By Jeff Birren, Senior Writer
For over a decade college athletes have been pursuing claims against the NCAA and its members for usurping their Name, Image and Likeness rights (“NIL”). Those defendants have repeatedly met judicial defeat. One early case was O’Bannon v. NCCA (802 F. 3d 1049 (2015)). What is now firmly established is that colleges may not profit from the unauthorized use of athletes’ NILs. Two of the defendants in O’Bannon were Electronic Arts and College Licensing Company. Those two entities had been happily using the unauthorized NILs of college athletes for profit. Both quickly settled and paid for this behavior. Apparently, the explosion generated by the legalization of sports gambling drowned out the reality that such conduct maybe beyond the judicial pale, and at least two gambling organization helped itself to the NILs of MLB players. MLB Players Inc. recently sued DraftKings, Inc. f/k/a DK Crown Holdings Inc, and BET365 Group Limited in Federal District Court for the Eastern District of Pennsylvania (2:24-cv-04884-KSM (9-16-2024)).
Family-Style Gambling For most of U.S. history, gambling on most sports was illegal, except on racing animals. However, despite the presumed best efforts of law enforcement, sports gambling was wide-spread. Nevertheless, bookies faced challenges. Local bookies were reluctant to accept too many bets on a particular team for fear of taking a massive hit if that team won. Eventually bookies began to “lay off” some of their action onto other bookies. This was like insurance as it allowed the bookies to continue to accept bets and spread the potential losses and profits. A problem remained. Using the telephone to reach such agreements, or to simply transmit odds was a federal offense as it involved using the instrumentalities of interstate commerce. Happily, a solution to transmitting odds appeared.
In Nevada, sports gambling became legal in 1931. For years Las Vegas was a sleepy spot on the map. The few casinos that did exist were one-story western themed motel-casinos. That began to change with the construction of the Flamingo on what is now the “Las Vegas Strip.” Its principal investors preferred to avoid publicity. Other hotel-casinos followed suit and brought a solution to a problem confronting illegal gambling. The Desert Inn began to publish its NFL game odds late every Sunday. Soon enough newspapers republished those odds, though typically referring to it as the odds from Las Vegas. Bookies did not offer those odds but were close enough to offer comfort to local gamblers, and with that, gambling increased. The odds did not reflect the Desert Inn’s opinion about the actual outcome, but was merely a prediction of the number of points given by the betting public’s favorite in order in ensure equal betting on both teams. Casinos and bookies took their cut off the top and paid the rest to those winning their wagers. It made Las Vegas a gambling pilgrimage site, and the city grew into its moniker, Sin City. Illegal gambling also grew across the country. Yet mere point-spread gambling was child’s play compared to the complicated joys the internet would bring to gamblers.
Complaint The Complaintasserts that diversity jurisdiction exists as the “Plaintiff and Defendants are citizens of different states and the amount in controversy” exceeds $75,000. MLBPI is a Delaware corporation with its principal place of business in New York, New York. DraftKings is a Nevada corporation “with its principal place of business in Boston.” Defendant bet 365 is a corporation from the United Kingdom. Both defendants are “registered to do business as foreign corporations in Pennsylvania.” Venue is “proper under 42 PA. Const. Stat. 5301(a)(2)(1) and 28 U.S.C. 1391(b)(2).”Doing businessas a foreign corporation under Pennsylvania law is a “sufficient basis” to “exercise general personal jurisdiction.” Venue is proper “in which a substantial part of the events or omissions fiving rise to the claim occurred in, or a substantial part of the property that is the subject matter of the action is situated. (28 U.S.C. 1391(b)(c).” DraftKings “regularly conduct and/or solicit business in this District.”
Parties MLBPI is the corporate subsidiary of the Major League Baseball Players Association. It represents the players in collective bargaining, and “as assignee of the right to use the names, images, and likenesses of three or more MLB players in calendar year, negotiates and enters into group licensing agreements with companies throughout the world.” It is the sole group licensing agent for all MLB players, and “possesses the exclusive right to use” and license those players’ NILs “for any commercial marketing, promotional activity, or product” in which MLB players’ group licensing rights are implicated.
