INDIANAPOLIS — Whether fantasy sports companies may use players' likenesses without their permission, a question now before both Chicago's federal appeals court and the Indiana Supreme Court, could have implications for some real-life athletes, but likely won't kill the virtual game.
"This case has possible broad implications for a limited group of athletes," said Jason W. Gordon, a partner at the firm of Reed Smith, working in its Entertainment & Media Group in Chicago. "To the extent this court holds that DraftKings and FanDuel violate these Indiana players’ right of publicity, others who use those same players names or likenesses for commercial gain could face similar suits, including video game companies, virtual reality providers, etc."
Jason W. Gordon | Reed Smith
Earlier this month, the U.S. Seventh Circuit Court of Appeals sought guidance from the Indiana Supreme Court in a lawsuit filed by former college football players over whether their likenesses may be used by fantasy football companies FanDuel and DraftKings without their permission.
The case now before the Indiana Supreme Court originally was filed by former college football players Akeem Daniels, Cameron Stingily and Nicholas Stoner against FanDuel and DraftKings. The three claim that FanDuel and DraftKings used their "names, pictures and on-field statistics" without their permission, according to background information in the appeals court's decision.
The case was dismissed in U.S. District Court for Indiana's Southern District in September when that court ruled the use of players' images is exempt under that state's right of publicity statute because the use qualifies as "newsworthy" and reports on a topic of public interest.
The appeals court's action in the case, noted for its unusual speed - the case was argued on Feb. 22 and returned on March 5 - was to send a certified question to the Indiana Supreme Court asking "Whether online fantasy-sports operators that condition entry on payment, and distribute cash prizes, need the consent of players whose names, pictures and statistics are used in the contests, in advertising the contests, or both."
"If the Seventh Circuit determines that the use of the players likenesses does not fall under the newsworthy exception, the alternative would be a finding that DraftKings and FanDuel violated the players' right of publicity," he said.
Those companies probably are not too worried about the Indiana high court's decision, Gordon said.
"I don't see this being a show-stopper for FanDuel or DraftKings," he said. "Both companies have weathered significant storms in the illegal lottery/gambling cases, which led to several states passing laws banning - or permitting - those companies from offering their services to citizens in those states.
"Importantly, right of publicity law is a state law, not federal, and accordingly, the ruling would be limited to those athletes in Indiana."
Athletes in other states could file their own lawsuits in those states, where courts would evaluate those cases based on laws in those states, Gordon said, making this appeal one to watch.
"This is a very important appeal, as it addresses the constant battle between fantasy sports companies and the players which those companies desire to highlight," he said.
"If the Seventh Circuit holds that Draft Kings and Fan Duel have violated the athlete’s right of publicity, the companies will either need to obtain permission from those athletes to use their names and likenesses on a going forward basis, or stop using them altogether."
Gordon declined to predict which way the Indiana Supreme Court might go but did say the case also raises another question.
"It’s very early to tell the implications of the Indiana Supreme Court's thoughts, but an interesting question remains," Gordon said. "Can a company that is fundamentally illegal in a given state receive protections under federal law?"