RUNNING AN NCAA BRACKET TOURNAMET AT WORK? WATCH OUT FOR THESE ISSUES.
According to the Fantasy Sports and Gaming Association (FSGA), more than 45 million Americans age 18 and over, played fantasy sports last year in 2021. In the U.S., fantasy sports leagues are made at both the collegiate and professional level and encompass a wide range of sports, including football, basketball, soccer, and baseball. With Selection Sunday coming up in a couple weeks to kick of March Madness, many employers are probably contemplating workplace brackets for the NCAA season. If that’s the case for you, or even if you’re preparing to do a fantasy tournament in the future for a different sport, you’ll want to make sure you keep the following information in mind to avoid a legal issue.
Business Sponsored NCAA Brackets and Fantasy Football Leagues
With the widespread popularity of fantasy sports here in the States, employers have taken to using the games as a method of building workplace camaraderie and collaboration. Fantasy leagues offer brief moments of reprieve for employees during the workday and encourage them to interact with one another, perhaps even across team/department lines. But employers often ask whether such activities in the workplace constitute gambling. The short answer: not if done properly.
What About the Recent Legalization of Sports Betting in Illinois?
Illinois recently passed the Sports Wagering Act and employers might be confused as to what it means for their workplace fantasy tournaments. It is imperative to keep in mind that the new law only makes sports betting legal in limited circumstances.
The Sports Wagering Act made huge waves last summer in 2019 when SB 690 was passed, no doubt due in part to the popularity of fantasy sports and NCAA brackets across the country. The law has been a game changer for the state, with more than $7 billion wagered statewide since legal sports betting launched less than two years ago.
The short of it is that sports wagering is legal in Illinois, so long as it is done in compliance the regulations laid out in the Act. Sports wagering means accepting wagers on sports events, portions of sports events, or even on the individual performance statistics of athletes in a sports event, by any method of wagering. It includes single-game bets, teaser vets, parlays, over-under, moneyline, pools, exchange wagering, in-game wagering, in-play bets, proposition bets, and straight bets. As you can already guess, sports wagering does include betting pools for fantasy sports leagues.
You Need a License to Engage in Sports Wagering, and Licenses Aren’t Cheap
However, the Act states that no person or entity can engage in a sports wagering operation or activity without first obtaining the appropriate license. There are 6 types of licenses: a master sports wagering license; an occupational license; a supplier license; a management services provider license; a tier 2 official league data provider license; and a central system provider license. So, in order for an organization to be involved in a fantasy football game that involves wagers, one of these licenses is required, all of which cost upwards of hundreds of thousands of dollars, and some of which cost millions, for initial purchase and periodic renewal. Based off the pricing alone, you can see that the Act is geared towards massive gambling organizations and sports facilities such as Soldier Field, DraftKings.com, and the Chicagoland Speedway. It doesn’t contemplate workplace fantasy sports gambling, and thus employers should not rely on it to justify taking wagers in the workplace on fantasy games or brackets.
Collegiate Sports Team Wagers are Prohibited in Illinois.
The Illinois Gaming Board website lists some frequently asked questions, including “May I wager on Illinois collegiate teams and players?”. The answer: Under Section 25(d) of the Illinois Sports Wagering Act, a licensee “may not accept a wager for a sports event involving an Illinois collegiate team.” This includes any combination of wager which may be determined by the performance of an Illinois team, including fantasy sports.
While some states place no restrictions when it comes to wagering on college sports, Illinois is not as restrictive as some others. For example, according to a recent Chicago Tribune article, if the Big Ten basketball tournament is played in Chicago, Illinois gamblers can wager on games that don’t involve in-state schools even though the event is staged here.
Last year the Illinois gaming board sent out a reminder regarding the bar against wagering on Illinois collegiate teams, saying “Futures wagers where an Illinois collegiate team is one of many possible winners are acceptable, ‘so long as no wager is accepted on the participating Illinois participant.’… each sports wagering operator must decide for itself (within the boundaries of the Sports Wagering Act and Rules) how it will resolve futures bets under such circumstances. Operators must decide whether a victory by an Illinois collegiate team will be graded as either a loss for all patrons or as a push for all patrons.
The Board provided an example, saying, “placing a wager on the final winner of the NCAA Women’s Basketball Tournament before the start of the tournament would be acceptable so long as a wager is not placed on a specific Illinois collegiate team. Similarly, a licensee could not offer a field bet that included an Illinois collegiate team as a possible winner.”
NCAA Brackets May Be Illegal Gambling in Illinois, So Don’t Use Cash Prizes
While Illinois law on gambling has changed significantly in the last few years, most employers do not hold the required licenses. So what does that mean for that annual March Madness Tournament you want to run again?
The key here is wager. Fantasy football, NCAA brackets, or any other workplace activity that involves odds, do not fall under the Act so long as wagers are not involved. Betting pools should not be set up, and employers should even avoid taking money as an entry-fee to join a team. In short, employers who want to encourage participation in fantasy sports in the workplace should remove all forms of money from the equation – let the reward for winning be “bragging rights” rather than anything monetary.
Pay Close Attention if You Operate Your Business in Multiple States
This issue of gambling is particularly important for employers who have places of business in, or employees working from, multiple states. Running a money-based fantasy league or NCAA bracket in a state where gambling is legal could still pose a serious issue if any of your employees who participate in it are working remotely from a state in which gambling is illegal. We highly advise that you become familiar with the gambling laws in all of the states where you have a place of business or remote employees before starting a betting pool for a fantasy league.
Should you have questions regarding sports brackets and fantasy leagues in the workplace or other legal needs for your business, or if you would like to schedule a no-charge initial consultation to discuss questions you have about your business, please contact Navigant Law Group, LLC at (847) 253-8822 or contact us online.
Navigant Law Group, LLC is a law firm with various areas of service to assist your business, including: Employment Law, Intellectual Property, Commercial Real Estate, and general Business Law services. Individual services include Estate Planning, Wills and Trusts, Probate and Guardianship.
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