In Sports Wagering, Information is Everything!

by Dickinson Wright
Contact

In “Back to the Future, Part 2,” the Old Biff Tannen gives “The Grays Sports Almanac” to his 1955 alter ego. The book contained all of the statistics one would need to place winning wagers on events that would occur in the future. As a result, the future Biff became the wealthiest man in town, before reality was restored by Marty McFly, the character played by Michael J. Fox. There is no doubt that “information” is power and the best information can mean the difference between success and failure.

When it comes to running a successful sports pool or sports book, there are multiple facets to obtaining and managing information that must be considered. This includes finding an experienced odds-maker to interpret the information they gather to manage your lines and your risk, determining how to organize the sharing of information throughout your operation and ensuring that your book has access to basic game-data information.

Old-School Bookmakers are the New Hot Commodity

With the removal of legal impediments to sports wagering found in PAPSA (Murphy v. NCAA), state legislators have been lining up to approve sports betting as their new “cash cow.” With multiple betting operations on the horizon, the next question is who has the expertise as an oddsmaker to run one of these operations. Setting lines and moving them swiftly in response to wagering patterns takes a special knowledge found either in the back rooms of organized crime or the legalized betting industries in Nevada and overseas.

Bookmaking is a skill and an art that takes years of experience to develop and hone. Because Nevada is the only U.S. jurisdiction with any significant history of regulated sports betting, bookmakers from Nevada are sought out by operators in other jurisdictions that primarily take wagers on U.S. sports.

It is no wonder that several bookmakers who work with Nevada’s licensed sports books have become acquisition targets for companies wishing to engage in sports wagering. Sports book managers, such as the respected Johnny Avello, has been lured away to work for fantasy sports behemoth Draft Kings, who presumably intends to sell information and risk management to fledging sports operations, if not operate the book themselves.

Risk Management and the Sharing of Data across State Lines

Sports book or sports pool businesses are the only form of betting without a theoretical win and one in which the house is truly active in the wager. The only way to make money in sports wagering is to manage the risks of operation.

In an ideal world, a bookmaker will take even wagers on both sides of an event, and simply move money from the losing side to the winning side while collecting a service fee (also called a “vigorish or vig”) from losing wagers. However, a balanced event is difficult to achieve in the real world and imbalanced events leave bookmakers exposed to having to pay more out to winners than they receive in wagers. To manage the exposure, risk managers adjust pricing to influence betting behavior based on the market conditions known to an experienced risk manager or bookmaker.

Unlike table games and slot machines, where the house can often not payout at the end of an event, the house always pays out at the end of a sports betting event. Therefore, the issue for risk management is whether the house has taken in more than it is paying out, and if not, how much more is it paying out and can the risk be offset with other events.

Additionally, there are no “good” roulette players, slot players and craps players as these games are all pure luck or nearly pure luck. With sports wagering there are good or sharp bettors that can take advantage of a bad line or a weakness in a sports book pricing and risk management policies.

A risk manager will look at line information, point spreads, betting balances, event conditions, event data and other market data to best manage the risk of a book. Based on the risk manager’s experience and analysis, lines can change, risk can be laid off, and multiple events can be used to hedge or manage exposure.

Given the real risk of loss exposure, and the risks of sharp bettors, a sports book must manage its risks carefully. The State of Delaware learned this the hard way in the 1970s when its NFL parlay card product lost money due to ineffective risk management. Therefore, an experienced risk manager is essential to having a profitable book.

With a limited pool of experienced bookmakers, however, not every operation can find a bookmaker to assume their risk management in each state. A solution to this is centralization of risk management in one location – such as Nevada – for books in multiple states. But is this allowable under Federal law and current state regulations in Nevada?

The U.S. Federal Wire Act (18 USC Section 1084, the “FWA”) prohibits the transmission of sports bets in interstate or foreign commerce. It also prohibits information assisting in the placement of sports bets in interstate or foreign commerce, unless the transmission is between jurisdictions where wagering on such events is legal. There is no exemption for the transmission of the actual sports bets, even between jurisdictions where it is legal; therefore, distinguishing betting information from information assisting the wager is the key issue.

Courts have distinguished bets from information assisting in the placement of bets as follows:

“Bets” are the agreement between a bookmaker and a patron. This encompasses all information used to create that agreement. In the context of phone and internet wagering, the communications to offer, accept and record bets are all deemed to be part of the bet.

