Fantasy Football: Productivity Threat and Camaraderie-Builder

When it comes to fantasy football at work, both a referee and a cheerleader may be needed.

Fantasy football costs more than $16 billion a season in lost productivity, according to outplacement consultancy Challenger, Gray & Christmas, but it also has fans who say it can be a camaraderie-builder at work. That is, as long as it’s legal, which for now most experts say it is. Tighter regulation in the future, however, is likely, as was demonstrated by New York Attorney General Eric Schneiderman's cease-and-desist letters to FanDuel and DraftKings over daily fantasy sports.

According to the Fantasy Sports Trade Association (FSTA), the voice of the fantasy sports industry, approximately 56.8 million Americans and Canadians will participate in fantasy sports this year. That is up significantly from approximately 12.6 million who participated in 2005. And, notably, 37.5 million of these participants are employed full time.

The $16 billion in lost productivity represents just one hour of unproductive work time a week per employed fantasy football player during the 17 weeks of the National Football League preseason and regular season. According to the FSTA, the average player spends three hours per week managing his or her team and up to nine hours per week reading or watching something about fantasy sports.

Team-Building

If done in moderation, the downtime that employees may spend playing fantasy football at work can have an upside for employers, such as fostering a common, harmless subject for co-workers to talk about around the watercooler.

John Challenger, chief executive officer of Challenger, Gray & Christmas, said, “We need distractions during the day, whether it’s checking Facebook, scanning Twitter, buying something at Amazon.com or managing one’s fantasy football team. It may seem counterintuitive, but these short periods of being unproductive help workers be more productive in the long run. They also help boost morale, lower turnover and keep our creative juices flowing. For these reasons, employers may not only want to avoid clamping down on fantasy football, but may want to encourage it within the office.” Challenger said that he belongs to multiple fantasy football leagues.

To quote Gov. Chris Christie, R-N.J., during the Oct. 28, 2015, Republican presidential debate, “Enough on fantasy football—let people play. Who cares?” (Christie is from one of three states in the nation that have legalized online gambling. Delaware and Nevada are the two others, according to The Kiplinger Letter.)

“Fantasy football is a good way to build camaraderie among employees. It has worked well in that regard at our firm,” said Christopher Caiaccio, an attorney with Ogletree Deakins in Atlanta. “Fantasy football is different from illegal gambling in that it takes a good deal of knowledge and skill in order to be successful,” he added. “I’ve been playing in a league with the same group for seven or eight years, and it’s always the same people who finish at the top of the heap.”

“Many fantasy football leagues are played for bragging rights and do not involve money at all,” added Thornell Williams, also an attorney with Ogletree Deakins in Atlanta. He said it would seem arbitrary for an employer to deem fantasy football unlawful gambling when the government has not done so.

“It’s rare that an enforcement agency will enforce a gambling law against work pools,” noted Rich Meneghello, an attorney with Fisher & Phillips in Portland, Ore. “It’s not a primary concern for employers.”

Even if employers ban the use of their computers for fantasy football activity, that kind of draconian policy can easily be evaded, as employees can participate on their smartphones, he said. “Most employers recognize there is a certain amount of Internet slacking—fantasy football, recipes, shopping. Many allow employees to set up fantasy sites.” And some hand out prizes for fantasy football winners, he added.

Though Michael Landen, an attorney with Kluger Kaplan Silverman Katzen & Levine in Miami, takes a stricter view. “As long as ‘gambling’—meaning money or other items of value—is not part of the prize for participating, then an employer could embrace an office fantasy football league as a team-building exercise.” But he cautioned, “However, by doing this, an employer may be inadvertently encouraging employees to spend part of their workday focused on their fantasy football teams rather than work-related activities.”

Referee Needed?

Just because fantasy football is lightly regulated now doesn’t mean that will always be the case.

“The Unlawful Internet Gambling Enforcement Act of 2006 specifically exempts fantasy sports that meet certain criteria,” said Arlene Switzer Steinfield, an attorney with Dykema in Dallas. “Maryland and New Jersey have enacted laws that affirmatively permit fantasy sports.”

Some states, such as Arizona and Louisiana, prohibit pay-to-play contests. In these states, “Fantasy football leagues likely constitute proscribed activity depending on how they operate,” said Douglas Klein, an attorney at Jackson Lewis in New York City. Iowa, Montana and Washington also have laws prohibiting wagering on fantasy sports, according to The New York Times.

