Betting rights: hunting the Snark
Published 10 October 2009
By Carl Rohsler, Hammonds
Recently, tournament organisers and other sport-related entities have started to speak about “betting rights” as if a new form of legal property had dawned. They argue that they should be entitled to some of the profits generated by betting on their events.
“And why not?” you may say – after all, it is the event organisers who develop the excitement and the content from which the bookmakers profit. Equally, from the gambler’s perspective, the prospect of handing over money to a body which carries no risk in the gambling itself and which, in many cases, already derives revenues from broadcast rights, sponsorships and merchandising just seems like another easy tax on the industry. But whilst it is easy to get quotes from pundits and legal guns arguing vehemently that such rights already exist or are incompatible with competition law or human rights, a balanced view of their legal viability is more difficult to find. Carl Rohsler and Marine Baudriller of Hammonds try to shed some light.
One of the most popular starting points for claimants in the quest for exclusive betting rights is the use of the event’s trade marks by bookmakers in their advertising.1 A number of recent cases have seen clubs and federations invoke trade mark infringement to prevent third parties from freely offering bets on sporting events. It is not a surprise that most of the jurisprudence in this area comes from France, a country which not only has a strong tradition of trade mark protection but is also going through the birth pangs of a new approach to gambling law. In the Juventus case2, the court decided that William Hill and Unibet had infringed Juventus’ trade mark by using it in the course of trade. A few months later, in a different case3, the court held that Bwin and Unibet had not infringed the trade mark PSG (Paris Saint Germain) by using it to designate that football club in the provision of online betting services.
These two decisions appear contradictory. In fact they reflect different views of the well known doctrine that its is not an infringement to use a trade mark to identify the goods or services of a third party, provided that this is done in an honest and fair way. For example, it is not an infringement of the relevant trade mark to put a Register in garage saying “genuine VOLVO spare parts here”, as the use of the trade mark then merely indicates that the goods come from that brand owner4 .In short, bookmakers have a clear right to use a trade mark in order to identify the teams or the match or championship on which they are offering bets.
What distinguished the facts of the above two cases was not the legitimate use of the relevant trade marks for identification purposes, but the inclusion, in the Juventus case, of the mark in editorials on the operator’s website. This was the use that was held to amount to an infringement.
Whilst brand owners can take an action where gambling operators overstep the mark, trade mark law cannot prevent a bookmaker from using a trade mark to identify the subject matter of a bet. The use of trade marks as a means to confer exclusive betting rights leads to a dead end.
Databases and confidential information
Database rights, another form of intangible rights, have already been tried as a mechanism for deriving revenue from bookmakers. But such attempts have come unstuck in front of the ECJ in the Football DataCo and BHB/William Hill cases. And these decisions did not clarify the scope of database protection, and seem to reflect an underlying desire to prohibit monopolistic behaviour. Another possible approach to create exclusivity would be for sporting entities to restrict the diffusion of some of the information relating to an event. Such private or proprietary information could be sold to one or more betting operators and would only be disclosed through them and to persons placing bets on the relevant event. But… the general public is now used to have access to a whole host of information, beyond the results, about sporting events and any information not reported in the press or generally accessible may not attract much betting enthusiasm. Also, this could only really work for in-match betting (the next lap time for Lewis Hamilton, or the speed of Andy Murray’s next serve); it is pretty difficult to keep the winner of the F1 Championship or Wimbledon secret!
The horseracing route
In short, IP and related rights don’t really work as a means to create exclusive betting rights. This is not really a surprising conclusion as they were never intended to do that job. Perhaps a more direct approach is needed. In the context of horseracing, both France and the UK have passed laws to ensure that part of the revenues generated by betting on races goes back to the sport. Through direct taxation, bodies established by statute are funded to ensure “the continued health and successful development” of the sport.
This perfectly acceptable solution has one major drawback in that taxation stops at certain borders whereas betting is a very international business. Consequently, direct taxation gives overseas operators an immediate advantage over the domestic industry and is an incentive for operators to relocate betting on certain events out of the reach of the levy. It might also be argued that direct intervention in the funding of sport is only acceptable as a last resort. In the case of horseracing, for example, one might argue that it is a sport which has long enjoyed a very close symbiosis with gambling – and might not survive at all without. A direct subsidy is less justifiable for sports such as tennis or football, which could generate considerable revenues from sources other than betting activities.
For a variation on the direct taxation model, we can look again to France. The French Sports Code5 provides that a sports federation is the exclusive owner of the right (commercially) to exploit the tournaments it organises. A case was brought in France in May 2008 that related to online betting on the Rolland-Garros tennis tournament6. The court held that the organisation of online bets in relation to a sporting event constituted a form of commercial exploitation of that event and that, therefore, the only rights of betting operators in relation to such an event were those granted by the organiser of the event.
The model commonly advocated by those in favour of the recognition of betting rights involves the rights owner selling an exclusive right to organise bets to the operator of his choice. As regards concerns for the integrity of the relevant sports, a number of articles have emphasised that such a model would require solid safeguards, increased checks, monitoring by competition authorities and/or a carefully thought-through tendering process.
Opponents have pointed out that gambling monopolies had been expressly granted to the PMU (horseracing) and the Française des Jeux (lotteries) and that this would again have been done expressly in favour of sports federations if such had been the legislator’s intention. Others have highlighted the European Convention on Human Rights and the right to information, making information relating to current affairs, including sporting events, incapable of being “owned” and/or withdrawn from events on which bets may be placed.
It appears that many, including sports professionals and French judges, take the view that betting activities on sports are a source of revenues that should be partly shared with the relevant sports entities. Leaving aside any argument as to the legitimacy of this claim and the use to which such funds would be put, the fundamental questions are these: is it a good idea? and can it work?
It seems to the authors that a model based on exclusive rights granted to a given betting operator can only be detrimental to the consumer’s interest as it is the competition between betting operators that guarantees the best odds for their customers; without that competitive pressure, there would not be any incentive for betting operators to offer attractive odds.
As to legal mechanisms tried to date, intangible rights simply aren’t the right tools for the job. Only some form of direct legislative intervention could establish betting rights – in effect a state granted mini-monopoly which although effective, poses as many problems as it solves.
So perhaps, since January is a time for New Year’s resolutions, our conclusion should be this: the attempt to create exclusive betting rights is a step too far. There is nothing wrong with an “official betting partner” category for sponsorship, and there are plenty of opportunities to offer incentives packages that will create good value for a gambling sponsor. But seeking to prevent a competitive betting market for a particular event appears neither legally sound under the law as it stands, nor desirable for the industry or the consumer.
Article reproduced with their kind permission.
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