On February 4, 2019, the New York State Gaming Commission approved a proposed set of regulations, which would allow four New York State casinos to operate, and permit, in-person sports betting. According to one a member of the New York State Gaming Commission, “[t]he proposed regulations seek to protect the integrity of wagering and ensure the sports wagering remains within the scope of activity the legislature authorize.”
Aside from the typical standards for operating sports betting, the proposed regulations layout a framework for how the four New York State casinos are to become licensed and how they can collaborate with various vendors in order to operate sports betting pools.
Notably missing from the proposed regulations is an “integrity fee” or “data fee.” While campaigning for legalized betting in all fifty states, many professional sports leagues, including the NBA, asked state legislators to stipulate that each professional sports league should receive a one percent integrity fee” or “data fee” every time a bet is made on one of its games. Thus, it appears from the proposed regulations that New York State is unwilling to share its proceeds with the various professional sports leagues. Also of note, the proposed regulations did not allow for mobile betting.
Currently the regulations are merely proposed regulations and must survive a 60-day public comment period. Once finalized, New York will become yet another state to allow legalized sports betting since the landmark May 2018 Supreme Court case. It also appears that Andrew Cuomo, New York State Governor, wants legalized sports betting to be a priority in New York State. In his 2019 State of the State address, Cuomo said, “We invested in upstate casinos. Let’s authorize sports betting in the upstate casinos. It’s here. It’s a reality and it will help generate activity in those casinos.”
On January 23, 2019, three litigation-funding companies, RD Legal Funding LLC, Atlas Legal Funding LLC, and Thrivest Specialty Funding LLC told a three-judge panel that U.S. District Judge Anita B. Brody, the judge who oversaw the NFL concussion case settlement, improperly assumed jurisdiction over third party funding contracts between the companies and the former players. The litigation funding companies argued that Judge Brody lacked jurisdiction to bar the litigation funding companies from recovering their stake in the settlement.
As we have previously reported, in April 2015, Judge Brody approved a settlement between the NFL and almost 22,000 former players. The settlement established a 65-year uncapped monetary fund for players who could prove certain neurological diagnoses. The settlement provided a $75 million “baseline assessment program” that provided eligible retired players with neurological examinations, a $10 million education fund to promote safety and injury prevention in youth football, and to inform retired players of their medical benefits. Lastly, the settlement offered payments ranging from $1.5 million to $5 million for each player, or the player’s estate, who suffered from a serious degenerative condition in connection with a traumatic brain injury.
In December 2018, Judge Brody invalidated the contracts between the litigation-funding companies and the former NFL players. One of the litigation companies, RD Legal Funding LLC, reported that Judge Brody’s ruling invalidated more than a thousand third-party litigation funding agreements between the players and the companies. RD Legal Funding LLC claims that it paid $1.6 million to purchase portions of the future awards from at least seven players. The litigation-funding companies argued that Judge Brody’s invalidation of those contracts amounted to her “extracting” a single issue that had been pending in separate litigation. Further, according to the litigation-funding company’s attorney, “[f]undamentally, I think this is about the scope of authority and how that authority is exercised.” One of the judges on the panel agreed that Judge Brody’s move was “really unusual.”
In the fourth quarter of the NFC championship game, the New Orleans Saints were tied 20-20 with the Los Angeles Rams. The Saints were marching down the field and it appeared they were on the verge of scoring a touchdown and leaving the Rams with little to no time to respond. On a crucial third down, Saints quarterback Drew Brees dropped back and threw a pass near the five-yard line, on the right sideline, intended for Saints receiver Tommylee Lewis; however, Rams cornerback Nickell Robey-Coleman slammed into Lewis and the pass fell incomplete. Not only did it appear to be a textbook pass interference penalty, but also it appeared, at first glance, to be a helmet-to-helmet penalty; however, no penalty was called. Saints fans responded in a chorus of boos, the announcers seemed to be stunned, and the Saints were forced to settle for a Will Lutz 31-yard field goal, giving the Saints a 23-20 lead.
Sean Payton, head coach of the New Orleans Saints, chased the referee up and down the sidelines, screaming, and pleading for the referee to explain the call. The Saints ended up losing the NFC Championship game, and their chance to compete in the Super Bowl, after the Rams tied the game and went on to win in overtime. After the game, it became clear that the Saints and their fans were not going away quietly. After the game, Payton said, “I don’t know if there was ever a more obvious pass interference call that … you know, that here it is, the NFC Championship Game. So, a tough one to swallow … We’ll probably never get over it.”
