In Federal Baseball Club v. National League, 259 U.S. 200 (1922) the U.S. Supreme Court ruled that Major League Baseball was exempt from the provisions of the Sherman Antitrust Act, an exemption that remains as of 2005.
After the Federal League folded in 1915, most of the Federal League owners had been bought out by owners in the other Major Leagues, or had been compensated in other ways (for example, the owner of the St. Louis Federal League team had been permitted to buy the St. Louis Browns). The owner of the Baltimore Federal League club had not, and sued the National League, the American League and other defendants, including several Federal League officials for conspiring to monopolize baseball by destroying the Federal League. At trial, the defendants were found jointly liable, and damages of $80,000 assessed, which was trebled to $240,000 under the provisions of the Sherman Act.
On appeal, the Court of Appeals reversed the trial verdict, and held that baseball was not subject to the Sherman Act, and the case was duly appealed to the Supreme Court. In a unanimous decision written by Justice Oliver Wendell Holmes, Jr., the Court affirmed the Court of Appeals, holding that "the business is giving exhibitions of base ball[sic], which are purely state affairs"; that is, that baseball was not interstate commerce for the purposes of the Sherman Act.
The decision was reaffirmed in 1952 (Toolson v. New York Yankees, 346 U.S. 356) and 1972 (Flood v. Kuhn, 407 U.S. 258).