DraftKings began in 2012, “primarily as a provider of daily and weekly fantasy sports in the U.S.” Fantasy sports use actual players’ statistics and were “generally considered to be to be games of skill that are not regulated as sports betting.” DraftKings is a publicly traded company on NASDAQ. It is a “digital sports entertainment and gaming company, providing online sports betting, online casino, daily fantasy sports, and other consumer products.” This includes their apps, “which allows consumers to place bets on virtually any professional sport or athlete in states where such sports betting is legal, including Pennsylvania.” Defendant bet365’s products are also available through its app and website, including customers in Pennsylvania. It began operating in 2001.
Background Cognizant of the impact that sports betting was having, Congress passed the “Professional and Amateur Sports Protection Act” in 1992, outlawing sports gambling in all states except Nevada. Sport gambling in Nevada doubled from $1.8 billion to $3.9 billion. Consistent with decades of practice, “a bettor did not need a picture” of a player to place a bet. Nevada introduced the first “online sports betting” and sports gambling “saw a sharp increase in sports betting immediately afterwards, especially among younger adults.” This legal jackpot was not to last.
The Supreme Court “overturned” the Act in Murphy v. National Collegiate Athletic Association (548 U.S. 543 (2018)). The rush to legalization commenced, and thirty-eight states legalized sports gambling. Within five years, “Americans spent more than $220 billion on sports betting.” In the first quarter of 2024, Pennsylvania “saw $212 million in gambling revenue.”
This includes bets on specific games, “of the outcomes of multiple sports, based on odds those companies set. They offer prop bets, or bets based on an individual’s performance”, either over the course of a season or in a specific game, how many home runs will be hit by a team during a baseball game, or other exotic bets for the more industrious, statistics-minded. The opportunities to bet is virtually endless.
MLBPI’s Role Usurped Any commercial use of the NIL rights of three or more players “must be licensed through and authorized by MLBPI.” It does so “to ensure that players are associated only with brands, products, and services that they choose to support; that the commercial value of their rights is neither tarnished nor diluted through misuse or overuse; and that the MLBPI and players receive fair compensation” for such use.
What follows are images showing how the defendants “feature the image of almost every current MLB player. These images are specifically used in connection with the promotions of prop bets on both Defendants’ platforms.” There is an image taken from a Draftkings’ mobile app and next to is an image from the bet365 mobile app. The next page demonstrates that the defendants’ mobile apps’ do not show NFL player images.
There are also pages illustrating that the defendants’ use “of MLB player images … on individual player images accompanying the player’s statistics and playing records.” This is not so for the defendants’ mobile apps for NFL prop bets. The images further show that the apps use MLB and MLB team colors, and logos. This is “intended to entice users of the platform to click on their tiles, which then takes the users to a page of prop bets pertaining to that player.”
This unauthorized conduct spills over onto the defendants’ social media platforms, “using MLB player images on their platforms for their own commercial advantage, as a means of associating their platforms more closely with these MLB players, to promote the use of their platforms and entice users to place bets when on the websites or apps.” The images and names of players are further used “in advertising for their respective sportsbook platforms”, including social media posts. The Complaint continues with two additional color photos of this use. The summation of the factual section states that the defendants “knowingly appropriated the images and likenesses of three or more MLB players, and willfully disregarded MLBPI’s rights in using these players’ images”, both on their mobile app sites and in “advertising and promotions for their sportsbook platforms.” There are four causes of action, all based on Pennsylvania state law. This section is approximately three pages long and entails sixteen numbered paragraphs, though some are a single sentence.
First Claim: Violation of Pennsylvania Statute §8316 This statute “provides a cause of action for any “natural person whose name or likeness has commercial value and is used for any commercial or advertising purpose” without written consent. It further protects any person, “firm or corporation authorized in writing” to license “the commercial or advertising purposes of the person’s name or likeness” (42 PA Const. Stat. § 8316(b)).
MLB players’ NILs have commercial value. These rights have been assigned to MLBPI. Without consent, the defendants helped themselves to those rights. This behavior is “outrageous, malicious, and in willful violation of MLBPI’s rights.” MLBPI therefore seeks “to recover equitable and monetary relief” in order “to remediate such violations”.