Some Saints fans decided to take their rage beyond words. On January 22, 2019, a group of Saints season ticket holders sued the NFL and Commissioner Roger Goodell with the goal of reversing the overtime playoff loss. According to the suit, Saints fans were “left bereft and with no faith in the National Football League for fairness despite the leagues own rules to correct such errors, along with emotional anguish, monetary loss for season ticket holders, who purchased tickets with the presumption of integrity and fairness.” The Saints season ticket holders requested that Roger Goodell use his power to replay the final 1 minute, 49 seconds of regulation of the NFC Championship Game.
On January 17, 2019, U.S. District Court Judge Lewis A. Kaplan explained his reasoning behind precluding the defendants use of an expert witness in the NCAA corruption/bribery trial. As we previously reported, on October 24, 2018, a Manhattan federal jury convicted former Adidas executive James Gatto, business manager and aspiring sports agent Christopher Dawkins, and former Adidas consultant Merl Code of fraud charges arising out of a high-profile college basketball pay-for-play scandal.
In a memorandum, Judge Kaplan explained that expert witness Dr. Daniel Rascher, a sports economics professor at the University of San Francisco, was precluded from testifying because the “amateurism and recruitment rules were not on trial” and Dr. Rascher’s testimony could have led the jury to rule on “perceived economic unfairness.” According to Judge Kaplan, “the [amateurism and recruitment] rules – whether wise or fair – simply were contextual facts – part of the milieu in which the fraud allegedly was committed.”
Judge Kaplan decided to preclude Rascher from testifying based on how attorney’s representing the defendants framed their arguments. In their opening statement, an attorney representing the defendants said, “[t]he kids on the court … the ones whose blood, sweat and tears is making this game a billion dollar industry … are not allowed to earn a dime. Ladies and gentlemen, we are here today because the government alleges that Jim Gatto committed two federal offenses when Adidas took a tiny portion of the money that it brought in and shared it with the families of the players on the court.”
Dr. Rascher, an expert in the field of sports economics, including on issues concerning “the quantitative and qualitative benefits that a successful [Division I] men’s basketball program can bring a university, was set to testify about: (1) the quantitative benefits to Division I universities of recruiting elite high-school basketball players; (2) the so-called “qualitative benefits” to Division I universities; and (3) the expected cost to Division I universities of “major infractions” of NCAA recruiting rules. However, the United States government moved to exclude all of Dr. Rascher’s testimony. According to Judge Kaplan, the proposed testimony had to be precluded because it would have been entirely irrelevant to the jury’s consideration and was inadmissible based on the rules of evidence.
The Department of Justice (DOJ) has released an official revised opinion articulating its stance on the application of the Wire Act. The opinion threatens to have sweeping effects on the online gambling industry, potentially prohibiting all online wagering, not just online sports betting.
The Wire Act, put into effect in 1961, was originally strategized by Congress as a way to crack down on underground sports betting and to subsequently reduce organize crime. The Act made it a federal offense to take sports bets through a “wire communication facility.” In 1961, “wire communication facilities” were thought to mean the telephone and its accessories. Of course, the meaning of this term would tremendously expand with the rise of the internet in the late 1990s and early 2000s, as online poker and online casinos began entrenching themselves in the gambling industry.
In 2011, the Department of Justice issued an opinion stating that the Wire Act only made internet gambling on sports illegal. Thus, online casino, poker, or lottery games were not illegal under the Act. However, as of January 2019, the DOJ has revised their stance, now stating that the Wire Act applies to all bets and wagers.
It is important to note that the opinion is not the law itself. It is instead a guide to how the DOJ plans to enforce federal law. Further, the Attorney General has issued a statement that no new actions will be taken by the DOJ on the basis of the revised opinion until at least April 14, 2019, 90 days from the revised opinion’s release.
It will then be up to the courts to decide how the Wire Act will apply to online, non-sports betting. Daniel L. Wallach of Wallach, co-founding director of the University of New Hampshire School of Law’s Sports Wagering and Integrity Program explains, “The opinion acknowledges that the decision will likely be tested judicially. I think we could be headed toward the next big gambling case that reaches the Supreme Court, or at the very minimum, the U.S. Court of Appeals.”
Reportedly, over 200 former NCAA college football players are planning to sue the NCAA. The lawsuits allege that the NCAA was negligent in failing to protect the former players from long-term brain damage, even though the NCAA knew about the dangers. The tip of the iceberg were several lawsuits filed on January 25, 2019. In one lawsuit, former Cameron University football player, Abe Mack IV, sued the NCAA for injuries sustained a result of NCAA’s “reckless disregard for [his and others similarly situated] health and safety of generations of Cameron University student-athletes.”
