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Shocked! Does March Madness Involve Gambling?

Can anything be more fraught with contradiction than our attitude toward March Madness gambling? For most people it falls in the category of not the best idea but, really, what’s the harm, with a little bit of money and no bookie? It’s just fun, and besides everybody in the office does it. Enter Captain Renault, with straight face and a whistle! We are…. well, you know the movie.

Betting on amateur sports is illegal in every state but Nevada. So, yes, the office pool is probably illegal. No, neither the federal nor state governments spend a lot of enforcement resources on this, but to minimize the penalty as “just a misdemeanor” is pretty cold. That doesn’t even touch the productivity issues. Nonetheless, some employers have opted to own the rampant bracketology, limit the risks and use it as an opportunity for team-building and perhaps a little marketing. Debatable perhaps, but not unknown.

You Must Remember This

Pay-to-play NCAA tournament pools may violate several federal laws, including the Interstate Wire Act of 1961, the Professional and Amateur Sports Protection Act and the Uniform Internet Gambling Enforcement Act. Gambling is also heavily regulated by state law, and the laws of New York, California and Texas, for example, are different. New York requires registering and bonding if a prize is more than $5,000. California law contains very specific penalties applicable to owners or landlords who permit the spaces they occupy to be used for gambling.

  • Step one, therefore, is to consult with an attorney licensed to practice in your jurisdiction.
  • Step two involves re-characterizing the pool as a contest, rather than gambling.
  • Step three requires taking it offline, out of the office and after working hours.

The Fundamental Things Apply

What is the difference between contests and gambling? Fundamentally, that would be money. If there is no fee to participate, then nothing can be lost other than bragging rights, and it doesn’t look like a wager. We would never have to get to the next principle, which is that the house should never take a cut. More cautious employers also offer a non-cash prize. Perhaps t-shirts are not the best team-building incentive in your workplace, but this is a time and a place to be creative. People have been known to become fiercely competitive and/or loyal for less. What about combining this with a charitable endeavor? That could cast a rosy marketing glow over the contest and even when money is involved, the rules about gambling for charitable purposes, like church bingo, tend to be quite different.

Keep it all on paper. You will notice that both the Interstate Wire Act and the Uniform Internet Gambling Enforcement Act presume some use of electronics. Don’t provide the predicate, even when you are notifying employees of the existence of a contest. Is this even possible?  This may feel like a challenge, but there was a time before the internet, when people managed to do these things.

Of All the Gin Joints…

Get it out of the office and after working hours, if possible. This may also speak to the productivity issues.  Now your employees are just watching basketball games with each other, perhaps not in a North African gin joint, but in a sports bar for the ASPCA and the right to keep a ridiculously gaudy trophy in the conference room.  Even if state and federal gambling laws were to become a higher enforcement priority, and this scenario a little overly optimistic, the activities of your employees will have moved quite far from the intent of the regulations.

An argument for embracing March Madness is that it may give you a chance to use the momentum of popular culture to strengthen your business culture, at least as time goes by.

 

 

Nasir Pasha, Esq.

Post by:

Managing attorney and co-host of podcast Legally Sound | Smart Business

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