How Wearables Could Save Professional Sports

By Nicole Kardell, of Ifrah Law

The professional sports industry has had a money problem for years – game attendance, viewership, and advertising have all declined. The COVID-19 pandemic made that problem much worse, cutting seasons and closing stadiums to spectators. But there is a silver lining from the pandemic era for professional sports – increased league, team, and player buy-in for wearable technologies. 

What do athletes with wearables have to do with money for the sports industry? Think sports betting on steroids … so to speak. Wearables – like “smart fabrics,” “smart rings,” and “smart pills” that collect biometrics on athletes – mean enhanced player data. Enhanced player data could mean new sports betting opportunities, where participants could bet on a variety of game and player statistics. The increased acceptance of wearables and the ability to monetize them could benefit all stakeholders in the sports industry: from leagues to teams to players to fans. 

With the growth of legalized sports betting across states in the U.S. (Morgan Stanley Research projects sports betting will be legal in 35 states by the end of 2021), comes new opportunities for getting money back into the game. Many have opined on how athletes’ biometric data could be used to round out sports books’ offerings, à la DFS. One of the more exciting prospects: in-game betting based upon real-time data from players’ wearables. The opportunity to engage betting fans is real. 

But athletes and their leagues have had reservations about collecting and disseminating player data. Concerns range from privacy implications to contract negotiations to maximizing royalty fees. Pandemic times caused them to change their tune: as leagues and players struggled to get their sports back in play, contract tracing and wearables to detect COVID symptoms have become a welcomed part of returning to the arena. Both the NBA and the WNBA offered players the use of Oura rings to wear during tournaments to monitor body temperature and respiratory and heart rates. The NFL and NBA are also using devices to monitor social distancing and facilitate contract tracing. The idea of the “hyperquantified athlete,” as a recent Deloitte report has called it, is taking hold. 

The overarching question is — who owns the data? There are a number of stakeholders with claims. And there are some established legal frameworks those stakeholders need to address. 

  • Stakeholders include: (1) the athletes whose data is tracked through wearables; (2) the teams providing the wearables and/or investing in the players’ training and performance; (3) the leagues, teams, and unions that are collecting and controlling the data; and (4) the data partners, including gaming operators, that collect and commoditize the data for dissemination and use.
  • Legal frameworks are namely privacy rights, intellectual property rights, and publicity rights.

Complicating matters is that the respective stakeholders need to work out data ownership in the midst of a changing legal landscape: We are awaiting developments in federal privacy legislation, as congressional hearings on the topic increase in frequency. More and more states are addressing personal data privacy, and some are delving into biometric data protection (e.g., Illinois, Texas, and Washington currently have biometric privacy laws; New York has proposed legislation in the works; California’s most recent privacy law addresses biometric data in its treatment of “sensitive data;” Virginia’s newly enacted data privacy law follows suit). 

Laws surrounding publicity rights and other IP rights are also in flux, as stakeholders are weighing the impact of data collection on the burgeoning legalized sports betting market. Some groups, including players’ unions, have been angling for enhanced protections for athletes to their commercial data. Professional leagues, including the NBA, NHL, and MLB, have lobbied state legislatures for what are known as “royalty fees” to cordon off revenue shares and mark their rights to the stats behind the games. 

As athlete and league stakeholders advance their positions, they also face setbacks. For instance, in 2018, the federal court of appeals for the Seventh Circuit (which covers Illinois, Indiana, and Wisconsin) rejected the publicity rights claims of college athletes who sued DFS operators FanDuel and Draft Kings for the use of their names, images, and statistics. The Seventh Circuit refused to disturb an Indiana Supreme Court ruling that the data was newsworthy information exempted from state publicity rights law. The Seventh Circuit’s position is consistent with prior federal court holdings that have refused to secure IP claims for the leagues (e.g., NBA v. Motorola Inc., in which the federal court of appeals for the Second Circuit — covering Connecticut, Vermont, and New York — rejected the NBA’s copyright claims to game stats).

But all the legal uncertainty from legislatures and courts makes the time ripe for addressing stakeholders’ rights in the commercial arena, which is happening, and which may be the most effective place for stakeholders to iron out their respective data rights. A newly published report from Deloitte predicts that “multiple professional sports leagues will establish new formal policies around the collection, use, and commercialization of player data” by the end of 2021. MLB, the NHL, and the NBA contracted with MGM Resorts. The National Basketball Players Association negotiated a new collective bargaining agreement that includes provisions on tracking devices. The National Football League Players Association partnered with Whoop, Inc. athlete data tracking.  

College athletes are not to be left out of the discussion, as these players vie to receive monetary benefit for their contributions to the sports industry. We have watched the area of sponsorship develop as states consider legislation to allow collegiate athletes to earn income from their name, image, and likeness (known as “NIL” laws). Six states—California, Florida, Colorado, Nebraska, New Jersey, and Michigan—now have NIL laws. Several more are poised to pass legislation. The NCAA was even supposed to pass an NIL regulation earlier this year (delayed by a Department of Justice request for the Association to cool its heels). Monetizing collegiate player data is likely to follow suit, especially as players grow accustomed to wearables per their coaches’ requests. 

Provided all stakeholders are adequately represented in commercial arrangements, there is no better place for players, teams, leagues, and gaming operators to identify a solution to the data ownership (and licensing) questions. The glaring exception may be college athletes—who do not have the benefit of collective bargaining agreements. The NCAA has formed a committee to explore the matter of player data. But perhaps the states pushing forward NIL legislation for college students should fold player data into the equation. As we turn our attention to March Madness—all the fanfare and local pools—we should consider whether those who are sweating it out for our entertainment should be entitled to more than glory and visibility.