According to Mack’s lawsuit, for decades the NCAA “knew about the debilitating long-term dangers of concussions, concussion-related injuries, and sub-concussive injuries that resulted from playing college football, but recklessly disregarded this information to protect the very profitable business of ‘amateur’ college football.” The lawsuit continued, “[d]espite knowing for decades of a vast body of scientific research describing the danger of traumatic brain injuries [the NCAA ] failed to implement adequate procedures to protect [Mack]and other CU football players from the long-term dangers associated with them. They did so knowingly and for profit.”
Jeff Raizner, an attorney representing a former player in a lawsuit filed on January 25, 2019, told Law360 that more than 200 lawsuits are set to be filed in the coming days. Allegedly, these lawsuits will target various NCAA schools, in all three NCAA divisions, across the country. Most of the lawsuits will be filed in the Southern District of Indiana, where the NCAA is headquartered; however, it is expected that the various lawsuits will be pulled together into multidistrict litigation, in Chicago, under U.S. District Judge John Z. Lee. According to Raizner, the goal is for various former NCAA college players to file their individual lawsuits against the NCAA, but after the lawsuits are pulled together into multidistrict litigation, one player, would represent a class of players against the NCAA and a single school.
Of note, in July 2016, Judge Lee approved a $75 million settlement in another class action lawsuit against the NCAA. In that lawsuit, former Eastern Illinois player, Adrian Arrington, and three others, sued the NCAA because they suffered from seizures, which were found to be a byproduct of repeated head trauma. After several delays, Judge Lee approved the settlement in September 2018. Of the $75 million, $70 million of the settlement will go to a Medical Monitoring Program, which will help treat and monitor the estimated 4.4 million current and former NCAA student-athletes who took part in contact and non-contact sports. The remaining $5 million will go to concussion research, changes to the NCAA’s guidelines, and a limited release.
Similar to the Adrian Arrington lawsuit, the Mack lawsuit claims that as a result of the NCAA’s negligence, he, and other similarly situated players, now suffer from “memory loss, dementia, depression, chronic traumatic encephalopathy[,] and Parkinson’s disease.”
On January 16, 2019, Lane Johnson, a right tackle for the Philadelphia Eagles, fought a motion for summary judgment in his case against the NFL and the NFLPA. Johnson argues that an arbitrator who handled an appeal in his 10-game Performance Enhancing Drug policy suspension, failed to disclose a conflict of interest. Back in 2016, Johnson filed his lawsuit after an arbitration proceeding which upheld his 10-game suspension for violating the NFL’s performance-enhancing drugs policy.
Johnson alleges that James Carter, an arbitrator and senior counsel at Wilmer Hale, failed to disclose that his law firm had previously represented the NFL and NFL teams before acting as an arbitrator in Johnson’s appeal. Johnson’s 2016 amended lawsuit asked the court to vacate Carter’s arbitration award on the grounds that it violates the Federal Arbitration Act.
Back in October 2018, the NFL suspended Johnson for violating the league’s Performance Enhancing Drug policy for a second time. Upon his return in December 2018, Johnson strongly hinted that he would take action against the NFL. In a statement, Johnson said, “I’m on a lot of people’s s— list, but I’ve got a few people on my s— list as well. That thing will get settled here in the next few months, so we’ll see what happens.”
According to Johnson’s attorney, Johnson’s lawsuit reflects that the arbitration was a “sham proceeding.” According to Johnson’s attorney, “[t]his case is harsh example of an employer and union who have chosen to withhold and manipulate the terms and conditions of employment in violation of the law. Such conduct is also in direct contravention of the 2015 Policy’s express requirements of ‘transparency’ and ‘fairness.'”
In his memo of law, Johnson argued that the documents provided by the NFLPA were missing several key pieces of information and modifications and that the NFLPA referenced during litigation. For example, Johnson sought an agreement where the NFLPA permitted the use of two arbitrators instead of the usual three-to-five. Further, Johnson sought relevant sections of the NFL drug policy on protocols/procedures used in player drug testing. According to Johnson, if the court grants the NFLPA’s motion summary judgment, it will set a precedent that a NFLPA can keep information from its members and force them into a legal fight to receive documents that they should be able to receive.
On January 14, 2019, Zachary G. Mumford, a former assistant youth football coach from South Carolina, filed an amended lawsuit against USA Football Inc. In his lawsuit, Mumford alleges that he was struck by lightning while acting as an assistant coach for a youth football team in a local South Carolina youth football league.
