Editor’s note: On February 22, the United States Court of Appeals for the Seventh Circuit – a court below the Supreme Court – will hold a hearing in a lawsuit brought by three former college football players against DraftKings and FanDuel.
In a three-part series, Legal sports report studies the case and explains its potential implications for both daily fantastic sports and traditional sports betting. This first installment unboxes the ongoing legal dispute involving claims of publicity rights and First Amendment free speech issues.
Group of college football athletes claim DraftKings and FanDuel collide with Indianapublicity law and may not use player names and associated game statistics in DFS contests without permission.
DraftKings and FanDuel respond that these names and statistics are available free of charge, given their timeliness and status as a matter of public interest. The DFS companies also cite the First Amendment in their defense.
On February 22, a federal appeals court based in Chicago will hear the arguments in the long legal case between the two parties. After the hearing, the three-judge panel will be tasked with making a decision that could have implications for DFS and traditional sports betting.
Court documents obtained by Legal sports report help recap the case to date.
Lower court decision in favor of DFS operators
The case was brought in federal court in Indiana by Akeem Daniels, Cameron Stingily (photo) and Nicolas stoner, all former university footballers. The two main operators of DFS – DraftKings and FanDuel – were named as defendants in the lawsuit.
September 29, 2017, Indiana Federal Judge Tanya Walton Pratt partially upheld the motion to dismiss requested by DraftKings and FanDuel.
Justice Pratt found that the two DFS companies were exempt from the Indiana Advertising Law Act for two reasons – the “public interest” exception and the “public interest” exception.
“[T]he documents challenged by the plaintiffs fall under the “current interest” exception to the Indiana Publicity Law, “Justice Pratt wrote in her 25-page decision. “[T]The prohibition on using an individual’s publicity right without their consent does not apply to the conduct of defendants.
Justice Pratt similarly ruled in favor of DraftKings and FanDuel as to whether the “public interest” exception should apply.
“[T]The court concludes that the defendants’ documents constitute a “story”, ”Judge Pratt wrote.
Justice Pratt concluded her written ruling with a brief discussion of the First Amendment argument advanced by DraftKings and FanDuel, but found that she lacked “the proper factual and evidentiary basis to conduct such an analysis.”
Daniels and his other co-plaintiffs have appealed the loss to Seventh Circuit, which is holding the next hearing in the case.
Both sides have spent the last few months filing additional briefs in the case, refining arguments previously made before Justice Pratt.
Arguments of collegiate athletes on appeal
In their November 2017 opening brief, Daniels, Stingily, and Stoner spent the most time on a recurring theme that could be their central point at the next hearing.
“The district court wrongly ruled that Indiana’s statutory exceptions apply to illegal behavior,” lawyers for the college athletes wrote. “When the speech in question is integral to criminal conduct, there is no First Amendment defense.
“The speech of the defendants was integral to the illegality of their gambling contests.”
To support their argument, the college athletes relied on a 1993 Supreme Court case.
“[T]The activity underlying the relevant advertising – gambling – does not imply any constitutionally protected right, ”the Supreme Court concluded in United States v Edge Broadcasting 25 years ago.
In an additional filing late last month, Daniels and the other plaintiffs reiterated their argument that the DraftKings and FanDuel “speech” concerned illegal conduct not deserving of First Amendment protection.
DraftKings and FanDuel respond
On January 16, DraftKings and FanDuel filed a 53-page brief in support of Justice Pratt’s decision to dismiss the varsity athlete lawsuit.
“The district court rightly held that [plaintiffs’] claims are prohibited, ”the lawyers for DraftKings and FanDuel wrote. “[F]antasy sports… is itself noteworthy.
“For the same reasons that varsity athletics and fantasy sports are of interest, they are also a” topic[s] of general or public interest.
The two DFS companies also refuted each of the plaintiffs’ arguments regarding the alleged illegality of fantasy sports in Indiana and the non-enforceability of the First Amendment.
“[Plaintiffs’] the baseless claim that fantasy sports are illegal is irrelevant to a right to publicity, ”the lawyers for DraftKings and FanDuel wrote.
An intermediate event
At the start of the trial, a wrinkle was added to the case: Indiana enacted a new law to regulate DFS.
The two sides proceeded to a different position of the intermediate event.
“On March 24, 2016, the legislature enacted a comprehensive legislative scheme regulating the licensing and operation of paid fantasy sports games,” FanDuel’s attorneys wrote in a 2016 court filing. “In so doing, the legislator declared that ‘[a] a paid fantasy sports game conducted under this chapter does not constitute a game for any purpose. ‘ “
DraftKings made a closely related point.
“[T]he new provisions codify the fact that fantastic sports competitions have never been illegal under Indiana law, ”DraftKings attorneys wrote in another 2016 submission.
Lawyers for Daniels and other varsity athletes have repeatedly pointed to the new law as evidence to support their illegality claim.
“The university sports betting contests of the defendants in this litigation took place from May 4, 2014 to March 31, 2016,” the lawyers for the university athletes wrote in a legal brief dated November 14, 2017. “[T]The partial legalization did not cover college sports, for which daily fantasy contests remained illegal.
Justice Pratt rendered his ruling without settling the debate, but the underlying issue could arise again in oral argument next week.
After the February 22 hearing, the three judges of the Seventh Circuit panel will render a decision in the case. A 3-0 vote will result in a unanimous decision. A 2-1 vote will likely lead the only dissenter to render a separate ruling.
Appeals court decisions can sometimes be made in a matter of weeks, but a waiting period of three to six months would be the most likely window for a decision.
No matter how – or when – the rules of the Seventh Circuit, the case is unlikely to have any impact on the current proceeding. New Jersey Sports Betting the case in the Supreme Court is expected to be decided between March and June.
However, with Major League Baseball hold shares in DraftKings and the NBA Having a stake in FanDuel, such a business momentum could turn the broader issues of sports betting legalization into a spin.
Indeed, the two sports leagues are now active lobbying for or against sports betting bills in several states, while the two DFS companies simultaneously advance legal arguments in the current lawsuit that may run counter to specific lobbying arguments advanced by their co-owners.