Unpleasant Fantasy

11 October 2005

Internet fantasy sports provider RotoPlay, Inc. in June filed a complaint in a U.S. district court against juggernaut online gambling company Sportingbet, alleging that Sportingbet copied two of Rotoplay's fantasy sports lottery games and ran them on some of its Web sites. The British company responded last week with a motion to dismiss.

Pennsylvania-based RotoPlay charges that Sportingbet has violated its copyrights and engaged in unfair competition and conversion and seeks damages in addition to an injunction to stop Sportingbet from continuing to offer the games.

Since 2001, Rotoplay has been running real-money fantasy sports games that differ from most traditional fantasy sports leagues. The two games that Sportingbet allegedly copied, for example, resemble both a lottery and a fantasy sports game in that participants try to choose a team from a set pool of athletes that will generate the most points based on statistical performance. In the American football lottery, participants try to pick the top six weekly statistical performers from of a pool of 54 athletes. Athletes generate points according to a mathematical formula that considers yards gained, touchdowns, receptions and other statistics. Participants who correctly predict four, five or six of the top six players win a cash prize.

The company claims that it began communicating with Sportingbet in September 2002 over the prospect of selling or licensing baseball and football lottery product for use on Sportingbet sites. It claims that the two parties continued communicating through April of 2002, at which time Sportingbet allegedly tested the games and informed RotoPlay that it liked the games and would like to see a business proposal. RotoPlay's CEO Korey Gardner says he discussed a business plan with a representative of Sportingbet on May 1, 2003 and then exchanged an e-mail, but that there were no further communications between the companies.

Gardner told Gaminginvesting.com, "Before any financial licensing arrangements were even discussed, Sportingbet stopped communicating with us. At the time we assumed, for whatever reason, they were no longer interested in the product."

Throughout its four years of existence, RotoPlay has never sold or licensed one of its lottery products to another company; the deal with Sportingbet would have been the first.

Gardner says his company discovered that Sportingbet "copied our lottery games verbatim and were offering them as their own on various Sportingbet-owned Web sites" in late 2003 after a customer alerted it to the fact. RotoPlay alleges that Sportingbet has been running the games on its Web sites SportingbetUSA.com, Sportsbook.com, Sports.com, PlayersOnly.com, Aces.com and MegaSports.com.

RotoPlay's legal complaint alleges that Sportingbet copied the HTML code, rules and scoring systems for its baseball and football lottery games. The six applicable copyrights owned by RotoPlay concern the HTML code, rules and scoring systems for each of the two games. It is upon these alleged copyright infringements that RotoPlay bases its first count against Sportingbet. Other counts include conversion and unfair competition in violation of the common law of the Commonwealth of Pennsylvania.

RotoPlay says that it has suffered--and continues to suffer--substantial damages and irreparable injury as a result of Sportingbet's actions. Although RotoPlay's complaint says the company has not yet calculated the financial amount of damages it has suffered, the Daily Mail quoted Gardner as saying that the case had the potential to be a "multi-million dollar" one. In addition to damages, RotoPlay wants injunctive relief barring Sportingbet from continuing to offer the games.

The same Daily Mail article insinuated that Sportingbet withheld information about the lawsuit from investors in possible contravention of U.K. stock exchange rules, although in an interview with e-Gaming Review, Sportingbet CEO Nigel Payne called the publication's article scandalous. Regardless of whether RotoPlay has a case, Payne pointed out, the amount in damages sought couldn't possibly be high enough to require such disclosure.

"If you assume everything in the article is true, I wouldn't have to announce anything unless the lawsuit was likely to be worth over $8 million." He said. "A license to buy the RotoPlay product is $60,000 a year over a three-year period so you can draw your conclusions. We haven't copied its software, and we haven't done anything wrong; however, even if we had, then any damages would not be material to our profits."

Gardner responded, "I appreciate Mr. Payne pricing our product for us. To the best or our knowledge, there never was an amount quoted to Sportingbet. Even if there was, it is irrelevant at this point. When a company willfully steals the IP of an other company, statutory and other damages can and shall be awarded.

"Using an analogy from my legal team Goldstein & Faucett, if you pull up to a parking meter and decide to take a chance and not put a quarter in, when the cop stops by and gives you a ticket, you can't just pay a quarter and make everything go away."

Sportingbet, which declined comment for this article, on Friday filed a motion to dismiss in which it argues that the court lacks personal jurisdiction over Sportingbet, that RotoPlay does not and cannot state a claim for copyright infringement, that the alleged copying of the "scoring system" does not constitute copyright infringement and that RotoPlay's state law claims are preempted by federal law.

Gardner believes the case will go to trial.

"I thought they would want to settle, and I think it would be in their best interest," he said, "but I think that because we sent out a press release and because we did the GamingInvesting.com interview, they're taking it personally. I think they have the impression that 'we're going to show them.' I know they didn't like that we sent out the bad press releases on the case, and as far as I'm concerned those things will continue because the facts don't lie. I think they need to pay for what they did, and I'll be relentless on that matter."


RotoPlay's Complaint

Sportingbet's Memorandum of Points and Authorities in Support of Its Motion to Dismiss

Bradley Vallerius

Articles by Bradley P. Vallerius, JD manages For the Bettor Good, a comprehensive resource for information related to Internet gaming policy in the U.S. federal and state governments. For the Bettor Good provides official government documents, jurisdiction updates, policy analysis, and many other helpful research materials. Bradley has been researching and writing about the business and law of internet gaming since 2003. His work has covered all aspects of the industry, including technology, finance, advertising, taxation, poker, betting exchanges, and laws and regulations around the world.

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