New Trial in Crystal Cox Defamation Case – What Does It Mean for Bloggers?

February 20, 2014 by 1 Comment
First Amendment to the US Constitution by elPadawan from Flickr (Creative Commons License)

First Amendment to the US Constitution by elPadawan from Flickr (Creative Commons License)

The Ninth Circuit Court of Appeals recently ruled that Crystal Cox will get a new trial for the defamation lawsuit that was filed against her. Cox calls herself an “investigative blogger” and she wrote a blog post where she accused Oregon bankruptcy attorney Kevin Padrick and his company, Obsidian Finance Group LLC of committing “fraud, corruption, money-laundering and other illegal activities.” Padrick sued Cox for defamation and an Oregon court awarded him $2.5 million in damages.

In general, defamation requires a false statement about a person communicated to a third party that hurts that person’s reputation. Based on this definition, it’s easy to see how a blogger could be accused of defamation if someone suspects the blogger is lying about them in a post. The court applies different standards for different situations involving situations which will affect whether the author has committed defamation and what damages can be awarded.

A court may award compensatory damages to make up for the person’s damaged reputation and punitive damages to punish the person who committed the defamation.

Here are the three standards that can apply in a defamation case.

  • Defamation of a public person: The alleged victim must prove that the author knew or should have known they were lying when they made the statement in question – only compensatory damages available.
  • Defamation of a private person regarding a manner of public concern: Punitive damages are available in addition to compensatory damages if the alleged victim can prove that the author was negligent in making the statement.
  • Defamation of a private person regarding a matter that is not of public concern: Compensatory and punitive damages are available if the alleged victim can show that the statement was false and damaged their reputation.

It appears the lower court applied the standard for defamation of a private person regarding a matter that is not of public concern and the court of appeals ruled that they should have used the standard for defamation of a private person regarding a manner of public concern because the public has an interest regarding whether an attorney is corrupt and committing fraud. So the parties will have to settle the case between themselves or have a new trial and use the correct standard. But note, there is no dispute about whether the statement in question was defamatory, only what standard the court is supposed to use to decide the case.

Some people are calling this ruling a huge victory for bloggers because it states that the same defamation standards for journalists apply to blogging – and I’m going to respectfully disagree.  The landmark defamation cases may have started with journalists, but we don’t have different defamation laws for journalists and everyone else. (If this were a Shield Law case, it would be different.) There have been other defamation cases against non-journalists where the court applied the same standards. The fact that this might be the first time a court has said that bloggers can write about matters of public concern is an indicator of how few defamation cases go to trial more than anything else. No real new information has come out of this ruling by the Ninth Circuit.

This case is a good reminder about where you can be sued because of your blog. If you do something wrong via your blog and you get sued, the alleged victim is going to sue you in their state and under their state’s laws. In this case, Cox was living in Montana when she made the original statements and she had to travel to Oregon to defend herself under Oregon’s laws.

If you want more information about internet defamation, please check out my book, The Legal Side of Blogging: How Not to get Sued, Fired, Arrested, or Killed. It has an entire chapter dedicated to online defamation. You can connected with me on Twitter, Facebook, YouTube, LinkedIn, or you can email me. You can also subscribe to the Carter Law Firm newsletter.
Please visit my homepage for more information about Carter Law Firm.

Filed Under: Internet law, Legalities of Blogging Tagged With: , , , , , , , , , , ,

Arizona may Pass a Law Against Revenge Porn

February 11, 2014 by 3 Comments
Pro Juventute Aufklärungskampagne ‚Sexting’ Themenbild_05 by Pro Juventute from Flickr (Creative Commons License)

Pro Juventute Aufklärungskampagne ‚Sexting’ Themenbild_05 by Pro Juventute from Flickr (Creative Commons License)

The Arizona legislature is considering a bill that would make “revenge porn” a felony. Revenge porn is the term commonly used when a person posts nude, often sexually explicit, photos or videos of another person on the internet without consent, likely after a bad break up.

House Bill 2515 would prohibit a “person from knowingly disclosing, displaying, distributing, publishing, advertising or offering a photograph, videotape or film or digital recording or other reproduction of a person engaged in a sexual act or in a state of nudity without that person’s written consent.”

