(with thanks to Chugarte for helping me refine my thoughts)
One thing should be made crystal clear straight off the bat: this is about the WPT release. The Players have tacked on several other outlandish claims to the complaint, but this is about the release. The players have been annoyed by the WPT release for a long time and now are finally trying to do something about it. They have good reason to be annoyed -- the release is ridiculously broad:
...Player...hereby irrevocably grants to WPT the right to film, record, edit, reproduce and otherwise use Player's name, photograph, likeness, signature, biographical information, appearance, actions (including without limitation, revealing Player's hole cards), conversations ... and/or voice ... in, and in connection with, the Programs and/or the "World Poker Tour" ... and any and all derivative, allied, subsidiary and/or ancillary uses related thereto (including, without limitation, merchandising, commercial tie-ins, publications, home entertainment, video games, commodities, etc.), in whole or in part, by any and all means, media, devices, processes and technology now or hereafter known or devised in perpetuity throughout the universe.Essentially, the players are being asked to give up substantial rights to their own likeness for FREE (technically, since WPTE takes a small cut of every buy-in, the players are paying for the privilege), which will hurt their ability to enter into other endorsement and sponsorship deals down the line. Obviously, this sucks for the players, but is it illegal?
Definition of the relevant market is always a key issue in an antitrust case. In order to show that a market actor is unreasonably restraining trade or preventing competitors from entering a market, you have to show what the market is. The complaint in the WPT case muddles this issue a bit; at points, it seems to define the market as "the services and intellectual property rights of elite, high stakes poker players". But at other points, the market definition is implied to be the market for "televised, high stakes poker tournaments", and in still other places is expressly defined as some sort of aggregation of the two ["the services and intellectual property rights of elite, high stakes poker players who provides these services and rights in connection with their participation in televised, high stakes poker tournaments."]
Obviously, the Players had some trouble defining a relevant market that would pass the laugh test, and I think that's going to be a problematic issue going forward as you'll see below.
But, accepting the Players' market definition ("the services and intellectual property rights of elite, high stakes poker players"), how do the actions of the WPTE unreasonably restrain that market? There are dozens of non-WPT affiliated casinos (even after you exclude "sister" casinos that are allegedly unable to host tournaments that compete with the WPT) in the U.S., and there is nothing preventing any of those casinos from hosting televised high stakes poker tournaments that will compete for "services and intellectual property rights of elite, high stakes professional poker players". Many already do (WSOP, U.S. Poker Championships at the Taj as two examples). Not only that, but if the market is "services and intellectual property rights of elite, high stakes professional poker players", why do the tournaments even have to be televised?
The WPT casinos themselves are not outright restricted from hosting other large buy-in tournaments. The only requirements are that those tournaments not conflict with a WPT tournament and not be televised. An argument can certainly be made that the agreements between WPTE and the WPT casinos imposing those restrictions were necessary to create and maintain a WPT brand, and that such a brand actually has a pro-competitive effect on the market.
To push the idea further, even if we assume that the relevant market is for televised tournaments, I'm certain that another WPTE-wannabe could come along and start up a competing circuit. The Trump casinos, Indian casinos, and other Vegas and California casinos would probably all be happy for the chance to get television exposure, not to mention the extra dollars into the casino from hosting such an event. In fact, the complaint itself states "the Conspiring Casinos have been approached about hosting televised, high stakes poker tournaments (that would compete with WPTE tournaments), but are prevented from accepting such opportunities pursuant to their agreements not to compete with each other or WPTE." Clearly, the demand is there. The fact that there is no other competitor in the market doesn't mean that WPTE is being anti-competitive per se.
That brings us to the release. As I stated up top, the release sucks, and I have tons of sympathy for the players that WPTE, which makes money off the hosting casino, the players AND the television advertisers, is simply asking the players to give up too much. That's not enough, though. The WPTE is under no obligation to negotiate the release, and is it realistic to expect WPTE to allow 1,000 participants of a WPT event each individually negotiate their release? It's not practical, from an efficiency standpoint or even from a business standpoint. Thus, we need to find an antitrust issue in the release terms.
There might be one, in the guise of an illegal "tying" claim. The argument would be that WPTE has illegally tied one product to another. For example, Con Edison, the electricity monopoly here in New York, cannot refuse to sell me electricity (the "tied" product) unless I also buy a monthly allotment of sporks (the "tying" product). In the case of the WPTE, the Players could allege that the tied product is the tournament play offered by WPTE and the tying product is the release of IP rights for "derivative" works (video games, WPTonline, etc.)
In order for this claim to be successful, however, the Players are going to have to show that WPTE has "market power" in the relevant market. The presumption is that if WPTE has "market power", the Players do not have a meaningful choice. Again, the issue boils down to defining the relevant market, and I think the Players are facing an uphill battle there.
In the end, maybe this will succeed simply by shining the spotlight on WPTE's unreasonable release and pressuring WPTE, through the court of public opinion, to change it to something more pallatable. Time will tell.
Thursday, July 20, 2006
(with thanks to Chugarte for helping me refine my thoughts)