Will High Court’s Ruling on Sports Betting Affect Office Pools?

States are now free to legalize sports betting

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A recent Supreme Court ruling just paved the way for states to legalize sports betting. So what does that mean for employers when it comes to informal office wagering, such as March Madness pools?

There probably won't be any immediate effect, and office pools will likely remain illegal in most states, according to employment law attorneys.

"While the Supreme Court's decision opens the floodgates for states and tribes to regulate sports wagering, the decision does not allow private citizens to simply begin conducting wagering pools," said Karl Rutledge and Mary Tran, attorneys with Lewis Roca Rothgerber Christie in Las Vegas, in an e-mail to SHRM Online.

Employers should treat office pools as they did before the ruling. Employers should not sanction office pools—they are illegal, after all, said Bernard Tisdale, an attorney with Ogletree Deakins in Charlotte, N.C. However, activities such as March Madness office pools with nominal bets can have the effect of improving workplace morale and boosting productivity. "It is very unlikely that authorities will come knocking to break up an office pool," he added.

Federal Ban

The Professional and Amateur Sports Protection Act (PASPA) of 1992 barred all but four states from legalizing sports betting. Nevada—and Delaware, Montana and Oregon to a limited degree—already allowed such gambling when PASPA was enacted, and their laws were grandfathered.

New Jersey had a one-year window to pass a sports-betting law, but the state failed to do so until about 20 years later. Thus, after New Jersey enacted the Sports Wagering Act in 2012, the National Collegiate Athletic Association and the major sports leagues sued state officials, arguing that the act violated PASPA. Federal courts agreed, and so New Jersey passed a new law in 2014 that instead scaled back on certain state-law betting bans. The plaintiffs filed a new lawsuit arguing that the 2014 law still didn't hold up under PASPA, and their claim reached the Supreme Court.  

On May 14, the Supreme Court justices found that PASPA—which is also known as the Bradley Act—violates the 10th Amendment to the U.S. Constitution. Under the 10th Amendment, all legislative power that the Constitution doesn't delegate to Congress is reserved for the states. And Congress may not require states to enact and enforce a federal regulatory program.

PASPA's provision that prohibits states from legalizing sports gambling "unequivocally dictates what a state legislature may and may not do," wrote Justice Samuel Alito Jr. for the court.

"It is as if federal officers were installed in state legislative chambers and were armed with the authority to stop legislators from voting on any offending proposals," he wrote.

The Supreme Court essentially said that Congress can't tell states what to do and declared PASPA unconstitutional, Tisdale explained. "So now the states are free to do what they want to do with respect to sports gambling." 

The ruling, however, doesn't mean everyone everywhere can start placing bets. States will first have to enact their own gambling laws—and those laws will likely have strict procedures for establishments and gamblers to follow.

As with the Nevada gaming industry, those businesses that are eligible to offer sports betting will be limited and will need to undergo licensure before being able to offer sports betting, Rutledge and Tran noted.

That said, a few states do have some exemptions for friendly wagers.

Tips for Employers

Employers should review the laws in their states to assess the legality of conducting office pools for their specific locations. "The recommended policy is to advise employees that office pools are potentially unlawful and company resources should not be utilized to conduct such activities," Rutledge and Tran said.

[SHRM members-only online discussion platform: SHRM Connect]

During tournament time, however, it is doubtful that employers will be able to eliminate the use of personal electronic equipment or computers to watch or track games, Tisdale said.

If employers decide to keep a lid on employee behavior during tournament time, they may still want to give employees some outlets to enjoy the games and festivities. "You might just engender a morale and productivity boost—at least while [workers'] teams are still in the hunt," Tisdale said.

The case is Murphy v. National Collegiate Athletic Association, U.S., No. 16-476 (May 14, 2018). 

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