Published Speech: The Legal Status of Fantasy Sports in a Changing Business Environment

On March 20, 2015, I had the pleasure of giving a speech at Northern Kentucky Law Review's symposium on the "New Era of Gaming Law" about the legal status of fantasy sports in a changing business environment.   The speech looks at the history of fantasy sports and "daily fantasy sports," as well as the legality of "daily fantasy sports" under federal and state law.  The speech is also among the first to explain why consistent winners in a "daily fantasy sports" contest is not, in itself, enough to indicate the contest is a "game of skill" under relevant state law.

Just in time for fantasy football season, here is a link to my speech.

Catching up on Patrick Kane investigation, Tom Brady v. NFL

It was an extremely busy last few days in the world of sports law. Here are three articles I wrote for Sports Illustrated during that time:

* Why the Patrick Kane rape case investigation may take months

* What to make of judge's criticisms of NFL's case against Tom Brady

* Deflategate goes back to court: Six keys to the latest hearing

Infield Fly Double Play

On Wednesday night, the Royals turned a double play on an Infield Fly. With bases loaded and one out, a fly ball was hit near the first-base line, even with the mound; the rule was put in effect, the ball was not caught, and the runner on third made the instinctual move of running when the ball hit the ground and was tagged out at home. This is about the third or fourth time I have seen a double play on an I/F/R call in the six seasons I have been tracking.

Although the non-catch here was unintentional (the pitcher and first baseman had a miscommunication), a play such as this shows why the I/F/R does not entirely eliminate the perverse incentive for infielders to intentionally not catch the ball. There is always a chance an infielder could con the runner into taking off when the ball hits the ground and the runner's instinct takes over. And because not catching the ball is costless to the defense (since the batter is out anyway), it could be worth a shot. But this possibility does not undermine the I/F/R. The rule exists because base runners would be helpless if forced to run on a non-catch; it does not exist to save the runners from the consequences of running without thinking. And, of course, had the catcher forgotten to tag the runner (i.e., had the catcher been the one to have the brain cramp), the runner would have scored. In any event, I have only seen two instances of intentional non-catches in six seasons, so clearly the likelihood of success is not high enough to convince infielders to try this on a regular basis.

Possible Reasons for NJ Sports Betting Delay

Amazingly, we are  still waiting for a decision in the New Jersey sports betting case. If you recall, New Jersey's plan to legalize sports betting is the subject of an ongoing federal court battle playing out before the U.S. Court of Appeals for the Third Circuit. It has been slightly more than five months since the oral argument. Many observers (including me) predicted that the appeal would be decided by May or June, since court statistics reveal that the average time between oral argument and a final decision is 2.7 months. That wait-time has now nearly doubled. I would have expected the Third Circuit to rule by May (or June that the latest) given the absence of any federal constitutional challenges in Christie II (the latest iteration of this controversy). In Christie I, the Third Circuit had to address complex constitutional issues under the Tenth Amendment, the Commerce Clause and the Equal Sovereignty doctrine, and was still able to issue a jumbo 128-page opinion less than three months following the oral argument in that case. By contrast, Christie II is much narrower in scope: the Third Circuit only has to address whether New Jersey’s partial repeal law rises to the level of an “authorization” for purposes of PASPA. There are no constitutional issues. This is a much cleaner opinion to write.

So why the delay then? There may be several factors in play. First, this is an important decision that will have far-reaching consequences. We are talking about the potential nationwide legalization of sports betting. These are big stakes. The Court’s charge is to get it right, not to satisfy any arbitrary deadline. There are a lot of eyes on this case, and many believe that it is ultimately headed to rehearing en banc (and possibly the U.S. Supreme Court), regardless of who wins.  With the prospect of further judicial review a realistic possibility here, it does not surprise me that the Court is taking its time with the decision. No judge wants to be second-guessed. But the delay could also be a sign that this case is not quite the "slam dunk” that many observers originally believed it to be. Oral argument certainly helped New Jersey’s cause (pushing its chances of success to closer to 40%, maybe even much higher), and it may very well be that this case is now “too close to call,” which may explain the delay in the court's decision-making. Could there be a dissenting opinion in the works? Based on the divided oral argument (with Judge Marjorie Rendell seemingly firmly in New Jersey’s camp, or was she just playing devil’s advocate?), it would appear that this case is primed for another dissenting opinion (just like in Christie I).

Or could the delay here just simply be a function of the Third Circuit’s busy workload. Statistics published by the Administrative Office of the United States Courts bear this out. In 2013, when Christie I was decided, the median time for an appeal to be decided (using the filing of the notice of appeal as the starting point) was only 5.9 months. In 2014, that number spiked to 7.1 months (a greater than twenty percent increase), and, in 2015, that number increased further to 7.8 months. So, since Christie I was decided, it is now taking the Third Circuit on average nearly two months longer to decide cases. The current appeal has been pending for only 8 months and 13 days, which is several weeks less than the Circuit average for all of 2015. Thus, the current delay is nothing out of the ordinary.