Steinfield added that daily fantasy sports (as opposed to season-based) are more luck-based than skill-based, and they are thus more like gambling. Federal and state regulators are scrutinizing whether daily fantasy sports should be regulated or outlawed altogether. Daily fantasy sports are one-time fantasy sports events, such as one football game or one baseball game

As The Kiplinger Letter noted, “The explosion in the popularity of sites such as DraftKings and FanDuel, which pay out millions of dollars in winnings, is ramping up attention on their legality. The sites insist that they promote games of skill, not online betting. … Any actual crackdown is probably a ways off, but legislators and other officials are starting investigations and calling for hearings.”

Based on his investigation, Schneiderman issued cease-and-desist letters to DraftKings and FanDuel, demanding that they stop accepting illegal wagers in New York State for daily fantasy sports. Season-long fantasy sports are not implicated by Schneiderman's action.

FanDuel released a statement, saying, “This is a politician telling hundreds of thousands of New Yorkers they are not allowed to play a game they love and share with friends, family, co-workers and players across the country. The game has been played—legally—in New York for years and years, but after the attorney general realized he could now get himself some press coverage, he decided a game that has abeen around for a long, long time is suddenly now not legal.” But Schneiderman subsequently filed an enforcement action in New York courts seeking a preliminary injunction against DraftKings and FanDuel.

In response to allegations that DraftKings and FanDuel employees were using insider information to win big jackpots on each other’s sites, Rep. Hakeem Jeffries, D-N.Y., released a statement on Oct. 6, 2015, saying, “The fantasy sports industry has grown into a multibillion-dollar giant that appears to be spiraling out of control, devoid of transparency and accountability. This is not the Wild West. The House Judiciary Committee should convene a hearing into the practices of online fantasy sports companies immediately.”

Sen. Richard Blumenthal, D-Conn., issued a letter on Oct. 12, 2015, urging Federal Trade Commission Chairwoman Edith Ramirez and Attorney General Loretta Lynch to investigate deceptive and possibly fraudulent practices in the daily fantasy sports online betting market.

As a pre-emptive strike, on Oct. 27, 2015, the FSTA announced it would form the Fantasy Sports Control Agency. It appointed former acting U.S. Secretary of Labor Seth Harris to chair the independent agency, which has been charged with creating a strict, transparent and effective system of self-regulation for the businesses that comprise the fantasy sports industry.

Yellow Flags

While not unlawful in most instances, fantasy football still has legal pitfalls that companies should avoid, Klein cautioned.

For example, an employer could face a gender-based hostile work environment claim from a female employee whose male colleagues ridicule her for not participating in the office’s fantasy football league, he said. “Similarly, an employee who refuses to participate in a company-sanctioned fantasy football league on religious grounds and is later passed over for a promotion and told he needs to be more of a ‘team player’ may claim religious discrimination.”

So, don’t treat employees differently for choosing not to participate in a fantasy football league, he said.

“Employers should train supervisors to recognize any potential issues related to exclusion and should consider whether they will allow supervisors to participate in the same fantasy football leagues as the workers they oversee,” said Adam Forman, an attorney with Epstein, Becker & Green in its Chicago and Detroit offices.

Game Over

Turning fantasy football into a team-building exercise isn’t recommended by everyone. Steinfield had some words of caution for employers considering making fantasy football a team-building activity.

“Even assuming that an employer operates in a state where fantasy football is permissible, I don’t recommend it,” she said. “Although I am all in favor of team-building activities in the workplace and employees taking periodic breaks, fantasy sports should not be one of those activities for a number of reasons.”

First, she was concerned about the possibility of undercutting productivity. “Those who are avid players readily admit that fantasy sports are, at best, distracting and impair their ability to focus for a lengthy period of time on the task at hand.”

Since many players become increasingly focused on the sport the more they engage in it, “permission to play during the workday can be easily abused.”

And those who choose not to play may become frustrated by their co-workers’ loss of focus. “Project teams can become divided if some team members perceive that others are not pulling their weight.”

Steinfield recommended that employers create a policy on gambling in the workplace, including a definition of what constitutes gambling and a detailed description on the extent to which employees can engage in such activities during the workday.

“Another consideration is that an employer should not permit nonwork-related activities, and then attempt to ban union-organizing activity,” she said. “Any nonsolicitation policy should expressly identify fantasy sports as a type of solicitation and communication that is prohibited in the office.”

Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor.