A QUESTION WE WISH WE WERE ASKING TODAY: ARE MARCH MADNESS BRACKETS LEGAL?

The moment the Super Bowl is over, I focus on one thing: my March Madness bracket. I am thrilled to watch Mid-March approach and continue tinkering up until the last moment. However, given the safety precautions surrounding COVID-19, the tournament has been cancelled. This marks the first time the annual NCAA Tournament will not be held since it was first held in 1939. Seniors saw their seasons end without a final game (as a 3L at UB Law, I get how shocking and surprising that is, as I left class this past week without realizing it may be the last time I see some of my classmates).

Regardless, some things come first: namely, the health and wellbeing of our entire country. That being said, maybe we can use this information in upcoming office brackets, no matter what the subject of the bracket is. So, as an intellectual exercise we ask (and attempt to answer) are March Madness Brackets legal?

A special thank you to my colleague Nick Mansour, who is involved in all things sports betting and so kindly contributed significantly to researching and writing this post. 

Given how many conversations are swirling around sports betting (New York just made this illegal in the state yet again) we would like to take a deep dive into the legality of March Madness brackets in honor of our favorite tournament of the year (except for this year of course).

In the United States, nearly 1-in-5 individuals will bet on the NCAA Tournament. Further, approximately 18 million people will wager billions of dollars, whether this be with a bookie or just a friend. March Madness represents one of the biggest events in sports betting where it is estimated that approximately $8.5 billion was collectively wagered on the 2019 tournament. Although these numbers seem insane to begin with, the amount wagered on March Madness will continue to rise as more states legalize sports betting.

It may shock you, but generally speaking, March Madness brackets including office pools are illegal. Yep. That’s right, that $8.9 billion wagered last year was all done illegally. How could that be? Well, simply put, state statutes prohibit games that contain a combination of chance, consideration, and reward. March Madness brackets with an entry fee and prize meet the first two elements. But what about the third factor? Does entering these contests constitute games of “chance?” To determine this, courts will apply one of three tests: (1) a ‘predominant purpose’ test, (2) an ‘any chance’ test, or (3) a ‘gambling instinct’ test.  On the other hand, some states are stricter and simply find that picking future contingent events are treated as akin to chance, even despite technical mathematical differences.

The Predominant Purpose Test

The predominant purpose test deems an activity to be one of chance where greater than 50% of the result is derived from chance.

The Any Chance Test

The “any chance test” deems an activity to be based on chance if a particular game contain any chance that influences the outcome of the game.

The Gambling Instinct Test

The “gambling instinct test” looks to the nature of an activity to determine if it appeals to one’s “gambling instinct.”

Despite which test the court chooses to apply, it is very likely that a court would find any March Madness bracket (traditional office pool) to involve chance. In a 1953 case, Commonwealth v. Laniewski (Pennsylvania Superior Court), the court applied one of the most liberal tests and still held that “it is common knowledge that . . . predictions even among these so-called ‘experts’ are far from infallible,” therefore holding that chance played a large role in sports betting.

Outside of state common law, is my March Madness bracket truly illegal? Yes! Here are a few federal laws that may be implicated.

1.  Professional and Amateur Sports Protection Act (“PASPA”)

Passed in 1992, PAPSA makes it illegal for any private individual to operate a wagering scheme based on a competitive game in which “professional or amateur athletes participate.” This broad law includes a grandfather clause that exempts previously authorized sports gambling in four states: Nevada, Delaware, Oregon, and Montana. 

2. Uniform Internet Gambling Enforcement Act (“UIGEA”)

Passed in 2006, the UIGEA makes it illegal for those “engaged in the business of betting or wagering” to “knowingly accept” funds in connection with the participation of another person in unlawful Internet gambling.  The language of UIGEA as applied to pay-to-enter NCAA Tournament pools that offer cash prizes seem to fall within the definition of “wagering.”

3. Interstate Wire Act of 1961

Passed in 1961, this may be one of the most unique ways someone engaging in a March Madness bracket could be prosecuted. This act prohibits individuals from “engaging in the business of betting or wagering [through] a wire communication for the transmission in interstate or foreign commerce.” The definition of “wire communication” includes not only communications that take place over the telephone, but also those that occur via the Internet.  Therefore, in applying this law to our discussion of March Madness brackets, one would find that tournament pools that collect entry fees and pay prize money via online websites would technically be illegal.

So, given this law, will you be prosecuted for the $20 you threw down on the office pool this year? Probably not. But where those who are deeply engaged in this type of betting should be careful is when big companies hold immense tournament pools where they charge an operating fee and do not pay out winners in full (hold back a fee) because these are the types of circumstances where participants get angry and pursue action. Furthermore, those individuals who collect and hold the money are in the riskiest position.

While illegal betting is still widespread, the gambling industry spends more than $300 million on responsible gambling programs. Laws legalizing sports betting has introduced an entirely new form of entertainment, which has led to programming such as ESPN’s “Daily Wager.” Sports betting companies are partnering with media outlets, technology companies, and casinos. 57% of Americans acknowledged that if a team they bet on was in the Final Four, those games would be more entertaining. There you have it – sports betting is good for the gambling industry, the sports industry, and the media industry. A win, win, win.

You can “bet” sports betting will continue to boom in the coming years, especially as new laws are introduced in states throughout the nation. See what we did there?

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