The complexity of the case is certainly at the crux of it though. As an appellate lawyer, I have seen decisions issued following oral argument in as a few as three weeks. But I have also been part of cases where it took more than one year for a decision to be issued. The wait may soon be over, if the calendar is any indication. As my friend and colleague, Alan Milstein, pointed out the other day, the timing of the opinion may correlate to the employment status of the judicial law clerks (I believe each federal appellate judge gets three). As the judge’s law clerks start departing their clerkships for “greener” pastures around Labor Day, Alan expects to see a flurry of opinions released in the latter part of August, as the departing clerks look to "clear the decks" for the incoming clerks. We could very well see the New Jersey opinion included in this late-August release, particularly if the clerk assigned to write the first draft of the opinion is leaving his or her clerkship at around the same. So, if Alan is right (and never bet against him!), the wait shouldn’t be that much longer.

-- Daniel Wallach

The NLRB Decision & The Sports Law Blog

In March 2014, the NLRB's regional office in Chicago decided that Northwestern football players should be defined as employees, and thus have a right to unionize. In a surprise announcement, 510 days later, the NLRB declined to exercise jurisdiction in a case, thereby vacating the earlier decision. The end result is that Northwestern football players are not defined as employees under federal labor law, and therefore unable to unionize.

When the NLRB punts, the contributors to the Sports Law Blog are there to comment on the case. In addition to the posts we've already written on the Sports Log Blog itself, here's a quick round-up of articles and quotes from our contributors from yesterday's news:

Sports Illustrated, "Breaking Down Implications of NLRB Ruling on Northwestern Players Union" by Michael McCann.

Associated Press, "Is the Effort to Unionize College Athletes Dead?" by Jimmy Golen. With quotes from Gabe Feldman & Warren Zola.

Forbes, "NLRB Rejects Northwestern Football Players' Bid to Unionize; Makes Antitrust Lawsuits More Important" by Marc Edelman.

NPR, AirTalk, "NLRB Denies College Athletes Right to Unionize" Quotes from Warren Zola.

Chronicle of Higher Education, "NLRB's Northwestern Ruling Sets a High Bar for Approving Student-Athlete Unions," Quotes from Warren Zola.

Bloomberg Business, "College Sports Gets Open Door for More Unionizing in the Future," Quotes from Warren Zola.

Another Take on the NLRB's Punt

Yesterday, the sports law world experienced a temporary reprieve from Deflategate when the five-member National Labor Relations Board declined to assert jurisdiction in the Northwestern case, unceremoniously deflating the question of whether players at private universities have the right to unionize under the Wagner Act.  

One might question why a punt took so long.  To boot (so to speak), the now-vacated decision was almost certainly correct: unlike in the famous 2004 case involving Brown University graduate students, who were denied the right to unionize by the NLRB because they were students first, students playing football at almost any institution serious about football are, whether by choice or circumstance, athletes first and students second.  Indeed, athletes at universities governed by the Wagner Act should, in fact must, be allowed to unionize should they so choose, and any argument to the contrary is on the wrong side of history. 

With that said, one could argue that the notion of college athletes unionizing was always a bit absurd, and was the wrong way to go about achieving the laudable and necessary result of empowering players and achieving equanimity:

• First, the exact arguments made in favor of unionization would have given the IRS a strong basis to rule that the full amount of a grant-in-aid to a student-athlete, as opposed to just room and board, is includable in gross income and therefore taxable.  For tax purposes at least, unionized athletes receiving monies under the current grant-in-aid framework would have been much worse off than individuals simply attending on a non-athletic scholarship.  We will perhaps never know whether they could have “made up the difference” through collective bargaining, but I doubt it, given that NCAA regulations only allow so much leeway.  

• Second, athletes really serious about unionization would have flocked to private universities, or public universities in labor-friendly states (because the National Labor Relations Act, of course, only affects private institutions, and state institutions are dealt with under state law).  And then at those private institutions, making matters still more comical, the athletes would have a right that the faculty members lack — unionization (after all, the Supreme Court long ago held, in the NLRB v. Yeshiva University case, that full-time faculty members at private institutions are managerial and therefore cannot unionize).  So you would have the very jealousy and resentment that in some small way at least could be said to support the NCAA’s “argument” against paying athletes!  

• Third, and finally, a cynical person could even argue, perhaps convincingly, that the students were being “played” by the labor unions (going from being the pawns of the institutions to the pawns of the labor unions) if the unions trying to organize the students knew all these things to be true.  Unions serve incredibly valuable purposes, of course, but ultimately the unionization has to work for the members and not just the union itself.

Appellate experts are in agreement that the NLRB's declination of jurisdiction is essentially unappealable.  Maybe, in these unique circumstances, and at this unique point in time in the history of college athletic reform, that is a good thing.  

NLRB punts on Northwestern

Here's my new column for Sports Illustrated on what the NLRB's decision means and it's impact on college sports.