If this bill becomes a law as it’s written, violating this law would be a Class 5 Felony (punishable by at least 6 months’ imprisonment and up to $150,000 fine), unless the person in the images is recognizable, then it would be a Class 4 Felony (punishable by at least 1 year in jail and up to $150,000 fine).

Arizona already has a law on the books about cyberharassment. This law is broadly written and requires the perpetrator to intend “to terrify, intimidate, threaten or harass a specific person or persons.” This new revenge porn law doesn’t require a particular intent, just the knowledge that the perpetrator knew they were posting sexually explicit material without the subject’s consent. It only looks at their behavior, not their goal regarding the alleged victim.

This bill has a long way to go before it becomes a law, and it has some opponents. Rep. Eddie Farnsworth is reported to oppose the law because people in the photos and videos often send the original images of themselves via “sexting” and they may be partially responsible for the continued distribution of the images.

“Once you send it out, I think there’s some difficulty in claiming that you have a right to privacy,” Farnsworth said. “You sent it. It’s on the entire system.”

What do you think about this bill – Should states have specific laws about revenge porn? Do you think the punishment should be up to a year in jail if the person in the photos or video can be identified?

I constantly remind people, “Think before you post.” Even if this law passes, victims’ lives could still be destroyed by revenge porn. You don’t know who is going to see it or where it might end up. If you can’t handle the responsibility of taking intimate photos  or videos, don’t do it.

If you want to chat more about revenge porn and this proposed law, please check out my book The Legal Side of Blogging: How Not to get Sued, Fired, Arrested, or Killed. It has an entire chapter dedicated to invasion of privacy. You can connected with me on Twitter, Facebook, YouTube, LinkedIn, or you can email me. You can also subscribe to the Carter Law Firm newsletter.
Please visit my homepage for more information about Carter Law Firm.

Filed Under: Cyberbullying & Cyberharassment, Internet law, Legalities of Blogging Tagged With: , , , , , , , , , ,

What the Yelp Lawsuits Mean for You

February 6, 2014 by Leave a Comment
People Hate Us on Yelp by danoxster from Flickr (Creative Commons License)

People Hate Us on Yelp by danoxster from Flickr (Creative Commons License)

There are a few lawsuits going on right now involving reviews on Yelp. If you are a business owner who is concerned about what people might post about you or a person who likes to post reviews of products and services online, you should be paying attention.

In the first case, the court ordered Yelp to reveal the identities of seven anonymous account holders who are being accused of posting false negative reviews about a business. The owner of Hadeed Carpet Cleaning filed the defamation lawsuit claiming that these people were not customers. Posting reviews of companies you haven’t used is also a violation of Yelp’s terms of service.

The First Amendment protects people’s right to share their opinions, including anonymously. However, it doesn’t protect against defamatory speech. The challenge with anonymous speech is you could be unmasked if you do something wrong or if someone builds a strong case that you could be wrong. These cases are hard because the owner doesn’t know who is posting the anonymous review so they can’t cross check the review with their customer records so they often have to sue to identify the person so they can determine if they’ve been illegally harmed.  This case doesn’t concern me too much as long as the court is applying the proper standards to determine if the plaintiff has shown enough evidence of harm that would warrant a subpoena to reveal the posters’ identities.

In the second case, a contracting company is suing a former customer for $750K for defamation after she posted a negative review on Yelp where she claimed her “home was damaged, she was billed for work that wasn’t done and jewelry went missing after she hired” the company. Defamation generally requires a false statement about a person or entity that’s communicated to a third party, and that hurts the person or entity’s reputation. In this case, the owner claims the review has cost his company business, so there’s his damage. If anything in her review is untrue and led to the drop in business, that’s likely defamation.

Some people are concerned that these cases will prohibit people from posting negative reviews online, even when they are accurate. Given how many Yelp reviews have been posted and how few lawsuits have come out of them, I don’t think this should be a significant concern for Yelpers. I think these cases provide good lessons regarding internet law and etiquette:

  1. If you’re going to post reviews online, make sure you only share your accurate opinion. (BTW – Federal law requires you to only post your honest and accurate opinions.)
  2. The First Amendment protects your right to speak anonymously; however, if someone suspects your speech has harmed them, they may have to sue to get a subpoena for the website to reveal your identity to determine if they’ve been harmed. If you use your real name, they can cross check your review with their records.
  3. If you are a business owner, take care of your customers. If you treat them badly, have low quality products, or provide poor service, they will call you out online.

