How AI is Changing the Sports Industry

While AI continues to evolve and gain more attention in everyday life, the sports industry is already seeing a rapid and impactful increase of AI presence and utility. Although AI has clear benefits, it also brings many legal implications. This alert examines the many ways in which AI is currently being used in the sports industry, some of the potential uses in the near future, and several key legal and practical considerations that should be considered as AI continues to be more broadly implemented.

Sports Betting and Fantasy Sports Contests

Sports betting has become a multibillion dollar industry now that sports fans in many states may easily (and legally) place a bet or wager. With the increased usage – and the potential for financial gain – gamblers are turning to AI to gain an advantage. AI’s tools can assist users in streamlining data and comparing players, assessing the impact of an injury, and evaluating starting lineups and potential trades.

However, the reliance on AI as a decision-making mechanism has its risks, especially a financial risk to the user. Reliability of results, patterns, and predictions depends on accurate and up-to-date data inputs that are not accessible to the user. Therefore, it is important to disclose that AI tools do not guarantee success. This may be achieved by addressing the risks of using AI in Terms of Use (such as accuracy disclaimers) or emphasizing on operators’ websites that AI tools are for decision-making support (and not exclusively for decision-making).

Coaches’ and Front Office Personnel’s Preparation

Coaches and front office personnel are leveraging the tools afforded by AI to gain a competitive edge. The improved data processing capabilities can help coaches better evaluate player performance, identify areas that need improvement, and recognize the strengths and weaknesses of individual athletes. AI can also streamline film study by isolating the most relevant footage and recognizing patterns that may not be easily detectable to the human eye. Virtual reality, powered by AI, can immerse athletes in simulated environments to replicate opponents and help hone their skills. Moreover, AI’s algorithms and pattern recognition capabilities can potentially revolutionize player scouting and recruitment because they can forecast the skill level and success of prospects.

However, these tools rely heavily on data consumption, a complex legal issue that raises important questions on how data is gathered and stored. This type of AI technology also could create critical privacy, security, confidentiality, and content concerns.

Automated Officiating

An important benefit of AI is the elimination of human error and bias – two factors that tend to be at the center of attention when it comes to officiating sporting events. Professional sports leagues have already implemented automated technology in their officiating programs in an effort to make the inherently unreliable task of officiating more reliable. One example is Major League Baseball’s (MLB) testing of its AI-generated automated ball-strike (ABS) system to standardize umpires’ calling of balls and strikes. The ABS system was originally introduced on a limited basis in Minor League Baseball in 2022 to determine challenged ball/strike calls only. But for the 2023 Triple-A season, the ABS system has been more prominently incorporated : ball/strike calls for one-half of the season’s games are exclusively determined by the ABS system, while ball/strike calls for the other half of games are officiated by human umpires, with the ABS system deciding challenges only.

MLB’s embrace of the ABS system suggests that important stakeholders are beginning to realize that the benefits of automated officiating cannot be ignored. However, the reliability and accuracy remain at the forefront of discussion. As of the date of this alert, MLB has not announced that the ABS system will be used at the Major League level.

Athlete’s Health

AI’s learning capabilities have the potential to transform the medical field and reshape the way an athlete’s performance and health are evaluated. Wearable technology, which has been used to measure training performance across many leagues and levels for several years, provides live updates of athletes’ vitals and exertion levels. The data collected serves as a detection mechanism to assess whether an athlete is injury-prone, as well as a tool to create specialized training, rehabilitation, and nutrition programs to mitigate an athlete’s risk of injury (or further injury) and to optimize performance.

AI can also be a useful tool in promoting safer sports across all leagues as its capabilities have the ability to analyze and predict how, when, and where injuries occur, evaluate the degree of such injuries, and model the potential short and long-term effect of such injuries. This data can then be used to create safer equipment, support rule changes, and assist game preparation strategy (for example, limiting the amount of practice time to avoid overexertion).

Although there are clear benefits, the use of AI to protect and preserve an athlete’s health can trigger legal implications, particularly when personal information is collected and disclosed to third parties. AI users may be able to mitigate these legal risks by disclosing to athletes the nature of the data being collected and how it will be used and protected, as well as obtaining the appropriate consents to collect and disclose personal information.

Fan Engagement

Fan engagement is yet another area in which AI can be useful. Marketers can use AI as a tool to create a more interactive fan experience by creating personalized content, products, and services that bring fans closer to the game. AI platforms, such as MILLIONS.co, tailor AI systems to sports marketers specifically by generating marketing campaigns with text-based inputs. Other AI platforms, such as NTT Data, are being used to provide fans insight on plays in real time, event history, player information and statistics, and information about the venue.

In addition to the many uses of AI in-venue, AI can also change the way we consume sports broadcasts by utilizing virtual venues and interactive content. In doing so, AI removes geographic barriers to attending live events while creating a more immersive and interactive experience as compared to traditional two-dimensional broadcasts. Additionally, this year, both the Masters and Wimbledon partnered with IBM to provide AI commentary, which used language models trained in golf and tennis to produce spoken commentary alongside video clips on their websites.

While AI has the potential to elevate the fan experience, its use must be navigated carefully, especially with respect to surrounding content. Content produced without significant human control and involvement is not protectable by US copyright or patent laws, creating a class of works with no human author and potentially no usage restrictions. Generative AI tools may also create works that could infringe the copyrights of existing works, trademarks, and likeness if used for commercial purposes without appropriate rights or permissions. The failure of AI users to implement procedures to evaluate any content produced by generative AI before using it for commercial purposes may expose themselves to potential intellectual property issues.

Security at Stadiums

Another way in which AI is changing the landscape of sports is the use of AI-powered facial recognition and other monitoring technology to make sporting events safer by detecting potential threats to safety. The tools provided by this technology create a more efficient (and hassle-free) security process for venue owners and operators, as it eliminates the time it takes to check bags or perform full-body pat downs of fans, personnel, and other guests entering the venue. Such tools also make for a more enjoyable experience for the fans, as they allow for quicker and less intrusive entry into venue.

While biometric data can be useful to make venues safer and operations more efficient, privacy issues and the potential for the perception of data misuse are major concerns. Venue operators can reduce the risk associated with the collection and storage by implementing policies that protect fans’ privacy as much as possible and by establishing practices to ensure that these tools comply with internal data security and confidentiality standards. Similar to any third-party software, the security and data processing practices for these tools vary.

Key Takeaways

AI has the potential to fundamentally change the sports industry, from how sports are played to how fans consume sports content. Although adoption of AI in sports has already begun, the technology is still very much in its infancy, and it is not clear how it will continue to evolve and be further integrated into sports. As the industry continues to adopt this next-generation technology, stakeholders will need to closely examine the unique legal and regulatory implications inherent in the use of AI technology in sports.

ArentFox Schiff’s Sports Practice group boasts one of the most experienced and diverse sports practices in the country and regularly advises sports organizations (including leagues, conferences, teams, and national governing bodies), players, sponsors, and investors on a broad variety of sports matters. As the industry moves forward with implementing AI, our skilled team of attorneys will assist clients in navigating the intricate regulatory environment of AI.