This SportTechie Legal article was written by Ryan Martin, an attorney in the Chicago office of Loeb & Loeb LLP.
After a slog through the Indiana courts, the Seventh Circuit U.S. Court of Appeals finally put an end to Daniels v. FanDuel late last year. The proposed class action suit had tried to bar the two biggest names in daily fantasy sports from using college athletes’ names, likenesses and statistics without permission. The case was closely watched by sports gambling stakeholders and many of the players’ associations for the major U.S. sports leagues.
Former collegiate football players had initiated the case in 2016, suing DraftKings and FanDuel in Indiana. The players had hoped to represent up to 2,000 other college football and basketball players whose names and likenesses the DFS companies used without consent or compensation. The former college athletes argued DraftKings and FanDuel wouldn’t have been able to build their college DFS empires without using their identities.
The right of publicity is an individual’s right to control the commercial use of his or her own identity. Governed by state law, and recognized under either statute or common law in 31 states, this right generally offers similar protections regardless of celebrity status. Indiana’s statute protects a broad right of publicity, including protection of not only an individual’s name, photograph, and likeness, but also their voice, signature, and mannerisms. However, states do recognize exceptions to the right of publicity in order to balance First Amendment interests, including when the use is deemed newsworthy or involves other social or political commentary.
An Indiana federal court dismissed the athletes’ claims, concluding that the state statute permits the DFS companies to use their likenesses because the use falls under the “newsworthy value” exception. When the athletes appealed, the Seventh Circuit asked the Indiana State Supreme Court to weigh in, certifying the question for its review. While acknowledging that there was scant case law interpreting language similar to that in the Indiana statute, the state high court found that Indiana’s statute “contains an exception for material with newsworthy value that includes online fantasy sports operators’ use of college players’ names, pictures, and statistics for online fantasy contests.”
Stung by the Indiana State Supreme Court’s ruling, the athletes made a last-ditch effort to salvage their claims in the Seventh Circuit, arguing that DFS gaming was essentially illegal gambling in Indiana, and thus could not qualify under the “newsworthy” exception. But, in late November, the Seventh Circuit rejected that argument, saying the question of DFS’s legality was already properly before the Indiana Supreme Court, which had opted not to address it.
That seemingly conclusive ruling follows precedent outside of Indiana. In 2007, the Eighth Circuit U.S. Court of Appeals prohibited Major League Baseball Advanced Media LP, a division of Major League Baseball that owns publicity rights to MLB players’ statistics, from interfering with the operations of fantasy sports league platform provider C.B.C. Distribution and Marketing, Inc. The court held that the First Amendment allowed use of players’ names and statistics in C.B.C.’s fantasy games, and barred right of publicity claims in that context.
Similarly, in 2009, a federal district court ruled in favor of CBS Interactive, which operated traditional online fantasy football competitions on cbssports.com. Prior to the 2008 NFL regular season, CBS Interactive entered into licensing agreements with an NFLPA rights holder. Those agreements authorized CBS to use, in connection with its fantasy football games, the “names, likenesses (including without limitation, [jersey] numbers), pictures, photographs, voices, facsimile signatures and/or biographical information” of individual NFL players who had entered into certain group licensing agreements. But after the Eighth Circuit’s CBC Distribution decision, CBS decided not to renew its license and instead sought a declaratory judgment that its use of the NFL players’ information was lawful. The District Court of Minnesota agreed, and extended the Eighth Circuit’s holding to CBS’s online fantasy football games.
Conversely, litigation surrounding the use of players’ likenesses in video games (EA Sports’ well-known Madden and NCAA Football titles) has been somewhat less clear-cut, and on balance has favored the players’ publicity rights. Potentially as a result of the video game litigation, EA Sports no longer makes NCAA-related sports video games, and holds licenses with rights holders for the pro leagues and players for its other sports-based titles.
So where does Daniels leave the players in respect to daily fantasy providers? The DFS operators already have licensing agreements with major leagues and players’ associations, so the unlicensed use of player info is already more of an exception rather than a rule.
The legal and business landscape has also changed significantly since this litigation began in 2016. Now, after last May’s decision by the Supreme Court that opened a path to the legalization of sports betting, many leagues are softening their stances to sports gambling, and instead trying to find a way to work with the DFS and gambling providers instead of against them. And the operators have larger interests and incentives to strike licensing deals with the leagues and players’ associations—like the frictionless access to data, sponsorship, and advertising capabilities—that would likely also involve the license to use player information for their DFS and sports betting products.
The ruling in Daniels is narrow, applying only one specific statutory exception of Indiana’s right of publicity law to daily online fantasy sports. The court left open the possibility that there could be a viable claim if a DFS (or sports gambling) product crossed the line from a “newsworthy” use to one that implies an endorsement or affiliation between a player and the product. Daniels is almost certainly not the last case that will need to be litigated as the courts work out the limits on fantasy sports and sports betting.