Sports data rights in 2021: the outlook

Sports data is big business, and has been for some time now. The State-by-State opening of the US sports betting market, with its stats-loving punters, has further enhanced the value of that data. However, the higher the stakes, the greater the likelihood of challenge. This year, we are likely to see further developments in the law relating to sports data, as some key challenges to the commercialisation models of sports data rights start coming to a head. We take a look at the top 5 things to look out for in 2021.

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1. Will sports bodies have their ability to enter into exclusive data rights agreements upheld?

The battle between Sportradar, Football DataCo (FDC) and Genius Sports (Genius) will kick off in earnest this year over two legs: firstly in the Competition Appeal Tribunal (CAT) and secondly, we expect, in the High Court.

The background to the dispute lies in a 2019 agreement between FDC, the data rights-holder for the English Premier League, English Football League and Scottish Football League, and Genius. A five year deal was struck, which grants Genius the exclusive right to capture live game data and distribute it to bookmakers globally. The deal also reportedly allows Genius to decide who, if anyone, it sublicenses such rights to, and requires that any downstream bookmaker client of a sub-licensee also has an over-licence to use the official Genius data.

In order to protect the integrity of this exclusive deal, FDC and Genius have taken a zero tolerance approach to other data suppliers collecting live data in stadia, relying on clubs to evict these unofficial “data scouts” on the basis of breach of ticket conditions and trespass.

In the first of these showdowns, to be heard by the CAT, Sportradar argue that the deal structure breaches competition law. Central to their argument is that the structure places Genius in a dominant position, which Sportradar alleges it is abusing by refusing to sub-license and employing the eviction tactics against other data providers who attempt to collect such data.

In the second showdown, FDC and Genius appear likely to bring a counterclaim against Sportradar in the High Court for trespass, rights infringement and breach of contract. Sportradar will claim that, as the long term exclusivity granted to Genius is unlawful, so too the ticket terms and conditions which enforce that exclusivity must be unenforceable. The complaint would test the legality of the tactics employed within stadia to protect the integrity of exclusive rights deals.

The parties have already come up against each other in the CAT at the end of last year in a tussle over whether this case should be transferred to the High Court due to the existence of the counterclaims, which the CAT does not have jurisdiction to hear. In refusing the application, the CAT has made it clear that resolution on the competition law claims, which are significant and complex in this case, is needed before the potential private law counterclaims may properly be considered.

Whichever way the decisions go, this case could have significant repercussions for the exclusivity of sports data rights across different sports and different jurisdictions. If Sportradar’s competition complaint is upheld it will make it more complicated, though perhaps not impossible, for sports bodies to sell exclusive sports data rights. If the competition complaint is not upheld and there is also a positive outcome for FDC and Genius in the High Court case, the assured exclusivity of these deals may lead to a further increase in their value, although see point 5 below as to the extent to which the betting market will sustain further price increases, and point 3 below as to whether the players themselves might be entitled to a cut.

The commercialisation models of sports data rights are under the spotlight here, and  sports bodies, clubs, betting operators, rights holders and data suppliers across all sports will be watching very closely.

2. Can sports data be confidential? The Racing Partnership v Sports Information Services – to the Supreme Court?

The issue of whether exclusivity in live sports data rights may also be protected by a right of confidentiality in certain situations forms the central issue in a decision handed down by the Court of Appeal in October 2020 in the long running dispute between TRP and SIS, and which might yet make it to the Supreme Court on appeal in 2021.

We covered the first instance decision here and the Court of Appeal decision here. For a more in depth commentary, also see our review of the Court of Appeal hearing here.

The Court of Appeal was split on whether the circumstances in which Sports Information Services (SIS) received raceday data from the Tote created the necessary quality of confidence. Value alone was not enough to secure confidentiality, but it was left open as to whether other circumstances could be created in which a right of confidence may exist.

A confirmation that rights of confidence may subsist in live sports data, including the circumstances in which they may exist, would further bolster the ability of rights holders to protect the integrity, and the value, of exclusive sports data rights deals against unofficial data suppliers, and would put further pressure on the ‘unofficial data’ market.

3. Will Project Red Card materialise?

There are limited public details on what the potential lawsuit dubbed ‘Project Red Card’ will entail and who it will target. What we do know, however, is that a group of former footballers are considering a legal challenge to the commercialisation of performance data which they will look to claim is ‘personal data’.

The case, if it does materialise, would likely consider the interface between intellectual property rights and the rights of individuals under GDPR. If successful, the case has the potential to drastically alter the way in which third parties such as sports rights holders, clubs, data collectors and suppliers, betting operators and media businesses can seek to commercialise this data. Indeed, Genius Sports Group considered the risk material enough to include it in its SEC filing.

Whilst 2021 is unlikely to see the culmination of this case, we’ll be keeping a very close eye on any developments.

4. Challenges ahead for Database Rights?

What does a Latvian jobseeker website and a sports data rights holder have in common? A keen interest in the scope of database rights, of course!

