From March Madness brackets to pay-for-play fantasy football--in every season, there is an opportunity for employees to engage in good-natured sports wagering. There's no denying the popularity of office betting: A 2011 CareerBuilder.com survey found that one in five workers have participated in March Madness office pools alone.
Trash-talking each other's favorite teams may seem like harmless workplace fun. Turns out, however, actually betting on those teams is illegal in most cases, according to attorney Michael J. Riccobono of Gibbons P.C. in Newark, N.J. Former currency broker John Bovery learned this the hard way when he was arrested in September 2010 at his Parlin, N.J., home for running a betting pool that reportedly raked in $850,000 per year.
While it's unlikely that the feds or local authorities are monitoring your business, waiting to snag brackets hot off the copy machine, office betting does put your company at risk. The Professional and Amateur Sports Protection Act of 1992 banned betting on professional and amateur sports in most states. Until 2009, it was a misdemeanor to run such pools in California, while in states like New Jersey, office pools are generally considered legal as long as the person or entity running the pool does not take a cut of proceeds.
Penalties can range from fines to felony charges and possible imprisonment, depending on state statutes, the size of the pool and other factors, according to John M. Husband of Denver law firm Holland & Hart. Understanding your state's laws is the first step to evaluating your potential liability. Husband says companies should spell out official gambling policies in employee manuals. ("Don't allow it," he advises.)
If you choose to look the other way, Riccobono says, you might limit your exposure to charges if you insist that staff keep wagers small and not take a cut of the proceeds for themselves. "Employees would be wise to keep their contributions minimal--less than $10 or $20. When you're getting into pools that are thousands or tens of thousands of dollars, those are more likely to start drawing the eye of the authorities," he says.
Avoid involving multiple offices in various states, particularly online or via e-mail. Riccobono warns that you'll be subject to compliance laws in each state involved. What's more, he says, "sending out a mass e-mail or making phone calls across state lines might [invoke] some federal statutes along with individual state statutes that deal with gambling."
Corrections & Amplifications: An earlier version of this article misstated the month that John Bovery was arrested.