This article originally appeared in the March 18, 2015 edition of the Philadelphia Business Journal
Despite the best efforts of the NCAA and the federal government in defending farcical amateurism and anti-gambling platforms, March Madness is about one thing — sports betting. Specifically, betting in the form of bracket pools.
This week, the American Gaming Association estimates that 40 million Americans will fill out more than 70 million brackets and wager $9 billion on the NCAA tournament. That staggering figure is more than double the amount bet on the Super Bowl ($3.9 billion).
Perhaps most astounding is that of the $9 billion bet on this “student” basketball competition, only about $2 billion is wagered legally. For most aspiring bracketologists just hoping to earn a few extra bucks from their co-workers, the legal ramifications of these seemingly innocuous tournament brackets are never fully considered.
However, March Madness brackets, like all sports betting outside of Nevada and parlays cards in Delaware, are simply not legal. One Pennsylvania legislator, however, is trying to preserve March Madness office fun by officially legalizing bracket pools.
As renowned sports law professor Marc Edelman explained to Forbes, bracket pools seemingly violate three separate federal laws. First, the Interstate Wire Act of 1961 disallows 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.” Since the Wire Act applies to the Internet, online tournament pools that collect entry fees and pay out prize money would violate the Wire Act.
Second, the Uniform Internet Gambling Enforcement Act of 2006 (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. Although the UIGEA offers a special carve-out provision for “fantasy sports,” this carve-out only applies to games where winning outcomes are not based on the final score of actual game results. Since brackets are based solely on the final outcome of individual games, the fantasy sports carve-out is inapplicable and tournament pools do not comply with the UIGEA.
Granted, anyone can wager money on the performance of individual athletes on websites such as DraftKings or FanDuel and that is not considered gambling. The distinction is essentially legal fiction and one of the best examples of this country’s incoherent gambling laws. Betting on an athlete’s performance is okay, but wagering on the outcome of the game is forbidden — unless of course the wager is placed in Nevada. Try to make the same bet in New Jersey and it is illegal.
Finally, the NCAA’s and NFL’s pride and joy, the Professional and Amateur Sports Protection Act (“PASPA”), makes it illegal for any private person to operate a wagering scheme based on a competitive game in which “professional or amateur athletes participate.” Volumes could be written about how PASPA has ripped tax revenue out of state coffers and placed more money into organized crime, but the most important point to know is that PASPA does not include a specific exemption for March Madness pools.
The effort to legalize office pools
But state Sen. Lisa M. Boscola (D – Lehigh, Northampton) is ready to make a change. On January 28, 2015, she introduced Senate Bill 338 along with six co-sponsors, including local Senator Christine Tartaglione, to amend Title 18 to legalize office pools.
SB 388, which is now in the Senate Judiciary Committee, would make it a first-degree misdemeanor to engage in pool selling or bookmaking unless the pool is “authorized.” Sen. Boscola’s bill defines an “authorized pool” as one that has 100 or less participants with a maximum wager of $20 per entry. All wagers must then be paid as prizes with the pool organizer not collecting any portion of the entry fees. Finally, the transaction of entering the pool must be “incidental to a bona fide social, professional or familial relationship.”
Although placing caps on wagers, especially a low ceiling of $20, takes much of the fun out of sports betting, Boscola’s law is a welcome start to allowing sports fans the freedom to engage in office pools whether for March Madness brackets or Super Bowl squares.
However, the main problem with SB 388 is that there is nothing in it for the state.
Sen. Boscola and her colleagues in Harrisburg should embrace all forms of gambling, especially those that can create desperately needed tax revenue such as Internet poker and sports betting if PASPA is ever defeated.
Although Sen. Boscola’s bill will not become law before the Final Four, it is highly unlikely that those bracket pools floating around the office would actually lead to any criminal charges. If the government is good at one thing, it is writing a lot of lengthy laws that are rarely enforced.