Second Claim: Violation of Common Law Misappropriation of Publicity This claim incorporates the previous allegations. Pennsylvania “recognizes a common law right of publicity for the appropriation” of “valuable likenesses, without authorization, for commercial purpose.” This behavior “has cost MLBPI compensation it should have received for these uses, entitling it to compensatory damages.” The alleged conduct “was outrageous and inexcusable, justifying punitive damages.”
Third Claim: Violation of Common Law Misappropriation of Identity The third claim also incorporates the above before stating that Pennsylvania “recognizes a common law right of publicity that provides individuals with a cause of action for the invasion of privacy by misappropriation of their name and likeness.” For MLB players, these rights “have commercial value.” The defendants “knowingly and intentionally violated the common law privacy rights of current MLB players.” The behavior was “outrageous, malicious, and in willful violation of MLBPI’s rights.” Both compensatory and punitive damages are sought.
Fourth Claim: Unjust Enrichment This adds little not previously stated, except that a result of the described behavior, the defendants “have been unjustly enriched to the substantial detriment of the MLB players and MLBPI.” Retaining these benefits would be “unjust and inequitable.” MLBPI “seeks full restitution of Defendants’ enrichment, benefits, and ill-gotten gains acquired as a result of the unlawful and/or wrongful conduct alleged herein.”
Prayer For Relief MLBPI seeks a preliminary and permanent injunction to cease the defendants “from continuing to use MLB player images and likenesses in their sportsbook platforms” and in “advertising and promotions”. It requests actual damages “under 42 PA. Const. Stat. §8316; compensatory and punitive damages to be determined at trial; an accounting and disgorgement of all profits “associated with the use of MLB player images and likenesses”; reasonable attorney’s fees, costs, and disbursements; anything else that the Court “deems just and equitable.” A jury trial is demanded.
Editorial
The case was filed by Winston & Strawn. Jeffrey Kessler is lead counsel, no stranger to NIL litigation. The NCCA’s purported attempt to shield itself from antitrust compliance for this behavior was laid to rest in NCAA v. Alston (594 U.S. ___, 141 St. Ct. 2141) (2021)). Kessler was lead counsel. He is class action lead counsel in House v. NCAA (4:20-cv-03919-CW). House and related cases are currently waiting Court approval of the pending settlement agreement. The parties filed amendments to the proposed agreements on September 26, 2024. This includes exhibits (Doc # 537 (under seal)); a stipulation (Doc # 533); a brief (Doc. #534); and two declarations (Docs #535 & 536). Kessler has served as outside counsel for the NFL Players Association for over thirty years. Kessler will be relentless, for better or worse depending on one’s point of view.
MLBPI had many potential venues. Winston & Strawn likely combed the country before picking Pennsylvania. Counsel is not dawdling. The same day that the Complaint was filed, it was served on DraftKings. Their Los Angeles office was admitted to practice before the Court on September 19, 2024. For many the concept of Big Law seeking “reasonable attorneys’ fees will lead some to laugh and others to bewilderment.
The defendants may attempt to assert with a straight face that they had no actual knowledge of the unauthorized use of the name or likeness of a natural person, thus obtaining immunity under 42 PA Const. Stat. §8316(d). They may also seek refuge under the provisions that exempt “news presentation having public interest”, §8316(e)(2)(ii)), or that their apps are an “expressive work,” §8316(e)(2)(iii)). Whatever they are, the apps are not exempt as “an original work of art” §8316(e)(2)(iv).
DraftKings can pay the players’ NIL rights. The Complaint cites “publicly reported financial information” that states that in 2023, the company “generated over $3.6 billion in revenues”, a “63.6% increase over the year before.” One wonders, however, how any “accounting” can discover just how much the defendants gained from the unauthorized use the player’s NILs. Experts will devour the records, make all sorts of calculations, some at the computer, some on paper, and some merely mental. Numbers will be concocted. One can only speculate as to what rabbits may lurk in DraftKings’ betting apps.
