MONOPOLIZING SPORTS DATA.

• Author: Edelman, Marc

TABLE OF CONTENTS INTRODUCTION 73 I. A BRIEF HISTORY OF SPORTS INFORMATION 77 A. Basic Scorekeeping 78 B. Early Distribution Era 81 C. Advanced Analytics 83 D. Future of Sports Data 86 II. USES FOR SPORTS DATA 87 A. Player Performance 88 B. Scouting 90 C. Fantasy Sports and Gambling 92 1. The Fantasy Sports Industry 93 2. The Gambling Industry 95 III. THE LACK OF INTELLECTUAL PROPERTY RIGHTS IN SPORTS DATA 101 A. Pure Game Data 101 1. Patents 102 2. Trademarks 102 3. Copyright 104 4. Trade Secrets 105 5. Common Law Property Rights 106 a The Right of Publicity 106 b. Misappropriation 107 c. New Property Rights Derived from State Gambling Statutes 108 B. Already Collected and Aggregated Data 109 IV. ANTICOMPETITIVE RISKS OF LEAGUE-WIDE SPORTS DATA LICENSING AGREEMENTS 112 A. Concerted Action 115 B. Competitive Effects Analysis 117 1. General Standards of Review 118 2. Legal Precedent 119 3. Likely Competitive Effects of Centralized League Data Policies 122 4. Antitrust Exemptions and Other Mitigating Factors 127 V. THE MONOPOLIZATION OF SPORTS DATA 128 A. Do Sports Leagues Have Monopoly Power Over Any Relevant Market? 130 B. Do Sports Leagues' Data Policies Entail Exclusionary Conduct? 132 CONCLUSION 134 INTRODUCTION

Data is the fuel that powers the sports betting industry. (1) In recent years, sports betting has become increasingly reliant on technology. (2) The demand for faster, more accurate, and more robust data by bookmakers and bettors began in the 1980s and has continued to increase through today. (3) While both the legal and illegal betting markets rely on data with the same features, the recent expansion of legal sports betting in the United States in the wake of the Supreme Court's decision in Murphy v. National Collegiate Athletic Ass'n, (4) has spurred the industry as a whole and made data an investible resource. (5) The recent expansion of legalized gambling into more than twenty states transpired so rapidly that a few well-positioned companies, with the help of professional sports leagues, have acquired dominant market positions while others are playing catch-up. (6) The ability for states to legalize sports betting marked a turning point for sports leagues that had long opposed legalized betting, and it even fueled the lawsuits that eventually resulted in the repeal of the Professional and Amateur Sports Protection Act (PASPA), which allowed states to begin legalizing the practice.' Sports leagues have not so quietly begun seeking to gain a piece of the sports betting pie, first demanding that jurisdictions legalizing sports betting pay the leagues a so-called integrity fee, (8) before pivoting to having legislators mandate that bookmakers use data that is sold by league partners. (9) These mandates are only the most recent efforts by sports leagues to consolidate control of information resulting from games they facilitate. (10)

The major American professional sports leagues have long faced opposition to their efforts to collectivize and sell team rights as a bundle. (11) The emergence of legal sports gambling has created a rush to parcel and sell a new item under a single umbrella--game data. (12) To increase revenue, some leagues are using data distribution partners to notify users who do not agree to increased fees that they may be cut off. (13) The efforts by various sports leagues to exert pressure on data purchasers to pay increased fees raise important antitrust questions for the regulators and consumers who will ultimately bear the burdens of increased supply costs. (14)

