March Madness is here, and all
over America people will be furiously filling out their brackets. Whether you
join an office pool or a competition with friends, everyone usually throws a
few bucks in the pot for the winner. According to the American Gaming
Association, 40 million people fill out brackets each March and will wager an
estimated $10.4 billion this year. Of that amount only $65 million is bet
legally, with $2 billion being bet in the kind of pools in which you're
probably partaking.
As a
matter of state law, pay-to-enter NCAA Tournament pools are illegal if they
constitute "games of chance." Courts apply various different tests to
determine if a game constitutes as “chance”. Under all tests, the likelihood is
that NCAA Tournament pools would involve a high level of chance. Remember a
couple years ago, when Warren Buffet offered 1 billion dollars for anyone that
could predict a perfect bracket? While that was a much longer
shot (1 in 9.2 quintillion to be exact) than just coming in first place in your pool, it just goes to show how unpredictable the whole
game is. This year Buffet is actually giving any Berkshire Hathaway employee,
that can pick the Sweet 16 correctly, $1 million a
year, for life. Only 14 out over 11 million brackets predicted that correctly in2015.
So
while you can make bets legally in places like Las Vegas, the majority of
seemingly “friendly-gambling” is likely illegal (See NCAA Official Statement). But it's
unlikely anyone was arrested last year for taking part in the office pool, and
it's unlikely anyone will be arrested this year or anytime in the future. March
Madness pools have become part of office culture, and usually flies under the
radar. Even if we are comfortable playing in NCAA Tournament pools, it might be
best to avoid serving as a pool administrator, according to one law school professor.
People that insist on doing so, should limit contest entry to
friends -- thus maximizing the likelihood of falling within
state-specific recreational gaming exceptions, and outside the scope of
reasonable state and federal legal scrutiny. In other words, play at your own
risk. But it's unlikely the police will be raiding the office.
Better yet, get
a job at Berkshire Hathaway and get in line for that “sweet” lifetime payout.
Steve Novak
Novak, Juhase, & Stern, LLP
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