Sports Betting Industry Gets Lesson on Data

By Betmaker Team

Data is what makes the sports betting world spin. The fastest, most accurate information is the most desirable. But the data market is far from a highly competitive marketplace, thanks largely to states that have mandated that companies use official league data, something available from only a handful of companies.


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By creating barriers to entry, lawmakers in places like Illinois, Virginia, and Tennessee are almost certainly stifling innovation. But the data market’s consolidation around a handful of companies is not that much different than what is happening in the sports betting market, as a handful of well-resourced companies outspend and out-lobby little companies.


Of course, state lawmakers play a role, too, with high licensing fees that small companies cannot pay. These are all problems suffocating the competitiveness of the sports betting industry, but it is far from the only sector suffering from similar issues.


A recent decision from the D.C. Court of Appeals regarding data feeds for the financial industry might be enlightening for the sports betting industry, even if it is not directly implicated.

According to the D.C. Court of Appeals’ decision, the case centers on 2020 orders from the Securities and Exchange Commission (SEC).


The first order involved consolidating the National Market System (NMS), which communicates market information, including market quotes, and aims to create a single plan to disseminate market data. NASDAQ, the New York Stock Exchange, and CBOE Global Markets all sued to argue that the decision was “arbitrary and capricious” in violation of the Administrative Procedure Act.


The Plaintiffs challenged three provisions of the plan. The crux of the provisions would have effectively limited the Plaintiffs’ power in the ability to have a say in the new data distribution plan.

According to Bloombergthe SEC was hoping to create a one-stop shop for financial market data, requiring the Plaintiff “exchanges and the Financial Industry Regulatory Authority, a self-regulatory organization, to consolidate their existing plans for public data feeds.”


But it was not just about consolidation. The SEC sought to include other stakeholders as voting members. People representing brokerage firms and traders should have votes governing the new system.


While consolidation may seem like a negative, the SEC reportedly issued the orders out of concerns about potential conflicts of interest between the markets’ responsibilities to disseminate data based on how the markets process transactions, and the markets acting as the data sellers. This certainly seems to sound a lot like official league data.


In the end, the D.C. Court of Appeals held that the SEC’s interpretation of the Act concerning its authority to add the non-exchange stakeholders was “unreasonable and therefore invalid.”


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