Competitive Cheer and Anticompetitive Practices: Varsity Spirit’s Antitrust Struggles

By: Hannah Gracedel

For decades, Varsity Spirit (“Varsity”) has been the undisputed champion of competitive cheerleading. They outfit teams, run camps, and, most importantly, control the biggest competitions in the industry. But while cheerleaders are trained to execute flawless routines, Varsity’s business decisions have drawn the attention of those who argue that its grip on the cheerleading world might be less about fair cheerleading competitions and more about unfairly dominating the competitive cheerleading market. Two recent class action suits, one in 2023 and another in 2024, claim that Varsity gained and maintained significant control of every aspect of the competitive genre, “All Star Cheer” through its anticompetitive practices. Both suits resulted in major settlements amounting to $126 million total.

What is All Star Cheerleading

Cheerleading has grown significantly since its inception in 1882, with an estimated 3.5 million athletes competing globally. While many Americans might be familiar with cheerleading, some might be surprised to learn about a subdivision called All Star Cheer. All Star Cheer focuses primarily on competition, whereas traditional school cheerleading involves crowd engagement, school spirit activities, as well as the option to compete. All Star teams are most often organized by private gyms, which form the teams based on skill and age level. At competitions, All Star Cheer teams perform a two and half minute routine composed of tumbling, stunting, pyramids, dance, and cheer segments. All Star Cheer is a notoriously expensive sport, where a full season can cost athletes around $8,000-$10,000 due to gym fees, uniform costs, travel expenses, competition fees, etc.

Who is Varsity Spirit

Varsity Spirit was founded in 1974 by Jeff Webb and started as a cheerleading camp company. The company later began manufacturing apparel for cheerleading teams, organizing competitions, and operating summer training camps. Today, Varsity runs the biggest and most prestigious cheerleading competitions and almost every single All Star Cheer competition as well. Varsity gained its dominant 90% share of the cheer competition market primarily by acquiring smaller competitors, including Jam Brands in 2015, Spirit Celebrations in 2016–2017, and Epic Brands in 2018. Essentially, if you are a competitive cheerleader, almost every competition you compete in is controlled by Varsity.

Antitrust Law

Varsity’s dominance in the competitive cheerleading industry has raised antitrust concerns. Antitrust law is about keeping the playing field fair by preventing businesses from using their power to stifle competition. Regulations like the Sherman Antitrust Act and the Clayton Act prohibit companies from monopolizing markets or using unfair practices, such as price-fixing, bid-rigging, or exclusive contracts, to restrict competition. The purpose of these laws is to safeguard consumers and other businesses from being coerced into bad agreements due to the excessive market power of a single company. However, not all monopolies are illegal. A company can gain dominance or a monopoly fairly by offering the best products or services at the best price, and that’s just healthy competition. But when a company reaches the top by stifling competition rather than fostering it, antitrust law will step in.

The Class Action Settlements

In March 2023, Varsity Brands agreed to pay $43.5 million to resolve allegations that it abused its market dominance to artificially inflate prices for private gyms and spectators. This action was brought by direct purchasers, which are those who paid registration and associated fees directly to Varsity to participate in Varsity competitions. Two markets were identified where Varsity exercised its monopoly power: the “competition” market and the “cheer apparel” market. The plaintiffs alleged that Varsity dominated 80% of the All Star cheerleading competition market and 90% of the All Star apparel market through a series of “exclusionary schemes.”

The alleged “exclusionary schemes” were the exclusionary contracts offered to All Star Gyms that were incentivized by the promise of rebates. A rebate is a partial refund given to a buyer after a purchase, which is different from a discount where the price reduction is applied at the time of purchase. The process to receive a rebate typically involves customers paying full price for an item and later submitting proof of purchase to the retailer, who then sends the customer the refund in the form of cash or future discounts on products. 

Varsity offered two rebate programs, the Network Agreement and the Family Plan. The Network Agreement, offered to large prestigious gyms widely known at their competitions, required a commitment to attending at least 5 of Varsity’s All Star Competitions and spending at least $30,000 per year on registration fees. Once gyms met this threshold, they earned increasing rebates for every dollar spent beyond it, creating a strong financial incentive to stay within the Varsity system. For smaller gyms that could not meet the spending threshold, Varsity offered a modified version called the Family Plan, which required attendance at 6 Varsity competitions in order to start receiving rebates. The rebates here were in the form of “Varsity Fashion Dollars,” which could only be used on varsity apparel purchases.