Advocate General Szpunar, a legal advisor to the European Court of Justice (ECJ), delivered an opinion earlier this month that has the potential to redefine the situations in which a database right may arise.

The case at hand relates to a Latvian jobseeker site, CV-Online, which compiles vacancies from employers and presents these to jobseekers through a search function. CV-Online utilises meta tags on its site to encourage discoverability across internet search engines and boost engagement with its adverts. A second website, SIA Melons, acts as content aggregator and offers a secondary search function which scrapes vacancies from multiple websites, offering the jobseeker the ability to refine their search according to various criteria and then hyperlinking them back to the original site, in this case CV-Online. CV-Online brought proceedings against SIA Melon on the basis that its activities breached their database right.

In his opinion, AG Szpunar reconfirms that for there to be a breach of the database right there must be (1)  extraction and reutilisation of all or a substantial part of the database; and (2) this extraction and reutilisation must adversely affect the investment made by the maker of the database. In considering point (2) the AG did not accept that such harm was caused to CV-Online simply through the reutilisation of the data by SIA Melon, even though the value derived from the database was linked to the number of hits on the site and the corresponding prices it could charge employers. Instead, the opinion suggests that SIA Melon was providing a different, specialist service and did not affect CV-Online’s position as the intermediary between employer and jobseeker – based on the fact that SIA Melon ultimately provided hyperlinks through to CV-Online. Importantly for the AG, the efficiency of CV-Online in the eyes of its clients (employers) was not affected.

This approach towards assessing whether or not the maker of the database’s investment has been adversely affected is narrower than previous applications. Its focus on immediate harm suffered by the database owner comes at the detriment of any consideration of the benefit obtained by the extractor of the data. It also risks ignoring the potential for other forms of monetisation that the creator of a database may wish to explore – such as licensing opportunities for different or innovative purposes – and would make it harder for database owners to assert a right in the database against any activity that wasn’t ‘parasitic’ to their own.

In justifying the need for this narrowed adverse effect, AG Szpunar considered that it was necessary when balancing the protection afforded to database owners with the need for competition in a marketplace to encourage new innovation.

The database right is of course also central to many sports data rights commercial models – and is a factor in the Sportradar / FDC / Genius case noted above. The effect of the opinion may be to reduce the situations in which a rights holder may be able to rely on the protection of the database right, especially where the utilisation of that data is for a purpose which is not identical to that of the database itself. Fortunately for sports rights owners, the use often made of sports data by unofficial data providers is often rather similar to that of the official providers!

The opinion is not binding, even in the EU, but the reasoning could be persuasive – we will await the decision of the CJEU with interest.

5. Will betting operators’ margins be squeezed further?

The sports betting industry is the biggest market for live sports data, and the health of the betting industry is linked to the success of the sports data market. Whilst ongoing opening of the US sports betting market is a big positive, the prospect of tighter regulation, possible higher taxes and squeezed margins in major European markets (most notably Great Britain and Germany) could have a dampening effect.

In Great Britain, the direction of travel during 2020 was towards further regulation for gambling operators to boost player protection, and a similar outcome from the affordability consultation and Gambling Act review could see deposit or stake limits set according to a customer’s financial profile or blanket limits set unilaterally by the Gambling Commission. In addition, other limitations could be placed on bookmakers relating to bonus offers, VIP schemes and advertising.

In Germany, the new State Treaty on Gambling looks set to impose strict deposit limits on players and severely restrict the in-play betting market, as well as placing additional regulatory burdens on the industry.

Of course, with governments around the world looking for ways to fill the budgetary holes left by COVID-19, the gambling sector could be an attractive target and it would not be a surprise to see gambling tax rates increase further in various jurisdictions.

If new regulation and taxation reduces the margins of betting operators, we would expect to see resulting pressure on the price of sports data rights, as well as the indirect impact on those operating under revenue sharing models.

 

Whilst these issues will not all be resolved during the course of 2021, there will certainly be enough going on to keep all those involved in the sports data business (whether as rights holders, suppliers or customers) – and their lawyers – on their toes.

Andrew is a partner in Bird & Bird's Commercial Department, concentrating his practice primarily on the gambling and sports sectors. He has particular expertise in online gambling regulation, a broad range of commercial gambling matters and major international sports media rights, sponsorship, licensing, event staging and supply agreements. He is a member of the International Masters of Gaming Law and also a former first-class cricketer.
Elizabeth is an Associate in our Commercial Department and a member of our Media, Entertainment & Sport Group, based in London. Elizabeth concentrates her practice on the gambling and sports sectors, and has particular experience advising on online gambling regulation and a broad range of commercial gambling and sports matters.
Toby is a Senior Associate in our Intellectual Property Group, based in London. Since joining us in 2010, Toby has been involved in a wide range of contentious intellectual property matters. With his physical sciences background Toby is often involved in disputes involving complex technologies and his recent experience includes matters involving electromagnetic methods for geophysical prospecting, GSM, UMTS and LTE cellular standards, USB functionality, flash memory devices, algorithmic trading systems and digital set top boxes.
Andrew is a trainee in Bird & Bird's Commercial department in London.

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