How Employers Can Approach March Madness Office Betting Pools

As March Madness begins, employees may get together to fill out their brackets and bet on who will win the NCAA men's basketball tournament this year. But should employers allow workers to participate in office pools? Here's what attorneys had to say.

"An office pool can be a great way to boost morale, especially now, when many employees continue to work remotely and it can be a challenge to keep employees engaged," noted Nandini Sane, an attorney with Cozen O'Connor in Houston. "An office pool—like a March Madness tournament—can be a fun way to get employees excited and promote a friendly rivalry."

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," said Karl Rutledge, an attorney with Lewis Roca Rothgerber Christie in Las Vegas.

Review State Law

"In most states, office betting pools are outlawed if money is involved," Sane said. "This can get particularly challenging if an employer has employees in many different states where the laws regarding office gambling vary." For example, if one participant takes money from someone in a state where pool betting is not legal, the whole pool may be against the law.

If money will be exchanged, Sane recommended that employers consult with an employment attorney and carefully craft rules for the office pool that comply with the applicable state and local laws.

"Don't call it betting," suggested Joseph Valenti, an attorney with Saul Ewing Arnstein & Lehr in Pittsburgh. When gambling on the outcome of a game or tournament, people generally stake funds or something of significant value, and "the house" (or, here, the person running the pool) makes money, he explained. 

"To avoid participating in unlicensed gaming, all money that comes in should go back out as prize money," he noted. "Rather than betting, it becomes a contest of skill in analyzing and predicting winners."

Some employers ban office pools altogether, while others create a sweepstakes where there is no entry fee and employees are assigned random teams to represent them to win company swag, gift cards or money, he added. "A sweepstakes is legal under this circumstance, but rules should make clear who is eligible for an entry and who is not."

Most of the legal issues associated with office pools can be avoided if employers keep money out of the pools, Sane explained. Nominal or nonmonetary prizes, such as time off from work or lunch for the team, can also be rewarding for employees. "Employers should also not underestimate the power of bragging rights," she said. "A simple trophy or other trinket commemorating the winner may be all an employer needs to get employees excited about the office pool."

Consider Your Industry

Whether employers allow workers to participate in office pools may depend on their industry. For instance, Valenti said, a private employer can generally let its employees spend a team-building day watching games, but a government contractor may commit billing fraud if it allows its employees to do this same activity without absorbing employee pay and other costs for that time. 

Companies in social media and entertainment may have name, image and likeness deals with athletes and therefore may have an incentive to follow along, blog and engage with the tournament beyond just general team building, Valenti observed, whereas heavily regulated companies may be more limited. 

Employers should also consider company culture. "Companies with parity among employees may see less risk than a hierarchical company where employees may feel more pressure to participate,"  Valenti said.

Ensure Fairness and Civility

Aside from the potential legal pitfalls associated with office pools, Sane said, another concern is that pools may be disruptive to the workplace and may decrease productivity. "This can be especially true with an event like March Madness if employees spend all their time watching the games during their work hours," she noted.

She suggested that employers set ground rules before the office pool begins and remind employees of the company's policies on conduct and civility, as well as the procedures for reporting complaints.

Employers should also recognize that some employees may be uncomfortable with office pools, particularly if they have a history of compulsive gambling or do not wish to participate because of their religious beliefs, Sane said.

Remind employees that all typical company policies continue to apply, Valenti said. Employers are likely to ban office pools if participation leads to misconduct.