I also made a video about how to respond to bad reviews online from a legal perspective:

Most states have laws against strategic lawsuits against public participation, called anti-SLAPP laws. These are laws against filing lawsuits that are intended just to shut you up, not to address a situation where a person was legally harmed. If someone files a defamation lawsuit against you because of an online review and you feel like you’re being falsely accused, you should check to see if your state has an anti-SLAPP law.  

If you want more information about internet defamation, please check out my book, The Legal Side of Blogging: How Not to get Sued, Fired, Arrested, or Killed. It has an entire chapter dedicated to online defamation. You can connected with me on Twitter, Facebook, YouTube, LinkedIn, or you can email me. You can also subscribe to the Carter Law Firm newsletter.
Please visit my homepage for more information about Carter Law Firm.

Filed Under: Business Law, Internet law Tagged With: , , , , , , , , , , , , ,

Courtney Love Wins her Twitter Defamation Case – What Does It Mean For You?

January 27, 2014 by Leave a Comment
Courtney at the Tabernacle by Katjusa Cisar from Flickr (Creative Commons License)

Courtney at the Tabernacle by Katjusa Cisar from Flickr (Creative Commons License)

Last week, a California jury reached a verdict in the Courtney Love Twitter defamation case – the first Twitter defamation case to go to trial. Love hired attorney Rhonda Holmes to represent her in a fraud case against the people who were managing Kurt Cobain’s estate. Their professional relationship didn’t work out, and in 2010, Love posted a tweet that said in part, “I was f***ing devestated [sic] when Rhonda J. Holmes esq. of san diego was bought off.” Holmes sued Love for defamation.

In general, defamation requires a false statement about a person told to a third party, that hurts that person’s reputation. Essentially, Holmes argument was that the tweet was lie and that it damaged her reputation. Defamation is a state-law issue so check how the law is written in your state.

Initially, I was surprised when I saw that Love won this lawsuit, until I read the full article. Then I made a video explaining why Courtney Love won this defamation case.

The law applies different standard to defamation involving public persons versus private persons. When a public person is defamed, the victim can prevail if she can prove that the person making the statement acted with malice – meaning they knew or should have known that they were lying when they made the statement. When a private person claims they were defamed, they only have to show that there was a lie about them that hurt their reputation.  

Holmes isn’t a celebrity lawyer. She’s just a person. You might think that Holmes would be treated like a private person, but the court said she was a public person in regards to this case because of her affiliation with Love. (Some people are public people all the time – i.e., celebrities – and some people are public figures only regarding certain issues.) Here, the jury believed Love when she said she didn’t know she was lying when she made the statement, so that’s why she won the case.

So what does this mean for you? This case suggests that you can be Joe Average Nobody (private person) in your day-to-day life but if you are affiliated with a celebrity, you can be a public person in regards to your dealings with them. If you claim that your celebrity friend defamed you, you may have a higher bar to clear than if you were defamed by your Joe Average Nobody friend.

Here’s something else to think about – celebrities are public people because they put themselves into  the public spotlight. If you are “internet famous” or put yourself online for all to see via your blog, YouTube channel, or on other social media platforms, you may become a public person. When you’re a public person, you can expect more criticism and the law will protect your critics against defamation claims as long as they didn’t know or couldn’t have known that they were lying about you when they did it.

There is no cut-and-dry equation to determine whether you are a public or private person in regards to a defamation case unless you are an obvious celebrity. So if you are ever file a defamation lawsuit, part of the trial might be just determine whether you are a public or private person in the circumstances of the case to determine which standard applies.

If you want more information about internet defamation, please check out my book,  The Legal Side of Blogging: How Not to get Sued, Fired, Arrested, or Killed. It has an entire chapter dedicated to online defamation. You can connected with me on Twitter, Facebook, YouTube, LinkedIn, or you can email me. You can also subscribe to the Carter Law Firm newsletter.
Please visit my homepage for more information about Carter Law Firm.

Filed Under: Internet law Tagged With: , , , , , , , , , , , , , ,

Why You Have to Respond to Suspected IP Infringement

January 16, 2014 by 4 Comments
Cease and Desist by H.L.I.T. from Flickr (Creative Commons License)

Cease and Desist by H.L.I.T. from Flickr (Creative Commons License)

A few weeks ago we all had a good laugh when Jeff Briton, owner of Exit 6 Pub and Brewery in Cottleville, Missouri got a cease and desist letter from Starbucks when he named one of his craft beers “Frappicino.” Starbucks said this was too similar to their Frappuccino and even took the liberty of contacting the beer review website Untappd to get the Frappicino beer listing removed.

Briton responded with a letter and a check for $6 – the profit he made from selling the beer to the three people who reviewed it on Untappd. If you haven’t read this letter yet, go do it. It’s hilarious.

My hat’s off to Briton for writing such a brilliant response and turning this situation into an awesome opportunity to promote Exit 6. Some people might say that Starbucks’ lawyers were being jerks for sending a cease and desist letter to the little guy who wasn’t their competition anyway. But it was what Starbucks had to do to protect its intellectual property.

When you have a copyright or a trademark and you know that someone is using your intellectual property without your permission and you do nothing, you send a message that you don’t care about protecting your intellectual property rights. If you let the little guys get away with things like Frappicino beer and then one of your big competitors does something similar and you try to lay the smack down on them, your competitor will have an argument that your track record shows that you let others use your property without permission or penalty. By not protecting your intellectual property, you put yourself at risk of losing your intellectual property rights.

It’s because of this risk that Starbucks has to send cease and desist letters to Exit 6 Pub. This is why I tell clients to keep an eye out for other people using their intellectual property. In trademark situations, a cease and desist letter is usually the proper response, even in situations like Frappicino beer.

This is also why I tell bloggers and photographers to be diligent about who is using their work. If they find that someone’s using their copyrights without permission, even if they’re ok with it, I often recommend they contact the alleged infringer and grant them a license after the fact and request an attribution if the infringer didn’t give them one. If they’re not ok with what the alleged infringer did, we discuss whether the artist wants to send a cease and desist, a DMCA takedown notice, a licensing agreement with a bill, or sue for infringement. There should always be a response.

If you have questions about your intellectual property rights or your strategy to protect them, please contact an intellectual property attorney in your community. If you have questions related to copyright or trademark and blogging, please check out my book The Legal Side of Blogging: How Not to get Sued, Fired, Arrested, or Killed.

If you want to chat with me more about this topic, you can connected with me on Twitter, Google+, Facebook, YouTube, LinkedIn, or you can email me. You can also subscribe to the Carter Law Firm newsletter.
Please visit my homepage for more information about Carter Law Firm.

Filed Under: Business Law, Intellectual Property, Internet law, Legalities of Blogging, Photography & the Law Tagged With: , , , , , , , , , , , , , , , , , ,

To Watermark or Not To Watermark

January 9, 2014 by 5 Comments
How to Create a Watermark in Photoshop by Michele M. F. from Flickr (Creative Commons License)

How to Create a Watermark in Photoshop by Michele M. F. from Flickr (Creative Commons License)

I was recently asked to talk about whether there are benefits to putting a watermark on your photos before posting them on the Internet. Is it worth the extra effort? Do they really prevent people from stealing your work?

Like all legal questions, the answer is, “It depends.” But let’s look at it.

When you take a photograph, you have copyright rights in your work the second the image is put on film or saved in your camera. You have the exclusive right to copy, distribute, display, and make derivative works from your picture, even if you don’t register it with the U.S. Copyright Office  or put the © [Your Name] [Year] on it. If you want to sue for copyright infringement if someone steals your work, you have to register your work and if that’s the case you should consult a lawyer to determine the best copyright protection strategy for your work.

I look at watermarks similarly to home security. Your home doesn’t have to be fortress; it just has to be less appealing than the other houses on the block. A watermark makes your photo less appealing to potential infringers who can probably find (and possibly steal) a similar image elsewhere that doesn’t come with a watermark.

