• Wednesday, October 17, 2018
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New York Times| News

When sports betting is legal, value of game data soars

  • NEW YORK TIMES

    Trader Scott Logan works at William Hill, an international sports betting book in Las Vegas, on June 26. Now that the United States has ended a ban on sports betting, should the gambling industry be required to use league-approved “official data”?

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Every weekend during soccer season in Britain, security personnel find them in stadiums, tapping furiously at their phones or talking nonstop into a mic, mysterious customers often wearing hoodies to conceal earpieces and their identity.

The unofficial data scouts — or data thieves, depending on who is describing them — are quickly ejected once they are discovered.

The fleeting data they are collecting — the minutia of what is happening in the game — is the lifeblood of sports betting, perhaps the most crucial and valuable element of the entire industry. If gambling operators are to monetize sports betting fully, they have to offer wagers on far more than the outcomes of games. Data on the second-by-second action — exactly when a goal is scored, where it landed in the net, who had the assist — creates manifold betting opportunities.

In Britain, this so-called in-play betting market is robust. In the United States, it may be the greatest hope for betting operators after the Supreme Court struck down a federal ban on sports betting. That means accurate and reliable data must get to betting operators like casinos, websites and phone apps fast, usually in a second or two — well ahead of the roughly 5-10-second delay baked into television broadcasts.

“For betting, it’s the difference between having value and having no value at all,” Steven Burton, a veteran lawyer in the rarefied field of collecting, using and protecting sports data, said about the necessity of rapid data distribution.

The sudden premium on sports data is likely to set up an array of conflicts in the betting industry that have been mostly unknown in the United States. Adrian Ford, general manager of Football DataCo, the official handler of data for the English Premier League and others in Britain, said that in dozens of stadiums each weekend, the hooded scouts show up for companies aiming to collect the data and sell it to betting operators without buying rights to the league-approved stream originating in the press box.

“It goes to the heart of this issue, the data debate,” Ford said. “Clearly the data from the source, a stadium, it’s valuable. Some people believe it’s appropriate to cheat.”

That shadowy cat-and-mouse game in Britain gives a small preview of battles to come in the United States over how the data should be collected and whether the gambling industry should be required to use “official data,” a league-approved tabulation of what happened in a sports competition.

The debate over official data is one facet of a still broader set of questions: How should sports data from any source, official or unofficial, be regulated, monitored and purchased? Does real-time data from a sporting event, like the sounds of a musical performance, have a claim to royalties and copyright protection for those who produce it?

FEEDING BETTING SITES

Because sports betting has been illegal in most states, wagering money has flowed offshore — fueling an illicit industry estimated to generate $150 billion a year. Some kind of data distribution system has to feed those offshore betting sites.

Some of the companies that have supplied data to sites that have been at the center of multiple federal gambling investigations now would like to become part of the new, regulated U.S. market.

One of those companies, Sportradar, is already working — legally — with several major sports leagues and is seen as well positioned to purchase rights as a provider of official data, should it decide to do so. Dissonances like that draw warnings from both critics and supporters of official data.

“You have this completely unbelievable, upside-down situation,” said Carl Mergele, chief executive of Stats, a sports data and technology company that was founded in 1981. (Stats provides live scores and statistics to the New York Times.)

Mergele said that while he was not referring to any specific competitor, if official data is mandated, it would likely be controlled by companies that fuel illicit markets. It would be affordable, he said, only to “those that monetize that data in the global betting market, often in unregulated, offshore, gray, illegal markets.”

Even supporters of official data recognize offshore books as the dominant player.

“The reality is, legalized betting is going to be a late entrant in this market,” said Burton, who is now managing director of Genius Sports, which provides data collection technology and other services to sports leagues.

Laila Mintas, deputy president of Sportradar U.S., said in a statement that among those deals are agreements with the NBA and the NHL “to distribute sports data around the world for betting purposes.” Distribution of data in the NBA deal is strictly limited to legal bookmakers overseas, the league says; the deal does not include U.S. sports betting outlets. The NHL did not respond to a request for comment.

Sportradar said in a statement that it provides data and betting services only to licensed bookmakers. A 2015 investigation by The Times showed how the offshore gambling websites serve a U.S. audience, and found that Sportradar works with one that has been identified in multiple federal gambling investigations.

In regard to the data scouts being ejected from soccer stadiums in Britain, the Sportradar spokesman said that the company “has always been transparent that we collect data from venues in the U.K. and elsewhere,” and that the company believes that the British soccer leagues’ “attempts to prevent us from collecting data” are in violation of British and European antitrust law.

As to the specific issue of whether U.S. law should mandate the exclusive use of official data, Sportradar’s Mintas came straight down the middle.

“Sportradar uses both unofficial and official data as market dynamics dictate, and we are fully transparent about the way we do business,” she said.

WHO OWNS REAL-TIME DATA?

Some legal experts, like Ryan Rodenberg, an associate professor of sports law at Florida State University, believe that, as with musical recordings and other copyrighted material, courts will find that real-time sports data is owned by those who produce it: the leagues and their players.

Others dismiss that view. Marc Edelman, a professor of law at Baruch College, said he believed that only “pre-scripted” events were subject to copyright — meaning that while professional wrestling performances might qualify, football, basketball and other true competitions would not.

There is little question that the leagues riled the gambling industry with their initial proposal for requiring the use of official data and royalty fees, which could have added up to around 20 percent of revenues, said Joe Asher, chief executive of the U.S. arm of William Hill, an international sports betting book.

Several of the leagues initially cast the royalties as an “integrity fee” that would help them pay for things like policing match fixing and point shaving. A legislative mandate for official data “sets up monopoly pricing power,” Asher said. “This whole thing of official league data is like a smoke screen.”

During the past year, at least 17 states have considered new laws on sports betting, including at least six where official data is in play, said James Kilsby, managing director of Gambling Compliance, an independent research service.

For proponents of official data, New York and Pennsylvania are potential bellwethers, Kilsby said.

The proposed New York law would require official data for in-play betting, and mandate what the bill calls a “commercially reasonable” subscription fee for the data. There would also be a royalty fee that all sports betting operators would pay to the leagues.

State regulators are working out details of a law passed in Pennsylvania. Comments sent to those regulators by Major League Baseball, the NBA and the PGA Tour push for official data and raise concerns about the data scouts, also called courtsiders, who could soon be as common in the United States as they are in Britain.

Unofficial data “is often collected by ‘courtsiders,’ who covertly collect data in arenas and stadiums,” the leagues said. “These courtsiders and scrapers operate in the shadows, compromise the legal market, fuel the illegal market and have no vested interest in the integrity of sports.”

Scott Kaufman-Ross, an NBA vice president, said: “For sports betting, official data should be the data that’s used. People are putting money on the line. It’s a real problem if they’re not getting the most accurate, up-to-date information.”

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