The High Stakes of NILs: MLB Players Inc. Challenges DraftKings and bet365 Over NIL Rights

This case centers on the alleged unauthorized use of MLB Players’ names, images, and likenesses (NILs) by these sports betting companies, underscoring the intricate balance between protecting players’ rights and permissible uses under the law of player’s NILs in the sports betting industry.

Background

MLBPI is a subsidiary of the MLB Players Association, the collective bargaining union for MLB players. The Players Association assigned MLBPI the exclusive rights to use, license, or sublicense the NILs of MLB players for commercial purposes. In 2024, DraftKings and bet365 began using MLB players’ NILs on their sportsbook platforms and social media accounts allegedly in violation of the players’ rights. In many instances, the defendants would feature player headshots on their apps or feature an image of a player on a social media post with a piece of sports reporting followed by an ad for consumers to place bets.

In response, MLBPI filed a lawsuit against the defendants alleging violations of the MLB players’ rights of publicity and privacy under both Pennsylvania statutory and common law asserting unauthorized use of a person’s NIL for a commercial or advertising purpose. As the assignee of MLB players’ NIL rights, MLBPI asserts that it is entitled to prevent any unauthorized use and recover damages for any harm caused. Furthermore, MLPBI alleges that the defendants have been unjustly enriched by benefitting from the MLB players’ NILs without compensating the MLBPI for such use. DraftKings and bet365 countered with a motion to dismiss, primarily arguing (1) that MLBPI lacked standing or failed to sufficiently allege the elements of each claim and (2) that their use of NILs was protected under the news reporting exception and the First Amendment.

Decision

In a 54-page ruling on the defendants’ Motion to Dismiss, Judge Karen Marston rejected the defendants’ first argument, holding that MLBPI is a proper plaintiff and had sufficiently pleaded each claim at this early stage – a stage that requires the Court to assume all facts alleged by MLBPI are true. The court also affirmed that rights of publicity are transferrable, echoing other courts which previously held the same. Therefore, based on the facts as plead, MLBPI had standing to enforce the rights assigned to them by the Players Association. Further, the court also discussed the nature of the MLBPI’s group license rights, which allow authorized entities to use the NILs of three or more players and which the court explained has value different from an individual player’s NIL.

However, the court dismissed MLBPI’s right of privacy claim, as duplicative of the right of publicity claim. In doing so, the court clarified the nuanced distinctions between the right of privacy and the right of publicity, particularly in the context of NILs. In Pennsylvania, the misappropriation of NILs involves two scenarios: one involving private individuals who are unwillingly exposed to public scrutiny (a privacy issue) and the other involving public figures whose commercial value has been exploited without compensation (a right of publicity issue). Here, in MLBPI’s owns words, it was not suing “to protect MLB players’ personal privacy interest, but rather the commercial value of their NIL rights.”[1]

Noting a dearth of caselaw interpreting the issue, the court refused to rule on the defendants’ second argument, holding it is premature to determine whether the defendants’ use of the MLB players’ NILs on sports betting websites and social media posts qualifies as news reporting or presentation under the public interest exception. But the court read the statute narrowly and declined at this time to find that the public interest exception also includes subject matter that is “newsworthy,” as the exceptions for a news report and the exception for “newsworthy” information are distinct. However, due to the nuances regarding the news reporting exception, the court found it a close call at the pleading stage to ascertain whether displaying headshots with betting odds constitutes news or sports reporting, or if it is regarded as promotion or advertisement of sports betting products or services. In regard to the defendants’ First Amendment argument, the court acknowledged that balancing the right of publicity and First Amendment protections requires a complex analysis of many factors, including the nature of the precise information conveyed, the context, the public’s interest in the information, among other factors. Given the need for a thorough examination of these factors, the court declined to engage in such an analysis until the completion of discovery. Therefore, the court declined to dismiss the plaintiff’s claims based on First Amendment grounds.

The defendants have apprised the court that they plan to seek permission to appeal the ruling (note that in Federal Court, preliminary decisions are often not appealable immediately).

Takeaways

The court’s ruling allows the case to proceed to discovery and demonstrates the gray areas in the use of players’ names, images and likeness. Importantly, if the case proceeds to summary judgment or trial, it could set precedent and provide much-needed guidance for the growing sports betting industry. An ultimate decision by the court could, like the important NIL cases before it in the fantasy sports space, also influence future use of athletes’ name, images, and likenesses for other commercial purposes. [2]

This case may have significant implications for both the sports betting industry and players alike with respect to the use of social media. However, companies should continue to be mindful of potential legal boundaries and limitations governing the use of NILs in association with promoting and advertising their products and services and adapt their strategies to align with the changing legal landscape at the intersection of sports business and NIL.

Should you have questions or wish to explore these issues further, please contact your ArentFox Schiff counsel or any of the authors.