Major League Baseball, Red Sox, Astros Hit with DraftKings Player’s Class Action Lawsuit Over Sign Stealing Scandal [UPDATE]

A Massachusetts DraftKings player alleges in a proposed class action lawsuit that Major League Baseball’s recent sign stealing scandal tainted the sports gambling platform’s fantasy baseball contests.

Filed against Major League Baseball, MLB Advanced Media, the Houston Astros and Boston Red Sox, the 52-page suit charges that those who partook in DraftKings’ daily fantasy baseball contests at any point from early in the 2017 season through the 2019 season were harmed financially given their wagers were compromised by “the cheating by MLB’s teams and their players.” Moreover, the suit contends that MLB, an investor in DraftKings since at least 2013, was “well aware” during this period that some teams were engaged in sign stealing yet “failed to properly investigate, deter, remedy or disclose” the misconduct while purposefully encouraging fans to participate in DraftKings’ fantasy baseball contests.

The case minces no words in alleging Major League Baseball is to blame for monetary losses sustained by DraftKings players who thought their wagers were placed on fair and honest baseball competitions. Brought to the surface in the wake of this off-season’s sign stealing controversy, at which the Astros and the Red Sox are at the center, is the revelation that fantasy baseball bettors, according to the suit, were effectively pushed by the league into betting on games and relying on player statistics compromised by cheating. From the complaint:

While actively inducing their fans to enter into fantasy baseball wagers based on the individual statistical performance of MLB players, MLB’s member teams secretly engaged in corrupt and fraudulent conduct, in knowing and intentional violation of MLB’s Official Rules and regulations, that produced player statistics distorted by cheating and deprived their fans of an honest fantasy baseball competition.”

The plaintiff asserts that neither he nor any other DraftKings player would have bet on daily fantasy baseball contests had they known players’ statistics were not derived from honest competition.

“Untold numbers of hits, walks, runs, and wins were dishonestly obtained and awarded to the Astros and Red Sox that would not have taken place but for the Astros’ and the Red Sox’s players’ impermissibly-gained advanced knowledge of pitches,” the suit attests.

Times Change: MLB’s Shifting Attitude on Gambling

Inextricable from Major League Baseball’s history is its long-time opposition to gambling on baseball. The lawsuit points out that MLB has up until very recently bucked the spread of legal sports gambling in the United States under the reasoning that the integrity of the game could be compromised should consumers be allowed to wager legally on the game. Highlighted in the complaint are MLB’s lifetime bans of “Shoeless” Joe Jackson in 1921—over the Black Sox scandal in which some members of the team were alleged to have thrown the 1919 World Series—and Pete Rose—MLB’s all-time hits leader who was found to have bet on his own team, the Cincinnati Reds, for years—in 1989 as supporting evidence of how firmly the league had planted its flag in opposition to any connection between betting and baseball. Further still, MLB, the case adds, went so far as to lobby state legislators on whether to impose “integrity fees” for sports gambling to compensate the league for potential dangers to baseball’s integrity after the Supreme Court in 2018 allowed sports gambling to proceed on a state-by-state basis. 

In 2013, however, MLB signaled subtly that its attitude toward gambling on baseball had begun to shift. Recognizing how lucrative the “enormous popularity” of sports betting could be for the league, MLB made in 2013 what the suit calls a “confidential investment” in DraftKings, one of the most prominent sports betting platforms in the country. In 2015, the lawsuit says, MLB tacked onto its initial investment in DraftKings with an equity investment that the league said at the time would enable it to “reap meaningful benefit from the rise of daily fantasy.” 

The plaintiff claims that it was during this time that MLB came around to realizing that the league could not lose by getting in bed with fantasy sports betting operators. To MLB, fantasy baseball, for which participants assemble their own lineups of players (a “fantasy team”) and compete against others based on real-life statistics, offered a wealth of opportunities to not only grow the sport but to make the league and its 32 teams a whole lot of money. 

More from the suit:

Investing in fantasy baseball was a win-win proposition for MLB. Not only would it be able to benefit financially by sharing in the multi-million dollars of entry fees fantasy baseball contestants paid their fantasy sports operator, but fan interest in the game would be heightened by fan participation in fantasy baseball wagering, resulting in greater attendance, higher advertising and broadcasting revenues, and additional sales of MLB merchandise and paraphernalia.”

Today, Major League Baseball considers itself a partner with DraftKings, the lawsuit says, and actively promotes the platform’s daily fantasy baseball competitions across its media properties, in teams’ stadiums, and on television. To this extent, the case argues, MLB has encouraged fans to “take a financial stake” in DraftKings’ fantasy baseball betting competitions.

Unbeknownst to fans, however, is that the integrity of Major League Baseball games since early in the 2017 season, at least those involving the Astros and Red Sox, has been substantially undermined and compromised due to sign stealing, the suit alleges.