Because gyms and their teams can only attend a limited number of competitions each season, these agreements strongly incentivized All Star gyms to participate in Varsity events and purchase Varsity apparel exclusively. Attending a non-Varsity competition meant forfeiting the chance to earn higher rebates, which teams could not afford to do, when that money could then be used on Varsity competition uniforms. Once gyms were locked into Varsity’s exploitative ecosystem, Varsity was able to inflate its prices, thus possibly furthering demand for their rebate programs.

In May 2024, Varsity Spirit agreed to an $82.5 million settlement to resolve another class-action lawsuit. Unlike the 2023 case, this lawsuit was brought on behalf of indirect purchasers – those who paid competition registration fees, camp fees, or bought apparel through a gym or school. The lawsuit covered all the same issues as the previous, such as unlawful acquisitions of rivals, anticompetitive exclusive dealing agreements, and Varsity overcharging consumers.

In addition to the monetary settlements, Varsity agreed to end any rebate or discount program related to their cheer competitions.

Conclusion

What makes Varsity’s antitrust issues particularly interesting is how long these practices went unnoticed. Unlike tech monopolies or pharmaceutical price-fixing, competitive cheerleading is a relatively niche industry that does not draw much regulatory attention. But the consequence of Varsity’s practices going unchecked for so long has driven many working-class participants out of the sport simply because it is no longer affordable. Although both recent cases settled before reaching trial, they highlight how antitrust law can play a crucial role in curbing corporate abuses in power, ultimately safeguarding consumers and promoting fair competition for businesses.

Anti-Cheating Privacy Concerns and A Tool To Combat Them

By: Wolf Chivers

Anti-Cheating Invasiveness

Remember when preventing cheating just meant the teacher watching to ensure nobody was peeking at their neighbor’s paper? As life has moved online, methods of cheating—in diverse contexts ranging from education to video games—have become more sophisticated. While cheating by unplugging your sibling’s controller might be done in good fun, cheating can also have major consequences in areas like education or esports tournaments, where hundreds of thousands or millions of dollars might be at stake. 

In recognition of the increased sophistication of cheating, anti-cheating measures have engaged in an arms race. In the process, some have become highly invasive. For example, video game anti-cheat software might once have monitored running programs, but current generations require the deepest possible access to a computer, raising concerns about exposure to ransomware, invasive monitoring, or remote system access. 

In schools, children as young as kindergarten age are being monitored with anti-cheat test-proctoring software designed to track everything from what is on their desks to how long they look away from the screen. In some cases, students are forced to allow school officials to inspect the contents of their bedrooms via webcam. In others, administrators can unilaterally declare that someone must have been cheating simply for looking away from their screen. Presumably, no one would want to be accused of cheating and have all of their work on an exam invalidated because their eyes flicked away from the screen one too many times.

Education and online gaming are different topics and only two examples, but despite their differences, they are both intrusive and raise similar concerns about privacy and monitoring. In some cases, intrusive anti-cheating software could even amount to a Fourth Amendment violation. This has already happened in one case, Ogletree v. Cleveland State University. A student was required to submit to a digital room search before taking an exam, and the court held that the search was unreasonable, and violated the Fourth Amendment. Why, and is the Fourth Amendment likely to protect against other anti-cheating intrusions?

Applicability of the Fourth Amendment

The full scope of Fourth Amendment law is complicated, but because it protects against “unreasonable searches and seizures,” searches within its scope have to be, at a minimum, reasonable. The general rule for determining whether a search is reasonable is to ask whether the subject of the search had a reasonable expectation of privacy in whatever or wherever was searched. Unsurprisingly, given how many times the word “reasonable” appears in that framing, there have been quite a few arguments over where people have reasonable expectations of privacy, but it is at least clear that expectations of privacy are highest in the home

A person’s expectations of privacy in the home are taken seriously; even bringing a drug-sniffing dog to the exterior of a person’s house can constitute an unreasonable search. The invasion in Ogletree was more overt in many ways: the student was taking the test in his bedroom, he had no opportunity to take the test another way, and he had very little choice in the matter, despite the fact that the scan would have potentially exposed sensitive documents. The school suggested that the student’s alternative was to get a zero on the exam. As a result, forcing the student to allow school officials to direct the room search was unconstitutional. 

