Are Office Betting Pools Illegal?

Q.     Tomorrow starts March Madness and the office is busy filling out the brackets.  Everybody puts in $5 and the winner will receive a little over $100 and a year of bragging rights.  My company keeps no money.  Even so, I’ve heard the pool is illegal.  Because lawyers, and particularly employment lawyers, try to take the fun out of every potentially fun office event, I thought I would ask why the pool is illegal.

A.     You are right, the pool is technically illegal.  In California if: 1) the amount of the pool is less than $2,500; and 2) the organizer does not profit from the office pool – then it is an infraction (like a speeding ticket).  Prior to 2010 you may have been subject to a felony conviction and $1,000 fine.  You may also be subject to Federal prosecution under the Professional and Amateur Sports Protection Act, also known as the Bradley Act.  Notwithstanding, most commentary notes that small office pools will not receive significant government scrutiny and prosecution is (very) unlikely.  It should be noted that, like President Obama (who this year smartly picked Kentucky to win it all), there is a good chance the prosecutors and police have also filled out brackets.  Accordingly, many employers will simply throw caution to wind.   A few additional things to consider:

  • What do your own policies say about gambling?  Certainly if you want to prohibit the office pool you can.  If you do have a policy, you want to enforce it – otherwise it may undermine the policies you actually intend to enforce.
  • Be careful about setting a precedent.  Although you may be willing to take a small risk with March Madness, do you want to go down the path of Fantasy Football and other popular office gambling events?  In addition to the potential illegality, these events may take away from productivity.  Challenger Gray & Christmas publishes a “March Madness Report.”  This year the report notes that businesses may lose as much as $1.9 billion for distracted and unproductive workers glued to their brackets instead of working.
  • Gambling may also lead to another American tradition known as “talking trash” which may in turn then lead to harassment claims.
  • Technically a winner is suppose to report all winnings to the IRS (although they can be offset by any gambling losses).

…….let the madness, and workplace distractions, begin.

This Legal Update / Bulletin is for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. The hypothetical question is posed to illustrate a point and does not contemplate all potential legal considerations This update should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

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