Sign Stealing: Legal . . . to an Extent

Similarly inextricable from the history of organized baseball is the practice of a team stealing the signs utilized by opposing pitchers and catchers to determine which pitches will be thrown. While the league’s official rules allow for, say, a runner on second base to steal a pitcher and catcher’s signs if he’s able to do so using his eyes and ears, MLB expressly prohibits the use of electronic devices to decipher a pitcher and catcher’s communications. The case expands on just how vital it is for a pitcher and catcher to be able to conceal from an opposing team what’s being thrown and when:

A pitcher’s ability to conceal from a hitter the type of pitch being thrown, and the intended speed, movement, and location of the pitch, is critical to a pitcher’s success. A team that can successfully steal the catcher’s signs and alert its hitter to information about a forthcoming pitch will have a substantial hitting advantage in that knowing what type of pitch is coming, and where, dramatically improves a professional major league hitter’s ability to hit the pitched ball and to hit the pitched ball with substantial contact.”

Complicating matters for the league was MLB’s adoption in 2014 of an instant replay challenge process, which allowed teams to challenge certain calls during a game. According to the lawsuit, MLB permitted teams to create video replay rooms at their home stadiums in which employees could immediately review video footage of a play to determine whether to field a challenge. Yet the advent of video replay, while generally accepted as a positive for the game, did not come without the realization by some teams that an opportunity existed to gain an advantage over their opponents. The lawsuit explains:

Several of MLB’s member teams, including the Astros and the Red Sox, realized that the replay rooms provided an opportunity for them to easily view and decipher an opposing team’s pitcher and catcher signals and devised ways to relay the information from the replay room to the dugout and to team hitters as they were batting. In 2017, numerous MLB teams reported concerns to MLB’s Office of the Commissioner that other clubs were impermissibly using electronic means to steal their signs in violation of MLB rules.”

The lawsuit argues that sign stealing “directly affects” the player performance statistics on which DraftKings’ daily fantasy baseball contests are based. As such, the plaintiff stresses, teams and players who successfully steal signs “directly compromise the fairness and integrity” of DraftKings’ wagering contests. The case alleges MLB, with whispers about sign stealing circulating, knew about the rule violations in 2017, 2018 and 2019 yet failed to take steps to look into, deter, remedy or disclose to the gambling public that certain games were tainted.

Lawsuit: Astros “Corrupted,” Red Sox “Manipulated” DraftKings’ Daily Fantasy Games

In November 2019, baseball fans and the general public learned that the Houston Astros and Boston Red Sox engaged in what the lawsuit calls “persistent and continuous” sign stealing across the 2017, 2018 and 2019 seasons. Citing media reports, the case explains that at least two Astros personnel, then-designated hitter Carlos Beltran and then-bench coach Alex Cora, concocted an elaborate method of stealing signs involving additional staff members, a camera in the outfield and a trash can in close proximity to the dugout. From the case:

Beltran and Cora, with the assistance of the Astros’ baseball operations staff set up a ‘[video] feed from a camera in center field, fixed on the opposing catcher’s signs, hooked up to a television monitor that was placed on a wall steps from the team’s home dugout at Minute Maid Park.’ During games, ‘one or more’ Astros players would watch the feed and decode the opposing team’s signs and would then ‘bang a nearby trash can with a bat to communicate the upcoming pitch type to the batter.’ This scheme is hereinafter referred to as the ‘Trash Can Scheme.’

Six days after the “Trash Can Scheme” was revealed, evidence emerged that Major League Baseball was aware of the cheat, instructing video monitors to “listen for banging sounds” coming from the Astros’ dugout during home games in 2019. The plaintiff argues this alone shows MLB “intentionally failed to disclose the scheme to the public.” As a result of the Astros’ scheme, according to the suit, the statistics of players used by DraftKings participants were inflated, and the contests themselves were rendered “dishonest and unfair.”

Much to the league’s dismay, however, the Astros were not a lone actor in stealing signs across the last three seasons. The case also focuses on the Red Sox, the team for which Alex Cora went on to be the manager before resigning in the wake of the scandal. Cora, described in the suit as “the architect” of the Astros’ Trash Can Scheme, allegedly set out immediately upon arriving in Boston to recreate the method of replay room misuse with his new ballclub. Again citing media reports, the lawsuit states that certain individuals with the Red Sox during the 2018 World Series-winning season divulged that “at least some players visited the video replay room during games to learn the sign sequence opponents were using.”

At any rate, the lawsuit charges, DraftKings’ daily fantasy players were harmed given the statistics of their players on any given day were “improperly distort[ed].” And Major League Baseball, for its part, has “profited enormously” from what’s alleged in the complaint as its “wrongful promotion” of DraftKings’ daily fantasy contests.

Who’s Covered by this Lawsuit?

The lawsuit looks to certify a class of all individuals who participated in DraftKings’ MLB Daily Fantasy Sports contests that took place from April 2, 2017 through October 30, 2019 and paid an entry for, and entered a lineup into, a DraftKings’ daily fantasy baseball contest.

The complaint can be read below.