Even so, Ogletree was only one trial-level court, and despite the circumstances being Orwellian, the holding was very narrow. The case could have come out differently if even small facts had differed, such as if the school had provided an alternative means of taking the exam or if a different type of anti-cheating monitoring that was less invasive of the bedroom had been used.

There are other limitations on applying Fourth Amendment protections against anti-cheating software. For one, there are arguments about whether people have a reasonable expectation of privacy in their personal computers, and trial courts have said both yes and no. If not, then even highly invasive anti-cheating software that only monitors activity on the computer probably would not be considered an unreasonable search. For another, the Fourth Amendment only protects against searches conducted by the government, not private parties. The search in Ogletree was a governmental search because it was conducted by Cleveland State University, which is a publicly funded institution, and therefore an arm of the government. Consequently, a private university with otherwise the exact same set of facts is unlikely to run afoul of the Fourth Amendment. 

Conclusion

Ogletree is perhaps less of a landmark and more of a signpost. It may not have much force on its own, but it signals the beginning of courts having to apply Fourth Amendment protections to anti-cheating software. 

Nevertheless, the Fourth Amendment’s privacy protections are not absolute. For instance, the fact that the Fourth Amendment does not apply to private parties probably prevents gamers from claiming its protections when faced with anti-cheating software. Still, given how intrusive anti-cheating software has become, new protections can only be a good thing, even if they do not apply in every circumstance.

#WJLTA #anticheat #cheating #education #gaming #fourthamendment

Under The Canvas: Money Laundering in the Art World

By: Jack Dorsey

Imagine a criminal syndicate heavily involved in the drug trade, seeking to launder the vast sums of illicit revenue they’ve generated. What better way to cleanse the tainted money than to invest in something both valuable and difficult to trace? For these criminals, the world of art dealing provides the perfect opportunity. Art has long been a haven for the wealthy, an arena where mystery, exclusivity, and high-stakes transactions reign supreme. When works like Leonardo da Vinci’s Salvator Mundi can fetch a staggering $450.3 million, it’s no wonder that anonymity and discretion is often preferred by buyers. Yet, the limited transparency creates opportunities for those seeking to exploit the art world for illicit purposes. Money laundering, a process through which ‘dirty money’ is made to appear legitimate, is one such crime that thrives in these shadows.

The Stages of Money Laundering

Illicit funds need to be cleaned in order to throw off authorities and subvert any audit systems in place. Money laundering typically occurs in three stages: placement, layering, and integration. Placement involves placing ‘dirty money’ into a legitimate financial system or using that money to purchase high value assets like art, jewelry, or real estate. The next phase, layering, requires that the money launderer facilitate a series of transactions to obscure and create a complex web of transactions. The final stage is integration where the obscured money is then re-introduced into some legitimate business venture.

Anti-Money Laundering Laws

In the United States, Anti-money laundering laws (AMLs) are regulations that aim to prevent money laundering and primarily apply to financial institutions like banks and brokerage firms, as well as insurance companies. The Bank Secrecy Act (BSA), passed in 1970, is an AML which requires financial institutes to: keep records of cash purchases for things like promissory notes, file reports for cash transactions exceeding $10,000 daily, and report suspicious activity that might signify money laundering. More recently, Congress passed the Anti-Money Laundering Act of 2020, which sought to strengthen, modernize, and streamline the existing AML regime through regulatory reform, and improve financial industry engagement. These reporting requirements could possibly extend to an art dealer engaging in suspicious transactions who is a client of the bank. However, the nature of art dealing provides numerous opportunities to conceal sales, creating the potential for money laundering schemes.

Reporting Requirements of Art Dealers

According to the International Monetary Fund, auction houses and art sellers typically do not have an obligation to report large cash transactions to governing authorities. Unlike real estate or jewelry, where value is more easily assessed through tangible metrics (such as square footage, weight, or quality), art’s value is highly subjective. The price of artwork is largely driven by the buyer’s desires, thus making it difficult to discern legitimate transactions from illicit ones. When analyzed in the money laundering stages, placement and integration are straightforward given the subjectivity, private auctions, and high value transactions typical in the art world. Moreover, there is often no need for layering, as a high price for a piece of art may appear completely legitimate due to the subjective nature. Simply put, a criminal can anonymously purchase a high-value piece of art, hold it for a time, and then resell it for a large sum, making the transaction appear legitimate due to this subjectivity.

