have chosen to work with multiple distribution partners on a non-exclusive basis. Most high-profile sports find that exclusive partnerships generate more value—indeed outside the U.S., the NBA, MLB, and the NHL have all opted to have one exclusive distribution partner. There are a number of possible reasons for the trend towards non-exclusive partnerships in the U.S. The leagues may feel that as they continue to lobby for use of official betting data to be made mandatory under state law, they need to guarantee choice of suppliers for betting operators. Alternatively, the data partners themselves may have decided that paying a premium for exclusive status doesn’t make sense commercially in the U.S. market at this time.
U.S. leagues are also reserving themselves the right to make their betting data available to official gaming partners. In the NBA’s case it has signed multiple official gaming partnerships with companies both in the U.S. and internationally in recent months. The number of partners—five and counting—could even indicate that the NBA is interested in cutting out the middle-man and distributing its official betting data directly in the future. A number of technical and commercial challenges would come into play here, not least the fact that many customers also may want specialist services such as odds and trading tools alongside raw data. But the concept of direct supply arguably fits the NBA’s pro-active approach to other elements of its sports betting strategy, so watching what happens next will be interesting.
The NFL is the last major U.S sport to make a move regarding official betting data, but the Action Network recently reported that team owners have been told to expect developments during 2019. Despite having a reasonably small number of games, the NFL’s official betting data will of course be “must-have” content if and when it becomes available to operators in the U.S and there will be no shortage of willing bidders for the distribution rights. These could include Sportradar or Genius Sport (both recent recipients of significant private equity investment, thought to be for U.S. expansion), the resurgent IMG Arena (fresh from concluding blockbuster exclusive official data partnerships in golf with the PGA Tour and European Tour), or Perform Group (a major sports data player in Europe, and in need of a statement deal in the U.S.).
When establishing their official data products in the U.S. market, plan A for the leagues is to convince states to include provisions in their betting legislation requiring all licensed operators to use official data. To date, the leagues have struggled to win out in the face of vocal opposition from the gambling industry but provisions of this nature still appear in draft legislation being considered in a number of states (including New York) and in the draft federal sports betting bill. Even where the leagues are successful, a number of interesting questions will arise: What is a “commercially reasonable” supply fee? What terms of use will they be able to impose on betting operators? And what terms of service will they have to offer those operators?
If the leagues’ efforts fail at the state level, their official data will have to compete with unofficial alternatives, as is the case in Europe. Unofficial data is collected in a variety of ways including by sending individuals to games posing as fans to collect and transmit data from within stadiums, by collecting data “off-tube” by watching live broadcast coverage, or by copying official data published online.
The presence of unofficial data scouts within venues is still a significant headache for sports bodies in Europe. Some employ specialist security companies to identify and eject scouts who are in breach of ticket terms and conditions, but the scouts and the companies that send them are persistent and, in some cases, argue that they have a right to be there. U.S. leagues should already be preparing plans to combat this practice within their venues.
Collection “off-tube” is even harder to identify and prevent, but traditionally has been less of a concern because the data produced is relatively slow due to the inherent technical delay in broadcast coverage. This method also has particular limitations for sports such as basketball, where the action is very fast-moving, and golf, where broadcast coverage may not follow all players live. However, as broadcast delays reduce and software for automated off-tube collection improves, leagues may need to keep a close eye on this area.
In Europe, sports bodies have a powerful tool in the form of intellectual property rights—primarily database rights—to fight unofficial data providers who copy and re-use official data. These were established by Football DataCo, the entity which commercializes the official data of the top football leagues in the UK, including the Premier League, in years of hard-fought litigation. Many sports that commercialize their official data now carry out detailed monitoring of websites and other sources to identify infringement and then to take action where appropriate. The question of what equivalent IP rights or other legal causes of action might be available in the U.S. is the subject of much debate, and U.S. leagues may decide to bring test cases to court as the domestic sports data market develops.
Looking further ahead, the leagues’ biggest asset is likely to be their direct access to venues and athletes. For years, the core of official betting data has been basic live scores and “safe/danger” messaging (continuous signals which tell betting operators when a key event such as a point or goal may be imminent, thereby allowing them to manage their live in-play markets). Now, betting companies are increasingly interested in receiving deeper data, such as tracking data, to support innovative betting options and provide an engaging experience for customers. In time, subject to sports navigating significant legal and privacy issues, athlete biometric data could also be added to the mix. Producing unofficial versions of these categories of deeper data without league-authorized access will be significantly more difficult if not impossible.
The story of official data in the U.S. and internationally still has a way to run. Unlocking the value in this new asset may not be entirely straightforward but, as many sports bodies outside the U.S. have already found out, the prize of a new long-term revenue stream is undoubtedly worth pursuing.