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Daily Fantasy Players Strike Out in Suit Over Baseball Cheating Scandal

The Major League’s cheating scandal wounded fans across the country, but a baseball-loving federal judge ruled Friday that it did not give daily fantasy bettors a basis to sue for fraud.

MANHATTAN (CN) — The Major League’s cheating scandal wounded fans across the country, but a baseball-loving federal judge ruled Friday that it did not give daily fantasy bettors a basis to sue for fraud.

Right off the bat in his 32-page opinion, U.S. District Judge Rakoff acknowledged what much of the world learned late last year: that going back to 2017, “the Houston Astros, and somewhat less blatantly the Boston Red Sox, shamelessly broke” a Major League rule that forbids the use of electronic devices to help what Rakoff called the "inevitable" efforts of players to steal an opposing catcher's signs.

“But did the initial efforts of those teams, and supposedly of Major League Baseball itself, to conceal these foul deeds from the simple sports bettors who wagered on fantasy baseball create a cognizable legal claim?” Rakoff wrote. “On the allegations here made, the answer is no.”

A Clinton appointee to the Southern District of New York, Rakoff is well known as lifelong Yankees fan, who reportedly a holds partial season tickets for the Bronx Bombers and keeps a ball signed by pitcher Mariano Rivera encased on his desk.

“A sport that celebrates ‘stealing,’ even if only of a base, may not provide the perfect encouragement to scrupulous play,” the jocular jurist wrote. “Nor can it be denied that an overweening desire to win may sometimes lead our heroes to employ forbidden substances on their (spit) balls, their (corked) bats, or even their (steroid-consuming) selves.

“But as Frank Sinatra famously said to Grace Kelly (in the 1956 movie musical High Society), 'there are rules about such things.'" (Parentheses in original.)

In an interview Friday, Andrew Brandt, executive director of Villanova University’s Moorad Center for Sports Law, called the suit’s dismissal appropriate.

"These claims by the plaintiffs seemed spurious from the start," Brandt said. "Were sports leagues 'responsible' for things like this, they would be paying off Fantasy players and fans all the time.

"Whether it be the Deflategate scandal, the Saints Bountygate scandal, various steroid scandals, the suspension of players due to domestic violence or other misconduct, etc., there is no way leagues can be held to owe a duty based on what some individuals are doing amongst the teams to gain an edge," said Brandt.

The federal class action was filed in January, led by DraftKings daily fantasy sports player Kristopher Olson, who accused the MLB of consistently promoting and engaging in fantasy baseball wagering contests through DraftKings that were “corrupt and dishonest.”

In addition to the league, Olson’s complaint named as defendants MLB Advanced Media, the Astros and the Red Sox, citing the league’s equity stake in the betting website, as well as additional agreements made with the teams.

FILE - In this Nov. 1, 2017, file photo, Houston Astros manager A.J. Hinch holds the championship trophy after Game 7 of baseball's World Series against the Los Angeles Dodgers, in Los Angeles. Houston manager AJ Hinch and general manager Jeff Luhnow were suspended for the entire season Monday, Jan. 13, 2020, and the team was fined $5 million for sign-stealing by the team in 2017 and 2018 season. Commissioner Rob Manfred announced the discipline and strongly hinted that current Boston manager Alex Cora — the Astros bench coach in 2017 — will face punishment later. Manfred said Cora developed the sign-stealing system used by the Astros. (AP Photo/Matt Slocum, File)

Represented by David Golub of the Connecticut firm Silver Golub & Teitell, Olson claimed that the league failed to inform their fans and player base of the truth behind these games, leaving devoted players to put money and time into online wagers the MLB knew or should have known were corrupted.

The complaint alleged counts of fraud, negligence, unjust enrichment and violations of consumer-protection law.

In a February motion to dismiss, league attorneys argued that Olson’s class action did not allege any actionable deception or any legally cognizable injury.

“Plaintiffs got exactly what they bargained for: contests determined by baseball players’ actual performance on the field, whatever the contributing factors, predictable or unpredictable, may have been (skill, luck, matchups, injuries, weather, umpiring, or, perhaps, rules violations),” attorney John L. Hardiman wrote.

Major League Baseball contended that attempts at cheating are a part of sports, and fans are aware of it. The league referred to a 2010 dismissal of a similar lawsuit by football fans pertaining to the “Spygate” scandal involving the New England Patriots employee who videotaped signals from the Jets sideline during a September 2007 game in which the Patriots won 38-14.

In that case, the Third Circuit found that sports fans cannot claim they don’t know “that players often commit intentional rule infractions in order to obtain an advantage over the course of the game.” 

MLB argued that the class action was “largely devoted to blatantly misleading allegations based on selectively quoted, out-of-context statements by MLB Commissioner Robert D. Manfred Jr.”

Manfred had released an official report in January confirming the Astros used live television feeds to steal signs flashed by opposing teams’ catchers during the 2017 and 2018 seasons to determine what type of pitch would be thrown. The league fined the team $5 million, suspended the team’s manager and general manager for a year and stripped the Astros of its top two drafts picks for the next two years. After the league’s suspensions, the Astros fired their manager and general manager.

Siding with Major League Baseball on Friday, Rakoff found that the class action plaintiffs were grasping at straws to allege an impact on online daily fantasy sports play.

“In short, the connection between the alleged harm plaintiffs suffered and defendants’ conduct is simply too attenuated to support any of plaintiffs’ claims for relief,” Rakoff wrote. “While the verbose, rhetorical, and largely conclusory complaint does manage to plausibly allege a few misrepresentations by defendants, these statements, which are unrelated to fantasy baseball, do not plausibly support plaintiffs’ claims of reliance. Moreover, plaintiffs provide no basis for imposing a duty to disclose on defendants absent a transaction or other relationship between themselves and the defendants. This absence of duty and reliance forecloses plaintiffs’ fraud and negligence claims, and the lack of a transaction, relationship, or other nexus forecloses plaintiffs’ consumer protection claims.”

Rakoff noted in his opinion that three federal circuits, including the Third Circuit’s ruling in the “Spygate” case, have declined to hold that sports organizations owe similar duties even to their direct customers, ticketholders.

Attorneys for both parties did not immediately respond to requests for comment on the outcome of the case.

DraftKings was not a party to the suit and declined to comment on the dismissal.

In a 2004 speech to the New York City Bar Association titled “Corporate Ethics in an Age of Steroids,” Rakoff clarified how his judicial objectivity was separated from his team loyalty.

“For those of you who could care less about baseball, or who wonder how any grown person could become so passionate about what is essentially a child’s game, I apologize,” Rakoff said. “All I can say in my defense is that at least I’m a Yankees fan — although, as a matter of professional courtesy, I always root for the umpires.”

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