Modern Legislative Efforts

The Illicit Art and Antiquities Trafficking Prevention Act was introduced in the House in 2018 with the goal to extend the BSA to art dealers. However, the Act has gained little traction since then. As a result, the scrutiny placed on art dealings remains limited. Experts place the prevalence of money laundering in the three billion dollar range, making clear that this is a significant problem.  The existence of digital art like NFTs, digital assets created using blockchain technology, complicates this issue further given the decentralized nature of blockchain tokens. 

Conclusion

The intersection of art dealing and money laundering presents a complex problem. Without strong regulations, criminals have a clear path to launder illicit money. While efforts like the Illicit Art and Antiquities Trafficking Prevention Act offer some hope, they remain largely conceptual and do not fully address the scale of the issue. 

TikTok: The Return of the Ban 

By: Jonah Haseley

The TikTok ban might seem like old news, but readers can expect it to be back in the headlines and their TikTok feeds by April. Here’s why: 

In April 2024, President Biden signed a bill into law that would ban TikTok from app stores in America. The law would allow TikTok to survive in the US if its Chinese parent company, Byte Dance Ltd., sold it to a new owner. TikTok sued, arguing that the law was unconstitutional, but the United States Supreme Court upheld the law on January 17, 2025. By January 19th, TikTok was down in America. On January 20, 2025, Trump retook the White House. TikTok was already back online, and he signed an executive order stating that the government would not enforce the ban for another 75 days. The order expires on April 5

Potential sale

So, by April 5th, someone will have to buy TikTok, or it could be banned in the US. TikTok has nearly 2 billion users globally, so it would be expensive. The company is not publicly traded, but sources estimate it would cost at least tens of billions of dollars. Any sale would have to be approved by the Chinese government, which would complicate the transaction. The President has proposed creating an American sovereign wealth fund, which could be a way for the US government to acquire a direct stake in TikTok. However, plans for the fund are vague and would likely require participation from Congress to form.  

Congressional action

Getting TikTok to sell is not the only way to ensure Americans can keep using it. Some members of Congress have opposed the ban since it was passed and filed an amicus brief with the Supreme Court when the case was being litigated urging them to strike down the law. In January, Representative Ro Khanna and Senator Rand Paul introduced the bipartisan and bicameral Repeal the TikTok Ban Act, which would do exactly what it says. Additionally, it seems unlikely that any ultimate resolution will be reached before April 5th, and lawmakers have recognized that, with Senator Markey introducing a bill to extend the deadline for the ban. 

The bigger picture

For TikTok to survive long term in America, either Congress needs to act, or someone needs to buy it. However, that does not necessarily mean the app can continue functioning as usual until April 5th. The law banning TikTok is still on the books, and the President’s executive order does not change that. It does tell US service providers that the government will not enforce the ban against them until April 5th, so the government is essentially endorsing breaking that law for now. If the executive order lapses without any other measure preventing the ban from going into effect, companies like Google and Apple could pay fines of $5,000 per user. Of the 2 billion TikTok users worldwide, 170 million live in the US. That could mean fines totally approximately $850 billion, which, even for tech giants, is considerable. Fundamentally, delaying enforcement of the law constitutes the executive branch of the government refusing to execute a law passed by Congress and upheld by the courts. Though support for the ban has declined, the rule of law is at issue when the government declines to enforce the law. The President has only been in office for a little over a month, and already there are concerns about whether his administration will follow court orders. Preserving people’s freedom to use the apps they want to use is important, but the real test for our institutions will come when the subject matter of a court order does not draw public attention like a 7-second video. 

#TikTok #TikTokBan #SaveTikTok

The Legal Implications of the Roblox Gambling Lawsuit

By: Tavis McClain

Roblox has become one of the most popular gaming platforms, with children from around the world playing the game. However, the platform’s accessibility to gambling-like experiences has raised serious concerns, resulting in a significant legal challenge. This blog will explore the legal implications of the Roblox gambling lawsuit and what it means for the gaming community.

What is the Lawsuit About?

