MLB’s Fantasy to Monopolize Suffers Blow

On October 16, 2007, Major League Baseball struck out for the second time in its pursuit to limit and essentially monopolize the fantasy league business that utilizes statistical information associated with MLB players' names.

While this did get some coverage in the mainstream press, the ultimate impact of such a decision impacts not only all of the professional sports leagues, but other commercial enterprises which make use of any kind of player statistical information such as the video game and software industries.

The U.S. Court of Appeals for the Eighth Circuit out of St. Louis, MO in handing down a ruling by a three-judge panel was an affirmation of the underlying appeal heard before U.S. District Court Magistrate Judge Mary Ann Medler, also out of St. Louis, and her opinion issued August 8, 2006. In the underlying Summary Judgment, Judge Medler found that "the players do not have a right of publicity in their names and playing records as used in fantasy games." And furthermore, that "the First Amendment takes precedence over such a right."

But offering only a peripheral view of the issues involved in this case does a disservice to fans not only of MLB, but the National Football League, the National Basketball Association, as well as the National Hockey League. In fact, MLB, the NFL, and the NBA all partake in their own fantasy leagues through such commercial ventures run by their league websites MLB.com, NFL.com, and NBA.com, respectively.

The litigation involving MLB Advanced Media, L.P. (MLBAM) as well as the MLB Players Association (MLBPA) originated over 2½ years ago when CBC Distribution and Marketing, Inc. d/b/a CDM, Inc. or CDMSports.com, of St. Louis, MO, filed a lawsuit against MLBAM for the right to operate its CDM Fantasy Sports League with the necessary statistical data on MLB players in order to do so.

But not emphasized thoroughly enough in reports is that from 1994-2004 it was the MLBPA which licensed rights to fantasy leagues. And as such, CBC, which licensed its use of the names and data about MLB players, had agreements in both 1995 and 2002, the latter of which expired in 2005.

CBC was the very first independent fantasy league license holder with MLB, by way of its contract with the MLBPA, well before the Internet played its now predominant role in the fantasy league business, now generating upwards of $2 billion annually from MLB, the NFL, and the NBA alone.

It was in 2005 when MLBAM purchased the exclusive rights to use baseball players' names and performance information from the MLBPA "for exploitation of all interactive media" to the tune of $50 million, for a period of five years. And it was at that point that MLBAM began to provide fantasy baseball games on its own website, MLB.com.

When CBC applied for its license in 2005, it was outright denied by MLBAM due to its claim of the players' "right of publicity" which gave CBC no other recourse but to sue MLBAM in court. CBC saw this as a deliberate attempt by MLBAM to monopolize the fantasy league business now that small operators had turned it into a lucrative investment waiting to be swept up. In fact, in its arrogance, MLB offered CBC in exchange for a commission, a license to promote MLB.com's fantasy baseball games on CBC's website, provided CBC discontinue its own fantasy products.

Additionally, ESPN, CBS Sportsline, Sporting News, and Yahoo! Sports were awarded licenses by MLBAM who pay $2 million annually to MLBAM for the right to run their own fantasy leagues. And it appears rather evident that the issue is not about the "right of publicity," but the right to cash in on and control another entity which MLB has yet to conquer.

Since statistical information had always been considered in the public domain according to prior case law, it was a rather creative leap in legal gymnastics that MLBAM came up with in order to ward off the use of problematic future technologies or entities which could arise and make use of such statistical data.

MLB was joined through amicus briefs, filed with the U.S. Court of Appeals for the Eighth Circuit, by the NFL, the NHL, the NBA, the NFL Players Association, the PGA Tour, and NASCAR, amongst others. It is clear that there is a big business expectation of windfall profits for such a venture which at one point started out not all that long ago with a bunch of guys sitting around drinking beers talking about forming a rotisserie league for fun.

But lost in all of the legal shenanigans of this litigation is perhaps the message that ensues at its result. And that is that essentially fantasy leagues are a form of gambling. It is more than ironic, given all of the history and more recent threats to the integrity of professional sports, such as officiating in the NBA, which now prohibits any type of gambling amongst its referees year round, and MLB's historic credo of zero tolerance when it comes to gambling on its sport.

The promotion of fantasy leagues by MLB, the NFL, and now the NBA is a distinct conflict of interest. But that did not prevent MLB and the MLBPA from testifying before the U.S. Congress, prior to its passage of the 2006 Unlawful Internet Gambling Enforcement Act, in lobbying for fantasy leagues to be exempt from the Act.

Yet, amazingly MLB does not consider fantasy leagues to fall under same the umbrella of gambling since it does not directly "attempt to influence the outcome of a game or a baseball player's performance." MLB went as far as saying that playing in a fantasy league is a game of skill, not of chance such as in a gambling casino, and thereby is not really betting.

Well, in its astute discretion, the U.S. Congress agreed with MLB allowing the continued organized fantasy leagues to remain on the Internet and officially exempt from the 2006 law. But whether or not fantasy leagues have a direct bearing on the outcome of a MLB, NFL, or NBA game, such fantasy leagues both directly and indirectly encourage gambling.

Yet, there is little distinction made in the minds of most participants and onlookers who happen to be the fans. Most associate fantasy leagues as a form of gambling as wagers are made, money is collected and a purse is paid out to the winners. Makes one think how these professional sports leagues and players associations can get away with such nonsensical drivel.

We can only rationalize it to the extent that the leagues are willing to risk such an association with gambling and their sports if there is a buck to be made. And even it is off the backs of small operators who created the whole fantasy league business in the first place.

Next up for MLB is perhaps a second appeal before the U.S. Court of Appeals for the Eighth Circuit before a nine-judge panel or even an attempt to petition the U.S. Supreme Court, which could either not choose to hear the case or remand it back the District Court. MLB is currently thinking about its next move.

And once again, MLB is trying to control everything baseball, even at the expense of alienating its fans or even worse, to encourage that which it says it will never condone: gambling.