With the NCAA Basketball Tournament right around the corner, now is the perfect time to examine the legality (or illegality) of what has become one of America’s favorite obsessions: “March Madness” bracket pools.
“Selection Sunday” will take place on March 17th, following its usual routine of being held on the third Sunday in March. This will be a huge day for college programs and players around the country, as they wait to see what seed their teams have earned based on their regular season performance. For other teams “on the bubble,” they will wait to hear if their name gets called at all, or if they have missed out on every college basketball player’s dream. Selection Sunday can make or break some college players, as it informs some players that they will get the chance to perform on one of the biggest stages in college sports, potentially boosting their draft stock or future financial success. However, Selection Sunday has a major impact on another group of people as well: the 70 million Americans that fill out a bracket each year. If this number sounds astronomical (it is!), it becomes even more mind-blowing when it is coupled with the fact that “March Madness” bets overall generate over $10.4 billion.
Based on the sheer volume of these numbers, it is obvious that people are coming out in droves to fill out brackets, often in office pools or amongst large friend groups. One would assume that a practice that has become this popular must be completely legal and above board, right? Wrong. Although our culture here in America has seemed to decide to let it slide far more often than not, participating in “March Madness” pools could subject participants to legal punishment and scrutiny, under a few different laws.
In terms of state laws, NCAA tournament pools are technically illegal if they include three elements: consideration, reward, and chance. As most brackets and office pools nowadays require some type of entry fee or buy-in, the first two elements are normally established pretty easily. In terms of the chance element, courts usually apply one of three tests to determine whether the pool required chance: a ‘predominant purpose’ test, an ‘any chance’ test, or a ‘gambling instinct’ test. But regardless of what test the court ended up applying, there is a strong chance that the tournament pool would be deemed to involve “chance,” as courts have not had any trouble reasoning their way to ruling that predictions are normally found to involve chance.
The potential legal punishment does not stop at the state level though, as there are three main avenues that an individual participating in a bracket pool could face federal punishment as well. The first would be the Interstate Wire Act of 1961. This Act essentially prohibits individuals from “engaging in the business of betting or wagering [through the knowing use of] a wire communication for the transmission in interstate or foreign commerce.” As courts have explained in the past, “wire communication” does not only include communications over the telephone, but also over the internet. As a large majority of “March Madness” pools are done via internet services that collect and pay prize money, such as LeagueSafe, these would all technically be illegal under the Wire Act.
Another federal law that would seem to prevent online, paid tournament pools is the Professional and Amateur Sports Protection Act (PASPA). As of 1992, this Act makes it illegal for a private person to operate a wagering scheme based on a competitive game in which “professional or amateur athletes participate.” PASPA did provide a grandfather clause exemption to the authorized government sponsored gambling in Nevada, Delaware, Oregon, and Montana, but there is no express exemption for privately organized NCAA tournament pools within the Act.
Lastly, the Uniform Internet Gambling Enforcement Act, passed in 2006, makes it illegal for anyone “engaged in the business of betting or wagering to “knowingly accept funds in connection with the participation of another person in unlawful Internet gambling.” Based on this language, it would seem inherently clear that NCAA tournament pools that require payment for entry would have to fall within the meaning of “wagering,” and be illegal under this Act. This is the newest of the federal laws designed to address online gambling and wagering and could play a major role on NCAA tournament pools in the future.
Despite the fact that these federal and state laws are rarely enforced in the context of “March Madness,” they have actually been utilized a few times to punish unlucky individuals for their participation, like the two Rhode Island workers who were arrested for running a $5-a-bet office pool on the NCAA basketball tournament. Although it may seem arbitrary to punish individuals like this when there are millions of people doing the same exact thing, the Rhode Island state police claim that they were just doing their duty, and they certainly have the law on their side to do so. Both state and federal officials know that it would be naïve to have a goal of completely shutting down office pools and “March Madness” brackets, but they do enforce them just enough to frighten people with the potential of being punished for what seems like a silly competition. Based on this, the smartest thing that individuals can do is to avoid being the creator of the bracket pool, and to avoid engaging in the role of collecting the money at all costs. This could help insulate them from some of these federal laws that seem to focus upon the illegality of being the person in charge. Also, it is always smart to try and limit the reach of the bracket pool to friends or close family, as doing so, along with making sure to payout the entry fees as part of the prizes, gives you a much better chance to fall within the state-specific in-home gambling exceptions that are provided for smaller competitions like “March Madness” brackets. Best of luck to everyone on your brackets, and let’s get ready for some Madness!
Photo Credit: Stoney Keeley (The SoBros Network)