For people who understand copyright, a watermark is a visual reminder that they don’t own the image and they should contact you if there’s an image they really want to use. The problem with watermarks is they can obscure the image itself and interfere with people’s ability to enjoy the image which was the purpose of posting it online in the first place.

You could try to avoid this problem by putting the watermark in the corner so it doesn’t obstruct the image, but then you open yourself up to the possibility that someone will steal you work and crop off the watermark before using it. If an infringer does this, it is a separate additional penalty to copyright infringement. If you sued the infringer you could ask for damages for the infringement which can be up to $150K if you qualify for statutory damages and up to an additional $25K for removing or altering the “copyright management information.

So, should you take the time to put watermarks on your photos? It’s your call. You can deter potential infringers with watermarks and/or using software that prevents them from downloading your images from your website. But if someone is dead set on stealing your work, there’s probably nothing you can do to completely stop them. The questions then become how much energy are you willing to put into prevention and how do you want to respond if someone steals your work. How you want the situation to be resolved usually tells you what you have to do on the front end to set yourself up for the desired outcome.

If you want to chat with me more about this topic, you can connected with me on Twitter, Google+, Facebook, YouTube, LinkedIn, or you can email me. I’m also available to speak at events on Copyright for Creatives.
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Please visit my homepage for more information about Carter Law Firm.

Filed Under: Intellectual Property, Internet law, Photography & the Law Tagged With: , , , , , , , , ,

Unsolicited Advice: Be Careful at Holiday Parties

November 28, 2013 by Leave a Comment
Self-Portrait, Christmas-Style by jimw from Flickr (Creative Commons License)

Self-Portrait, Christmas-Style by jimw from Flickr (Creative Commons License)

Back when I was in high school and college, there was always one friend at every party who brought a camera and a few days after the party that people would be confronted with the evidence of the stupid things they did the previous weekend. I was lucky because this was back in the days of film. If the person only had one roll of film, they only had 24 chances to capture footage from the party so they would be more thoughtful about what they captured. And they knew the pictures would be processed by a person so they rarely shot anything that would get them into trouble.

Those days are long gone. Now everyone has a smartphone with a built in camera and video camera in their back pocket. If there is a moment worth capturing at a party, it will be recorded, probably by multiple people. And then it will be posted on Facebook, Twitter, Instagram, etc. 30 seconds later, before the poster really has had a chance to think through whether they should be sharing that image or video with the Internet-accessible planet. If they decide later to delete the post, who knows how many times it will have been seen, shared, downloaded, and what that effect might be (on everyone involved).

The holiday season is upon us. Between now and New Year’s there will be copious gatherings, parties, and other frivolity. A lot of people will be drinking and making asses of themselves while under the influence. If that’s you, you may want to take it easy because you don’t know and usually have no control over whether someone will take a picture of you or where it will end up.

If you’re that guy who is swift to whip out their phone to snap a photo of your buddy or random strangers doing stupid things, think before you shoot and share. It might be funny in the moment, but it could have dire consequences for the person in the photo. And you might look like a thoughtless jerk for being the person who took and shared the photo in the first place.

Remember – just because you’re in a photo it doesn’t mean you own it or have any say over where it is published.

Have a safe and happy holiday season! If you want to chat with me about this or any other topic, you can connect with meTwitter, Google+, Facebook, YouTube, LinkedIn, or you can email me.
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Please visit my homepage for more information about Carter Law Firm.

Filed Under: Internet law Tagged With: , , , , ,

Can You Trademark a Hashtag?

November 21, 2013 by 9 Comments
Rémi Beaupré, Meme Snippets, 2012 by Retis from Flickr (Creative Commons License)

Rémi Beaupré, Meme Snippets, 2012 by Retis from Flickr (Creative Commons License)

I spoke at TechPhx on Social Media Horror Stories from the Legal Trenches. One of the stories I told was Turner Barr’s experience with having his blog, Around the World in 80 Jobs, essentially shut down because another company registered the trademark in the same name. At the end of my talk, someone asked if you could register the trademark in a hashtag.