According to Mumford, back in August 2015, he was coaching a practice for a team composed of 12- and 13-year-old boys at Carver Elementary School, when suddenly, a lightning storm abruptly ended practice. Mumford, along with other coaches, sought shelter for the children away from the field; however, all of the doors at Carver Elementary School were locked and coaches searched for vehicles, and other means, to provide shelter for the children. Later during the storm, Mumford and other volunteer coaches, returned to the field to gather their equipment and the children’s’ belongings; however, Mumford claims that during this time he was struck by lightning.
After being struck, Mumford’s body “body was in a contorted position and was smoldering; the grass around his body caught afire; his heart apparently stopped or almost stopped beating; his lips and skin color turned blue; and he was moaning and barely breathing.” Allegedly, the “lightning bolt violently struck Mumford in the chest, ran through his body and down his leg, and exited his body through his foot while burning a hole in the sole of his shoe.” He claims emergency services arrived on scene and administered emergency medical care and was hospitalized. As a result, Mumford was in a coma for several days.
In his lawsuit, Mumford alleges that his injury could have been avoided if USA Football Inc. had taught their coaches better safety procedures. USA Football Inc., a nonprofit organization funded by the NFL, included training courses for coaches, including coaches like Mumford in the Florence Junior Football League. However, Mumford claims that the USA Football Inc. training course did not include any lightning safety. According to the lawsuit, “USA Football knew or should have known of the critical importance for all youth football leagues to have a comprehensive, written emergency action plan that includes lightning safety protocols.”
Mumford, who was nineteen years old at the time of the incident, says he incurred and continues to suffer from severe physical, emotional, psychological, and financial harms and damages.
Maori Davenport, a girls high school basketball star and Rutgers recruit, was ruled ineligible for her senior season of basketball after a controversial ruling. Back in November 2018, the Alabama High School Athletic Association (AHSAA) suspended Davenport after she cashed an $857.20 check sent to her by Team USA. Previously, in August 2018, Davenport played for Team USA in the FIBA Americas U18 Tournament. The $857.20 check was sent to Davenport to cover her expenses and lost wages; however, a clerical error was made and the check was mistakenly sent to Davenport. The amount of check exceeded a threshold that the AHSAA allows its players to receive.
Once Davenport learned of the AHSAA violation, she returned all of the $857.20 check to Team USA with the hopes of reversing the AHSAA’s decision. Yet the AHSAA upheld the ruling, despite Team USA’s admitting that the check was issued to Davenport due to a clerical error. According to Team USA, it typically consults with various high school federations and associations prior to issuing checks to participating players, but Team USA failed to do so in Davenport’s case. Davenport reportedly appealed the AHSAA decision twice, once to an AHSAA district board, and later to an AHSAA central board; however, both appeals were unsuccessful.
Eventually, Davenport and her family filed lawsuit asking an Alabama state court judge to invalidate the AHSAA’s suspension. On January 11, 2019, a Pike County Circuit Court Judge, Henry Reagan, issued a temporary restraining order, which allowed Davenport to play for the first time since November. However, Judge Reagan’s order was only temporary and only permitted Davenport to play until the court could make a final ruling based on the merits of the lawsuit.
Seeger Weiss LLP, a law firm representing some of the former NFL players involved in a class action lawsuit against the NFL, asked Untied States District Court Judge Anita Brody to distribute $3.2 million from a common benefit fund to pay Seeger Weiss LLP, and a handful of other firms, for work they performed in the class-action lawsuit.
As we have previously reported, in April 2015, the NFL entered into a settlement agreement with almost 22,000 former players. The settlement established a 65-year uncapped monetary fund for players who could prove certain neurological diagnoses. The settlement provided a $75 million “baseline assessment program” that provided eligible retired players with neurological examinations, a $10 million education fund to promote safety and injury prevention in youth football, and to inform retired players of their medical benefits. Lastly, the settlement offered payments ranging from $1.5 million to $5 million for each player, or the player’s estate, who suffered from a serious degenerative condition in connection with a traumatic brain injury.
In their petition, Seeger Weiss LLP claims that over the past six months, it has spent a total of 3,728 hours working on various aspects of the seemingly never-ending settlement and has yet to be paid. According to the petition, “Seeger Weiss has worked tirelessly with other class counsel on numerous important matters, in coordination with the administrators, the special masters, and the court — and both cooperatively with and, as circumstances have warranted, against the NFL — to facilitate and oversee the settlement.” The work includes working with the settlement’s claims administrator to develop neuropsychological tests, “certain significant work that was unanticipated, but which was essential to ensure the integrity of the settlement,” and defending two appeals filed by the NFL. One of the appeals, as we have previously reported, took place in in January 2019, one day before a scheduled hearing. However, the NFL withdrew its January 2019 appeal after it outraged the player’s attorneys, including attorneys at Seeger Weiss LLP.