“Information Assisting a Bet” is information a bookmaker uses to operate their business, whether or not a bet flows from such information. This might include:

  • Line information
  • Point spreads
  • Patron account information
  • Patron messages for call-backs
  • Pricing information
  • Risk profile

So long as bets are not accepted across state lines, the act of managing lines, spreads, balances and risk can be done from Nevada for book operators in other jurisdictions in which wagering on the events at issue is legal.

This notion is reinforced by NRS 463.810 which addresses global sports book management and requires approval of global risk management arrangements when a licensed Nevada book is involved in the relationship. Providing remote risk management services alone, however, does not require a Nevada gaming license. If the risk manager in Nevada is not taking wagers in Nevada and is not providing services to Nevada books, then the risk manager is not engaged in an activity requiring a license in Nevada.

If the remote risk manager, however, is taking wagers in Nevada or receives a percentage of gaming revenue in Nevada, then a Nevada sports pool license is required. Additionally, if the risk manager is providing line information, spread information or risk management advice to a Nevada licensed book then the risk manager should obtain a Nevada information service provider license.

Obtaining Information: What is Protectable and the Role of the Leagues

Where do sports books obtain their “information”? This article began by stating that “information” is the key to any successful sports book operation. A Global Risk Manager relies on information it may receive from multiple sources, whether publicly available or “stringers” with “inside information” about injuries or condition which could affect the odd. The Global Risk Manager also may have access to betting patterns at other legalized operations, or in some cases, the shadowy underworld’s knowledge of illegal wagers placed upon particular events. But could access of books to the most key information – the official game data – be threatened or controlled by the sports leagues themselves?

As we have all learned from past experience, opportunism knows no boundaries. A looming challenge faced by sports book operators is the claim by professional sports leagues, such as NBA, NFL, MLB and NHL (the “Leagues”) that only they may control sports information. With the Leagues lining up to participate in what they believe will be a financial bonanza, information, which was once freely given, may now have a price.

The question is whether the gaming industry should be forced to use League-approved “official” information, which would make the value of game data soar, or whether sports information is protectable at all? Initially, the Leagues’ direct financial participation in sports wagering was referred to as an “integrity fee,” but most recently it has been called what it may truly be, a “royalty” for the right to use information generated from their events. These fees are a concession the Leagues feel they should be entitled to receive for their conditional support of sports wagering.

During West Virginia sports betting testimony, the Leagues argued that their data is simply faster and better than third party data. While the ultimate score is never in dispute, the advent of in-game wagering requires facts and statistics which the Leagues argue can only be provided by trained and monitored scorekeepers. (Source: Legal Sports Report, Eric Ramsey, March 22, 2018).The seminal case which discusses the issue of protectable information is National Basketball Association v. Motorola, Inc. 105 F. 3d 841, (2nd Cir. 1997). The facts involved Motorola as the manufacturer of the SportsTrax paging device and STATS, a supplier of game information that was transmitted to the pagers. The product became available to the public in 1996, at a retail price of $200. SportsTrax displayed information on NBA games in progress, including (i) the teams playing; (ii) score changes; (iii) the team in possession of the ball; (iv) whether the team is in free-throw bonus; (v) the quarter of the game and (vi) the time remaining in the quarter, all updated periodically.

The NBA complaint alleged that this amounted to unfair competition and misappropriation of information, among other allegations, and sought an injunction and damages. The lower court found that there was misappropriation of data and entered an injunction. However, the Appellate Court disagreed, finding that the underlying basketball games was the subject matter of Federal Copyright protection, but was expressly not protected by the federal statutes, because they do not constitute “creative works of authorship” entitled to copyright protection. The Court went on to state that “statistics from sports events are ‘creative works of authorship’ in any common sense of phrase.”

Accordingly, the Court concluded that Motorola and STATS had not engaged in unlawful misappropriation under the “hot news” test standard discussed in the case and the injunction was lifted with the NBA’s claim for “misappropriation” dismissed.

It should be interesting to see whether the Leagues will be able to control the release of information which would be their predicate for earning a “fee,” or whether their share of the profits derived from wagering activities, however characterized, will be merely assumed as a “participation in gaming revenues,” which could, without appropriate exemptions, subject them to licensing in the various jurisdictions which have approved sports wagering.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Dickinson Wright | Attorney Advertising

Written by:

Dickinson Wright
Contact
more
less

Dickinson Wright on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at www.jdsupra.com) (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.