A trademark is the words, slogans, logos, colors, packaging, etc., you put on your products that differentiate you from your competition. If you don’t register your trademark, you get the exclusive right to use your marks where you’ve established your market. When you register your trademark, you get the exclusive rights to use your marks on your type of products everywhere in the U.S. If you want to know more about trademarks, check the story behind the Burger King trademark.

Hash Tags are Like Snow Flakes by cambodia4kids.org from Flickr (Creative Commons License)

Hash Tags are Like Snow Flakes by cambodia4kids.org from Flickr (Creative Commons License)

Just like you can register a trademark in a company name, product name, or slogan, you can register a trademark in a hashtag. The first rule is your trademark can’t be the generic product. If you own a coffee shop, you can’t register the trademark #coffee. If the U.S. Patent and Trademark Office (USPTO) let you have that, you could stop your competition from calling their coffee “coffee,” which would be very confusing. You could register your business name (i.e., #DansCoffee) or a slogan like #GreatMornings or #WheresMyMug.

The second rule is you can’t claim a trademark that your competition is already using. If you were a soda manufacturer, you couldn’t register the trademark #Coke or #CocaCola unless you were the Coca-Cola Company.

Another thing to keep in mind is when you register your trademark, you have to declare what you’re claiming as your trademark and what goods or services you’re using it on. You only get the exclusive rights to your mark in your arena of goods. You can’t stop another company from using a similar trademark on their products as long as they are completely unrelated.

Registering a trademark allows you to prevent your competition from using your trademark or something similar to it. It doesn’t give you the ability to stop people from using your slogan in their everyday lives. For instance, the Williamstown Theatre Festival could register the trademark in the hashtag #WTF which would allow them to prevent other theatres from using the same hashtag to promote their products, services, and events, but it would allow them to stop everyone who uses it on Twitter to mean “What The Fuck.”

Registering a trademark is a long process. It can take months for the USPTO to look at your application and then there may be several rounds of communications between you and the USPTO before your trademark is approved. If you want to claim the exclusive right to use your desired hashtag, it should be for something that you’re planning on using for a long time.

So can you register a trademark in a hashtag? Yes. Should you register your hashtag as a trademark? It depends on your situation. That should probably require a joint meeting with your marketing staff and your lawyers. If you want to chat with me about this or any other topic, you can connect with me Twitter, Google+, Facebook, YouTube, LinkedIn, or you can email me.
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Please visit my homepage for more information about Carter Law Firm.

Filed Under: Business Law, Featured Post, Geek Law, Intellectual Property, Internet law Tagged With: , , , , , , ,

How To Use Event Photos for Marketing Purposes

November 7, 2013 by 5 Comments
Notice Posted at the Arizona State Fair - October 27, 2013

Notice Posted at the Arizona State Fair – October 27, 2013

I get hits on this website every day from people who are searching for terms like “posting photos online without permission” and “privacy expectations in public filming.” I also get questions from people who want to know whether and how they can use the photos from their events to market their businesses.

The general answer is you can use photos and videos you take at your events but you should put your guests on notice that you are doing this by posting a sign at the registration table for the event. If your event has tickets, you may also want to put this notice on there as well. If your guests do not want to be photographed or videotaped, they should not attend the event.

There is no guarantee that your guests will notice the sign or read it, but if it’s a big event, you can’t be expected to get each guest’s verbal or written consent to possibly being on film. The best you can do is make the information readily available and in a place where they are likely to see it.

I saw a photo/video notice recently at the Arizona State Fair. They had a few A-frame signs throughout the fairgrounds that contained this notice. (Sorry about the shadow.)

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I’m a dorky lawyer so I read the sign, but I’m sure the majority of the thousands of people who were there didn’t. However, by continuing to be at the fair, they consented to being photographed and videotaped. If anyone sees themselves on the fair’s website or promotional materials, there’s nothing they can do to stop it.

From a business owner’s perspective, most people aren’t going to care if you use a photo of them from your event on your marketing materials. If a person is at your event, they probably like your company and it’s highly unlikely that an event photo will become the main image for a company. It will be a picture in a brochure or a supplemental photo on the company’s website. Most people would be flattered to be featured in this way. The notice is to protect businesses against the rare angry person.

I also made a video about this topic. You can see it below or here.

If you want to chat with me about this or any other topic, you can connect with me on Twitter, Facebook, YouTube, LinkedIn, or you can email me.
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Please visit my homepage for more information about Carter Law Firm.

Lights Camera Lawsuit

There’s always a need for quality legal information for photographers. That’s why I created an online course called Lights Camera Lawsuit: The Legal Side of Professional Photography to address photographers’ most important questions. I want you to feel secure in your business, confident in the way you operate day-to-day, knowing that you’ve set yourself up to get paid what your worth without incident.

For less than the cost of hiring a lawyer for two hours, the course contains nearly six hours of legal information you can immediately apply to your business!  

Please subscribe for more information and to make sure you don’t miss out on any special offers or discounts.

Filed Under: Business Law, Internet law, Photography & the Law Tagged With: , , , , , , ,

Fantasy Football = Felony in Arizona

October 24, 2013 by 19 Comments

 

Fantasy Draft by Chimpanz APe from Flickr (Creative Commons License)

Fantasy Draft by Chimpanz APe from Flickr (Creative Commons License)

Fantasy football is a Class 5 felony in Arizona. That’s right a felony.

Yeah, I’m with you – What the fuck?!?!

Fantasy football leagues are legal in 45 of the 50 states, but not Arizona. Arizona considers it a “game of chance,” therefore gambling, therefore illegal.

Under federal law, fantasy sports are legal under the Unlawful Internet Gambling and Enforcement Act of 2006 (UIGEA) because each participant’s team is made up of players from multiple teams and the results “reflect the relative knowledge and skill of the participants and are determined predominantly by accumulated statistical results of the performance of individuals.” Making predictions based on your knowledge of the players’ past performances and making strategic decisions in managing your fantasy football team appears to be sufficient knowledge and skill to comply with the law.

The other big rules are the prizes have to be determined in advance – they can’t be something like a percentage of the total money people paid into the league to play, and the winner cannot be chosen based on a score, point-spread, or any performance or performances of any single real-world team or any combination of such teams or solely based on one athlete’s performance in one event.

So what’s wrong with Arizona? In Arizona, amusement gambling is not illegal. Here’s the state’s four-part definition of “amusement gambling.”

(1) The player actively participates in the contest.
(2) The outcome is not in the control to any material degree of any person other than the player.
(3) The prizes are not offered as a lure to separate the player from their money.
(4) Any of the following:

(i) No benefit is given to the player other than an immediate and unrecorded right to replay which is not exchangeable for value.
(ii) The gambling is an athletic event and no person other than the player derives a profit or chance of a profit from the money paid to gamble by the player.
(iii) The gambling is an intellectual contest, the money paid to gamble is part of an established purchase price for a product, no increment has been added to the price in connection with the gambling event and no drawing or lottery is held to determine the winner.
(iv) Skill and not chance is clearly the predominant factor in the game and the odds of winning the game based upon chance cannot be altered, no benefit for a single win is given to the player or players other than a merchandise prize which has a wholesale fair market value of less than $4 or coupons which are redeemable only at the place of play and only for a merchandise prize which has a fair market value of less than $4 and, regardless of the number of wins, no aggregate of coupons may be redeemed for a merchandise prize with a wholesale fair market value of greater than $35.

Fantasy Football Hell by Dave Parker from Flickr (Creative Commons License)

Fantasy Football Hell by Dave Parker from Flickr (Creative Commons License)

Based on this definition, you would think that fantasy sports are a type of amusement gambling, but no, Arizona is backwards and says that fantasy sports are based on chance, not skill, so all fantasy football leagues are illegal.

I’ve never played fantasy football, but I did participate in the Deadliest Catch Fantasy Game this past season. Each week I picked my boat and assembled my crew to maximize my points predicting what was going to happen on the show that week. I will say my knowledge of the show, the crew members, and my training as a former mental health professional helped me predict what was going to happen each week. There was definitely skill involved. (And since I didn’t have to pay-to-play, it wasn’t gambling so don’t waste your time investigating me Arizona.)

This appears to be a low-priority issue in Arizona because I have lots of friends who play fantasy football and none of them have been arrested or know of anyone who has been arrested for participating in a fantasy league. (But they get caught they could be facing at least 6 months in jail and up to a $150,000 fine.)

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