Q: Our employees usually create an inexpensive office bracket pool to bet on the NCAA college basketball tournament. Is this type of friendly gambling among colleagues illegal?
A: The short answer is yes, but it is nearly impossible to find a workplace without a bracket pool when March Madness – the popular name for the tournament – rolls around each year. This is probably the case because the chances of being prosecuted for an office pool are about as good as picking the perfect bracket or getting down to the final four without a single upset. In other words, possible but unlikely.
Gambling and unlicensed sports betting, including workplace office pools, are illegal in several states and under federal law, including the Interstate Wire Act of 1961 (IWA) and the Uniform Internet Gambling Enforcement Act of 2006 (UIGEA). The IWA prohibits any wagers in interstate or foreign commerce placed or received by a person located in the United States "on any sporting event or contest." The UIGEA makes it illegal for those "engaged in the business of betting or wagering" to "knowingly accept" funds in connection with the participation of another person in unlawful internet gambling. Notably, the growth in the number of remote employees and hybrid work arrangements increases the risk that office pools will cross state lines and implicate the laws of multiple states in addition to federal gambling laws.
While the risk of prosecution may be low, it still exists. For example, several years ago in New Jersey a former schoolteacher was arrested for running a March Madness bracket pool with a total prize payout of more than $800,000. New Jersey also is the state where a management-level employee of a telecommunications company faced criminal prosecution because he sought to take a 10 percent cut of an office pool.
Potential criminal offenses aside, an office bracket pool can lead to other workplace issues and potential liabilities. For instance, if an employer has a policy prohibiting gambling in the workplace but permits employees to run an office pool, the inconsistency could expose the employer to claims of disparate treatment. This situation arose several years ago in Dent v. Federal Mogul Corp., 129 F. Supp. 2d 1311 (N.D. Ala 2001) where the employer maintained a policy prohibiting gambling on company property but, according to the plaintiff, permitted employees to run an office pool and then terminated plaintiff's employment for doing so because of his race.
Given the illegality and complexities of sports betting in the workplace, employers who permit March Madness pools and other office gambling should adopt a workplace gambling policy to clearly define acceptable and unacceptable conduct. At a minimum, the policy should:
- Include a detailed description of gambling permitted in the office
- Prohibit gambling among employees located in different states
- Identify limitations for using company devices and technology, such as emails, chats and computers, to engage in permissible gambling
- Mandate compliance with federal and state laws
- Ensure compliance with the policy by requiring employees who desire to host an office pool to request the approval of the Human Resources Department or another designated contact
- Explain that violations of the policy will lead to disciplinary action up to and including termination of employment.
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