Are March Madness Office Pools Legal?

Posted March 16, 2012 in Criminal Law by

West Virginia's Deniz Kilicli (13) drives by Gonzaga's Robert Sacre in the first half of an NCAA tournament second-round college basketball game on Thursday, March 15, 2012, in Pittsburgh. (AP Photo/Keith Srakocic)

With the NCAA men’s basketball tournament just gearing up, fans across the country have filled out their brackets and are putting their money down in pools with friends, family and coworkers. But wait a minute– is this even legal?

  • NCAA pools technically illegal in most states, but law goes unenforced
  • Several states have made changes to allow legal gambling on small office pools
  • Make sure you aren’t violating any company rules with your office pool

 

Legalize it . . .

So are March Madness pools legal, or not? “It depends,” says attorney Daniel Schwartz, from the Connecticut firm Pullman and Comley. ”If money is exchanging hands then yes, it may be illegal in some states.”

While individual pools tend to operate on a small scale, the total stakes of the tournament are actually quite large. An estimated $12 billion was circulated on NCAA bets last year, of which around $3 billion was in small bracket pools. Las Vegas bookies say the overall event sees as many bets as the Super Bowl.

To clear up any legal ambiguity, a proposed law in Pennsylvania would explicitly legalize office pools as long as certain conditions are met:

  • The entry fee is no more than $20
  • The pool is limited to 100 people, who have preexisting relationships, like friends, family or coworkers
  • All the money either goes back to participants or is donated to charity (ie no cut for the bookie or house)

Currently, bookkeeping charges in Pennsylvania carry penalties of up to five years in prison and $10,000 in fines.

 

Really?

No, you won’t actually get arrested for playing in a tournament. As long as things are kept small, there is almost no danger of getting busted. “In many cases where the money is just going back to participants, states have bigger issues to worry about than an office pool,” Schwartz says.

However, happy bracketeers will be pleased to know that a number of states have made allowances to ensure that office pools are legal in both the spirit and the letter of the law:

  • Montana allows legal pool or fantasy gambling as long as there’s no house taking a cut of the money.
  • The Connecticut attorney general said that small pools done not-for-profit would be considered legal.
  • Vermont already passed a law similar to the one being considered in Pennsylvania.
  • Michigan is also considering a similar law.
  • Las Vegas, obviously, has legalized sports gambling.

 

Camaraderie and Good Morale

Attorney Daniel Schwartz

While it’s extremely unlikely that you could run into any legal problems for small office pools, your boss might still take issue. Employers might be more concerned about their employees surreptitiously checking scores or watching games on their smartphones, or using the company printer to reproduce reams of brackets. On the other hand, a friendly tournament can be used to build camaraderie and good morale among workers. A LegalZoom post suggests that employers lay out clear rules so there is no confusion about policies and liability.

Technically, employers who own their workplace could open themselves up to bigger penalties for hosting gambling, but again, for small informal tournaments the rule is rarely if ever enforced.

“From a practical perspective, law enforcement doesn’t seem interested at all in going after company office pools,” Schwartz says. ”I really haven’t heard of any companies that have been targeted because of an office pool. Among the things employers are worried about, this doesn’t seem to be one of them.”

 

Advice From Pete Rose

That’s not to say you can’t still find yourself in hot water for bracket violations. NCAA team players, staff, and members of the athletic department are forbidden from betting on games in any way. And younger students, take note: A fifth grader in Omaha got sent to the principal’s office for running a $5 pool out of his locker.

For those of you not affiliated with major college basketball teams, and who have already graduated from middle school, there are still a few caveats. Internet and phone bets with a bookie are generally a no-no. ”Once you take it beyond the office workplace and your employees are placing bets across state lines, that’s where it seems to cross a line,” Schwartz says.  PayPal is actively looking for users it suspects of using its service to gamble on the tournament and restricting their accounts. And don’t tick off the IRS –  ”Another area where employees could get in trouble is where they get a big win from office pool and they don’t report the winnings to the taxing authorities,” the lawyer says.

In an interesting tangential note, the term “March Madness” is a trademark held jointly by the NCAA and the Illinois High School Athletic Association, so don’t try to use it to sell any products. Promotions that come close (like “Vasectomy Madness”) are on shaky ground, but probably okay. However, non-commercial use by people (and law blogs) is fine.

And finally, on to the most important question: Who’s going to win? “Despite my residence in Connecticut, I don’t see UConn repeating this year,” Schwartz says.  “I picked Michigan state.”

You can bet on it.

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