The 2015 NCAA Men’s Division I Basketball Tournament, affectionately referred to as “March Madness,” begins today.  The NCAA Tournament garners millions of viewers and advertising dollars. This event brings two issues to the forefront for employers: (1) lower employee productivity; and (2) office betting pools related to filling out brackets for games involved in the event.  Both of these issues are discussed below:

Lower Employee Productivity

Advertisers estimate that approximately 60 million people will view at least a portion of the NCAA Tournament. Many of the basketball games occur during the traditional workday. Therefore, it is very common for employees to watch at least portions of the games—whether that be in the breakroom or via streaming video—while at work. This inevitably results in distracted employees. Distracted employees can lower productivity and increase costs. Indeed, a recent report created by outplacement firm Challenger, Gray & Christmas estimated that the NCAA Tournament will cost employers approximately $1.9 billion in lost productivity in 2015.

Despite the high loss in productivity, Challenger, Gray & Christmas recommends against prohibiting employees from taking part in the traditional filling out of tournament brackets. The consulting firm notes that even the President of United States fills out a bracket. Rather, employers should use the event as a morale booster, while setting clear parameters related to viewing games during the workday in order to limit lost productivity and the potential for work related accidents resulting from distracted employees.

Office Betting Pools

Along with March Madness also comes office betting pools related to the NCAA Tournament.  Estimates project that more than $2.5 billion will be wagered on the NCAA Tournament.  As noted above in the report prepared by Challenger, Gray & Christmas, office betting pools related to the NCAA Tournament are commonly accepted by many employers as a way to build employee morale and camaraderie.  However, before allowing office pools, Texas employers should be careful to evaluate potential legal implications.

In addition to potentially creating workplace distractions and lowering productivity, strictly speaking, office betting pools also violate federal law.  For the vast majority of states, including Texas, the Professional and Amateur Sports Protection Act of 1992 (“PASPA”) specifically prohibits a private individual from operating a betting scheme based on a professional or amateur sporting event.  In other words, PASPA effectively outlaws sports gambling unless the gambling takes place in one of the few states exempted from the statute (namely Nevada, Oregon, Delaware and Montana).  While sports betting pools are illegal, the federal government does not devote resources to prosecuting minor office pools.  The statute is aimed at catching bigger fish (think organized crime).  Therefore, employers who permit an office pool related to the NCAA Tournament run very little to no risk of being prosecuted by federal authorities for violating PASPA.

Nonetheless, in addition to federal law, employers must also make sure they comply with specific state statutes related to gambling.  For example, in Texas, the current state of the law appears to support that an office pool is permissible so long as employees are not required to pay an entry fee or something of value in order to participate.  Put differently, pursuant to Texas case law and several opinions issued by the Attorney General, in order to place a “bet” in Texas, one must pay something of value, i.e., an entry fee.  Therefore, without an entry fee, there can be no unauthorized “bet.”  Consequently, so long as an office pool does not require employees to pay an entry fee or something else of value, it does not appear that such a pool would violate Texas law—this is true even if the winner of the pool receives a monetary prize.

If you have an office anti-gambling policy, make sure that any office pool is consistent with the policy.  Employers do not want to turn a blind eye to a seemingly innocent event such as an office pool related to the NCAA Tournament only to have it used against them in reference to a more serious gambling event at a later date.  If you have an anti-gambling policy, make sure to document that an office pool related to the NCAA Tournament or other similar events (e.g., a company sponsored casino night) will not be deemed to violate this policy so long as it meets the above-referenced criteria.