Recent efforts to raise revenue by sports leagues like the National Basketball Association (NBA), Major League Baseball (MLB), and the Professional Golfers' Association Tour (PGA Tour) have centered on using their official data partners to extract rents from sportsbook operators who rely on fast, accurate, and reliable data, while lobbying legislators to mandate that sportsbooks use only official data. (15) The result of this double barreled approach is a stifling of competition in the market for sports data. (16) While the sports leagues appear to be granting nonexclusive licenses to a small handful of data brokers, this is likely nothing more than an illusion of competition in the data market. (17) As long as the sports leagues control the spigot of data that is disseminating the information to select providers, the leagues are able to dictate pricing and other conditions antithetical to a robust and free market. (18) The sports leagues' desire to control sports data, despite the lack of an intellectual property right in much of the data itself, has been referred to as "naked rent-seeking." (19) Though the leagues have only had moderate success in lobbying state legislatures to mandate official data use for certain types of wagers, this "rent-seeking" activity may eventually become protected. (20) However, the extension of this market position into states without mandates creates antitrust questions worth examining. (21) Some sports leagues such as the National Football League (NFL)--a part owner of one of the data distributors--have asked that bookmakers remit a percentage of sportsbook profits to the league as part of contracts for data. (22) There are collusive barriers to entry being created through official partnerships--buttressed by legislative mandates that linger beyond state borders. (23) These barriers create a significant concern for the long-term viability of an industry that is making a transition from an almost entirely illegal market to a legal and regulated market at warp speed. (24)

This Article proposes that the United States professional sports leagues' recent attempts to collectivize the sale of sports game data to third-party buyers and prevent non-league-affiliated entities from competing in the markets to collect, aggregate, and resell sports game data gives rise to both legal and policy concerns under federal antitrust laws. This Article proceeds in five main parts. Part I explores the history of sports game data, the historical collection of this data, and the historic sale of this data. Part II explains the wide range of uses for sports game data in the modern era, where sports gambling, traditional fantasy sports, and daily fantasy sports are all an important part of many fans' sports experience. Part III describes the intellectual property rights (or lack thereof) that extend to pure sports game data, as well as already collected and aggregated data. Next, Part IV explores the league-wide sale of sports game data as a form of collusion among individual sports teams that may potentially violate section 1 of the Sherman Act. Finally, Part V analyzes league-wide efforts to secure exclusive rights to sell sports game data. In doing so, Part V looks at the right to sell sports game data as a potential form of exclusive conduct that illegally leverages each league's shared monopoly in the market to host games in a given sport, and transforms it into a second shared monopoly in the market to collect, aggregate, and resell sports game data.

1. A BRIEF HISTORY OF SPORTS INFORMATION

   Sports information is now ubiquitous, but even before the advent of modern sports analytics, people were keeping score. (20) However, sports information has undergone a number of transitions over the last two centuries, beginning with an era of developing a means of keeping track of final results and individual performance. (26) The transition from individualized scorekeeping and record keeping, to publication of sports scores in newspapers, eventually to distribution across national wire services, and then to near-instant transmission over the internet, began in the 1800s and continues to this day. (27) The modern era of sports information has been driven by a desire to collect and then present large amounts of data in a way that yields novel insights, and in turn, this has led to the emergence of an entire subfield revolving around sports analytics. (28)

   1. Basic Scorekeeping

      Before it was possible to conduct advanced analytics and develop derivative statistics yielding new insights and creating a multi-billion dollar industry, sports needed a scoring system. (29) The ancient Olympics crowned winners with an olive branch wrapped into a crown, and losers received nothing--a contrast to today's Olympic system, whereby medals are awarded for first, second, and third place. (30) While the ancient Olympics' winner-take-all system afforded a clear understanding of who was successful, the modern system of sports scorekeeping has evolved to utilize all varieties of interval measurement to rank teams, players, and even certain aspects of players. (31)

      Scorekeeping and the publication of American sports results date back to the mid-1800s. (32) In 1837, the Olympic Ball Club of Philadelphia, which played an early predecessor to baseball, mandated the use of a scorebook to record runs scored by each team in their constitution. (33) Beginning in 1845, the New York Morning News began publishing a predecessor to the modern box score by including a column listing each team's batters and the runs they scored, as well as the outs that they recorded. (34) By 1858, box scores expanded to include nine columns per player and provided additional information on how outs were recorded. (30)

      Baseball scorekeeping would evolve significantly in 1859, after an English-born cricket reporter, Henry Chadwick, changed his focus from cricket to baseball. (36) Chadwick, who had been hired by the New York Times to cover cricket, became enthralled with baseball after watching a game in 1856. (37) By 1859, Chadwick was covering the sport for the New York Clipper and the Sunday Mercury. (38) Chadwick was instrumental in evolving the box score and in introducing a variety of statistics, including runs, hits, and errors. (39) Eventually, Chadwick would develop other statistics as well, including the unearned run and the concept of total bases...