The Roblox gambling lawsuit is a class action lawsuit brought by parents who allege in their complaint that Roblox has facilitated access to gambling-related content, either through games or third-party platforms. The primary issue revolves around the use of Roblox’s virtual currency, Robux, which has been used by gamers to participate in various gambling-like activities.  These activities are often tied to third-party games that mimic gambling mechanics such as chance-based outcomes, virtual prizes, or the exchange of virtual currency for real-world value. 

While Roblox itself doesn’t host traditional gambling, the platform allows developers to create games that can include gambling-like features. The exchange of Robux in these games has led to concerns about underage users being exposed to, and potentially engaging in, gambling behavior. The lawsuit raises several important legal issues including underage gambling, consumer protection, and platform responsibility.

Underage Gambling Concerns

The lawsuit is centered around whether Roblox is inadvertently promoting gambling to minors. With Roblox hosting millions of young users under the age of 18, the platform’s role in allowing gambling-like experiences is problematic. The parents claim that Roblox is liable for negligence per se and negligence. In summary, the plaintiffs allege Roblox owes a duty of care to children and teenagers by creating a platform for them to interact with others, and they breached that duty by permitting them to gamble. Many of the virtual gambling-style games on Roblox may not explicitly involve real money, but the real-world value of Robux has made these activities a potential gateway to actual gambling behavior in the future. 

In the United States, underage gambling is strictly regulated, with federal and state laws designed to protect minors from being exposed to gambling activities. The plaintiffs argue that Roblox’s platform should be held accountable for allowing these gambling-like activities to flourish, thereby putting minors at risk of developing unhealthy gambling habits.

Consumer Protection

 Consumer protection laws are designed to ensure that companies do not exploit users, especially vulnerable populations like children. Roblox users spend real money to buy Robux, and it’s argued that by participating in gambling-style games, they are not fully informed of the potential risks surrounding gambling. While the platform offers guidelines and policies around virtual currency, the lawsuit suggests that these protections are insufficient or poorly enforced. Additionally, third-party games that promote gambling mechanics may be misleading or unfair to young users who do not fully understand the consequences of their actions in a game. If Roblox is found to be complicit in enabling gambling-like experiences, it could incur serious penalties. This lawsuit demonstrates the growing concerns over how virtual economies, like those within Roblox, could be exploited for profit at the expense of user safety.

Platform Responsibility

As a platform that hosts a wide variety of user-generated content, Roblox’s responsibility in monitoring and regulating its ecosystem is a significant point of contention. The company provides tools for game developers to create experiences, but it also has a duty to ensure that these games comply with legal standards and do not expose users to potential harm. The lawsuit places a spotlight on the extent to which Roblox should be held responsible for the content created by users. While Roblox has implemented moderation and content filtering, the massive player base means that many potentially harmful games slip through the cracks. The legal question is whether Roblox should be held liable for the actions of its users and the subsequent content they produce or whether game developers should bear full responsibility for creating gambling-style content. The plaintiffs argument is premised upon the idea that video game platforms undertake a duty to protect children and teenagers that use their platform.

Broader Legal Implications for the Gaming Community 

This lawsuit may result in greater scrutiny and regulation of virtual economies across all online platforms, not just Roblox. Jurisdictions may begin to implement stricter laws, like some countries in the EU have done, around the use of virtual currencies, in-game purchases, and gambling mechanics within games. This could lead to a shift toward more transparent virtual economies and the implementation of superior safeguards against underage users participating in gambling-like activities. 

If the lawsuit leads to changes in regulation, game developers on platforms like Roblox may face more stringent requirements for the types of games they can create. The industry could see an increase in compliance costs and changes to how virtual currency is managed in games. Additionally, developers may have to reconsider the types of in-game monetization models they can utilize, particularly those involving random chance, to ensure they comply with evolving regulations. For example, publishers like Electronic Arts may be required to disclose odds on features of their game that involve random chance.

Conclusion

The Roblox gambling lawsuit illuminates the complex legal landscape surrounding online gaming, virtual economies, and user-generated content. As the digital world continues to evolve, platforms like Roblox will face increasing pressure to balance user safety with business interests. While the outcome of this lawsuit remains uncertain, it’s clear that the legal implications for Roblox could have an impact throughout the entire gaming industry. The legal implications in the Roblox case may inspire stronger regulations, heightened platform responsibilities, and increased protections for young users. Parents, gamers, and developers alike should pay close attention to this case as it could set new standards for how virtual worlds are regulated in the future.

#WJLTA #gaming #gambling #roblox