Daily Fantasy Sports (DFS) has grown in popularity in the past two years. It has become a booming business. Draftkings, a DFS, struck a 2 year $250 million advertising deal with ESPN. The competing DFS Company, Fanduel struck a 4 year deal with the NBA to handle all of its fantasy sports.
(DFS) is slightly different from typical fantasy sport games. In traditional fantasy sports games, participants compete against one another by assembling a team of players from a particular league and earn points based on the statistical performance of the players in real world competitions.
DFS is conducted over short-term periods, such as a week or single day of competition as opposed to traditional fantasy sports games, which take place over a whole season. DFS is set-up in the form of contest-competitions where users pay an entry fee in order to participate, and build a team of players while adhering to a salary cap. Players can win a share of a pre-determined pot. While it may sound like gambling, it is very legal. Courts have determined that fantasy sports are a game of skill as opposed to a game of chance.
As popular as DFS has become, there have been some legal issues within the growth of the industry. For example, Pierre Garcon of the NFL’s Washington Redskins filed a suit in the United States District Court for the District of Maryland against Fanduel concerning proprietary rights and First Amendment issues.
Garcon raises two legal issues. One is the Latham Act, a federal law that prevents businesses from creating false endorsements when those endorsements tend to cause consumer confusion. The other is the “right of publicity,” which prevents unauthorized commercial use of a person’s name, likeness, or other recognizable aspects of one's persona. It gives that person the exclusive right to license the use of their identity for commercial endeavors. The “right of publicity” is protected by state law.
One of Fanduel’s defenses to the “right of publicity” is the First Amendment allowing its use. Generally in defending against “right of publicity” one would assert that the use reflects “significant transformative elements.” Generally “subjective transformative elements” are issues in cases involving artwork. When determining “significant transformative elements” the courts consider the following issues:
· The product containing a celebrity’s likeness needs to transform such that it become the user’s own expression rather that the celebrity’s likeness.
· The expression must be an expression of something other than the likeness of the celebrity.
· The marketability and economic value of the challenged work must not derive primarily from the fame of the celebrity depicted.
In essence the value of the work must come from the creativity, skill, and reputation of the artists and not principally from the fame of the celebrity to possibly be deemed “sufficient transformative elements” to warrant protection under the First Amendment.
Fanduel must also show that the marketability and economic value of its work derived from its own work and expression and not just solely from Garcon’s celebrity. This will be quite a challenge.
The right of publicity is reaching new territory with daily fantasy sports. DFS is not in the business of reporting the new and they are not in the field of art. Stay tuned.