Editor’s Note: On Feb. 22, the US Court of Appeals for the Seventh Circuit — a court one level below the Supreme Court — will hold a hearing in a lawsuit filed by three ex-college football players against DraftKings and FanDuel.

In a three-part series, Legal Sports Report probes the case and explains its potential implications for both daily fantasy sports and traditional sports betting.

This second installment deep-dives into how a 2007 legal decision in a different fantasy sports case could cast a shadow over broader sports betting legalization movements currently underway. Part one of the series is here.

A 2007 fantasy sports legal case that started in Missouri could play a big role when three federal judges in Chicago hear oral argument next week in a high-profile lawsuit pitting three former college football players versus DraftKings and FanDuel.

The 2007 case — formally titled CBC Distribution and Marketing vs. Major League Baseball Advanced Media — addressed whether a fantasy sports operator could use player names and statistics without permission.

“[T]he information used in CBC’s fantasy baseball games is all readily available in the public domain,” wrote the judges from the US Court of Appeals for the Eighth Circuit, who decided the 2007 dispute. “[A]nd it would be strange law that a person would not have a First Amendment right to use information that is available to everyone.”

Beyond the fantasy sports lawsuit involving DraftKings and FanDuel, the CBC case could also influence traditional sports betting in the current environment. Indeed, court documents obtained by Legal Sports Report from over a decade ago shed light on how the CBC case was viewed by some of the same sports leagues now at the center of on-going sports betting lobbying efforts.

What happened in the CBC case?

Fantasy sports operator CBC sued Major League Baseball Advanced Media (MLBAM) “to establish its right to use, without license, the names of and information about [MLB] players in connection with its fantasy baseball products.” CBC furthered a First Amendment free speech argument throughout the case.

At the time of the lawsuit, MLBAM was a sister company of Major League Baseball and was used by MLB to spearhead the league’s media and internet pursuits. For example, MLBAM ran fantasy baseball games on MLB’s official website.

MLBAM filed a counter-suit against CBC, alleging that “CBC’s fantasy baseball products violated rights of publicity belonging to [MLB] players and that the players, through their association, had licensed those rights to [MLBAM].

MLB’s media arm was joined in the lawsuit by the Major League Baseball Players Association (MLBPA), which successfully intervened in the case on the same side.

Fantasy company CBC prevailed at the trial court level, leaving the appellate judges with the task of balancing MLBAM’s right of publicity claim with CBC’s First Amendment argument.

“[W]e conclude that the former must give way to the latter,” wrote the judges in a ruling favoring CBC. “It is true that CBC’s use of the information is meant to provide entertainment, but ‘[s]peech that entertains, like speech that informs, is protected by the First Amendment.’”

Supreme Court attempt

MLB’s sister company and the players union — in a joint court filing — then asked the Supreme Court to take the case and potentially have it overturned.

“Review is warranted to resolve conflicts among federal and state courts concerning when the enforcement of publicity rights violates the First Amendment,” wrote lawyers for MLBAM and MLBPA in a Feb. 22, 2008, petition to the nation’s highest court. “It is well established that famous persons, including [MLB] players, have a property right in their identities and that others may not use or exploit these identities commercially without the person’s consent.”

The league and union then furthered an argument similar to one now being adopted by the NBA and Major League Baseball in current lobbying efforts.

“Without the players’ identities, there would be no fantasy,” wrote MLBAM and MLBPA lawyers on May 12, 2008.

The Supreme Court declined to hear the case shortly thereafter, ending the litigation.

Other sports leagues take note

Sports leagues beyond Major League Baseball joined the fray too, evidencing the importance of the case then — and now.

On Dec. 22, 2006, a half-dozen sports leagues and affiliated companies filed an “amicus brief” in support of MLBAM when the case was still pending before the Eighth Circuit.

“The district court compounded its error by concluding incorrectly that CBC’s unauthorized use of player names to market and promote its fantasy games was not predominately commercial in nature, but was akin to news dissemination” wrote lawyers for NBA Properties, NHL Enterprises, NFL Ventures, NASCAR, the PGA Tour, and the WNBA.

NFL Properties and the National Football League Players Association also filed a certiorari-stage amicus brief to the Supreme Court in support of MLBAM’s petition for review.

“The Eighth Circuit’s decision will undermine the entire fantasy sports industry,” wrote lawyers for NFL Properties and the union. “Businesses such as respondent CBC may be able to reap the benefits of the labor, skills, and achievements of athletes and other celebrated figures, with no return to the individuals themselves.”

The CBC case in the current DFS dispute

The issues in the CBC case mirror some of the issues in the current DFS case set for a hearing on Feb. 22, as the Seventh Circuit will likely be tasked with balancing right of publicity claims, on one hand, and First Amendment free speech defenses, on the other hand.

Lawyers for both sides in the current dispute have positioned the CBC case much differently.

“CBC is significantly different from this case, and is analytically flawed,” wrote lawyers for the three ex-college football players who sued DraftKings and FanDuel.

In contrast, DraftKings and FanDuel have repeatedly cited the CBC case as authority for deciding the case in their favor.

“The Eighth Circuit in CBC rejected a right of publicity challenge to a fantasy sports site like the ones [we] run here,” wrote lawyers for DraftKings and FanDuel in a joint brief dated Jan. 16, 2018.

Implications beyond fantasy sports

Regardless of how the Seventh Circuit rules in the pending case, First Amendment free speech issues are likely to appear in sports betting legalization debates across various statehouses and on Capitol Hill.

Early evidence indicates that at least some sports leagues — such as the NBA and Major League Baseball — will actively lobby in the debates over the parameters of legalized sports betting.

“[E]ach league needs the ability to approve the types of wagering that are offered,” wrote the NBA in a Jan. 24 statement submitted to the New York State Senate.

In turn, sports betting operators, as well as lawmakers considering bills during public debate, may look to the First Amendment to gauge whether restrictions on the scope of traditional sports betting would be prudent. Or allowable at all.