Tag: march madness

Yes, Your March Madness Office Bracket is Technically Illegal

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March Madness has arrived!  The 2017 NCAA Basketball Tournaments tip-off tonight (March 15) and continue through the Women’s and Men’s National Championship Games on April 2 and 3 respectively.  With this, comes the American tradition of companies and their employees betting on tournament outcomes through office bracket pools.

As lawyers, we have to point out that your company’s March Madness pool is very likely illegal under at least three federal gambling laws (the Professional and Amateur Sports Protection Act, the Interstate Wire Act of 1961, and the Uniform Internet Gambling Enforcement Act) and many state laws.  And we would be remiss to not mention that there is a parade of horribles that could happen from permitting such workplace wagering.

With that said, the more practical reality is that office pools have become a widely-practiced and culturally accepted form of gambling, law enforcement authorities seem to have little interest in enforcing laws that technically prohibit them, and many employers view these office pools as a workplace morale booster.

For those employers – seemingly, most all of them – who will not shut down this popular practice, here are some best practices to help mitigate legal issues when sponsoring or allowing office pools:

  • Make sure that all entry fees are distributed solely to the winner or winners of the pool.  An employer, or employees organizing a pool, should never take a “cut” of entry fees.  Under various anti-gambling laws, profiting from the pool in this way raises a host of issues.

  • Limit pools to offices within a particular state.  Doing so may prevent the pool from violating federal laws, as they generally require the transmission of money or communications across state lines to be applicable.

  • Make participation completely voluntary and limit entry fees to nominal amounts.  Expensive or compelled buy-ins may encourage the predilections of employees who are problem gamblers, and expensive buy-ins may tempt those employees responsible for collecting and distributing entry fees to surreptitiously take a “cut.”  Compelled buy-ins could implicate wage and hour and religious anti-discrimination laws.  Following these guidelines helps ensure that an office pool is low-stakes and simply intended to promote friendly rivalry.

  • Do not retaliate against or single-out employees who may complain to the pools.  There are plaintiff’s lawyers out there who will try to tether an internal complaint of unlawful activity to later adverse action against the complainer.

  • Prohibit employees from gambling in other pools on company time or through company equipment.  Apart from a workplace pool, employees may choose to participate in other pools with non-employees, and there are many options to do so online (including through company-issued or owned computers).  These other pools can raise additional concerns about potential violations of the law, to the extent they involve large wagers, are structured to profit the organizer, or involve interstate communications.  Consequently, for reasons of both legality and ensuring employee productivity, employers are best served by a policy that prohibits employee gambling in other pools on company time or company equipment.

  • Consider sponsoring a free pool that provides a non-monetary award.  Although employees may not find it as interesting, an employer concerned about the legality of its office pool may consider sponsoring a pool that is free to enter, with a non-monetary award (a gift card or some other prize) for the winners.  The lack of an exchange of money in such a pool may avoid the reach of potentially applicable anti-gambling laws.

Putting legality aside, it is well-established that employee productivity takes a hit during March Madness, particularly since it is now possible to watch games online through work computers or personal mobile devices, and permitting an office pool could encourage distraction.

To accommodate employee interest in the tournaments while reducing productivity loss employers should consider airing the games in a breakroom or lunchroom. At the same time, add sports broadcasts and websites to blocked sites on company systems that monitor and limit Internet use on company-owned computers, systems and devices (certainly, gambling and unlawful activity websites should be blocked year-round).  And if productivity becomes a problem, communicate policies addressing these concerns to employees, including policies restricting viewing to non-break times or reminding employees (including those tempted to duck out early to catch a game) of applicable attendance and punctuality policies.

As March Madness begins, we wish you the home court advantage.

ARTICLE BY Mark E. Terman & Dennis M. Mulgrew, Jr. of Drinker Biddle & Reath LLP

©2017 Drinker Biddle & Reath LLP. All Rights Reserved

March (Appellate) Madness re: O'Bannon NCAA Antitrust Case

Womble Carlyle Sandridge Rice, PLLC

It has been a few months since we updated on the O’Bannon antitrustcase, where federal judge Claudia Wilken ruled last summer that theNCAA’s amateurism rules violated federal antitrust laws. But this week, as the rest of the country filled out their brackets and geared up for the start of the NCAA tournament, the NCAA was getting ready for another battle – in the Ninth Circuit.  On Tuesday, the appeals court heard oral argument from both the NCAA and plaintiffs’ counsel, as the parties debated the lower court’s decision, which allowed limited compensation for the use of athletes’ name, image, and likenesses.

Central to the parties’ argument was the interpretation of NCAA v. Board of Regents of the University of Oklahoma, a 1984 case regarding football television rights. While the NCAA lost that case, one statement in that case has become central to the NCAA’s current “amateurism” defense:  “To preserve the character and quality of the ‘product,’ athletes must not be paid.”  In Tuesday’s arguments, some of the judges seemed skeptical of the NCAA’s shifting definition of “pay,” they were also concerned about opening the door to “pay for play.”

We can expect a ruling in the upcoming months, though this is unlikely to be the final appeal in the case.

ARTICLE BY

Amanda Norris Ames
Womble Carlyle Sandridge & Rice, PLLC

March (Appellate) Madness re: O’Bannon NCAA Antitrust Case

Womble Carlyle Sandridge Rice, PLLC

It has been a few months since we updated on the O’Bannon antitrustcase, where federal judge Claudia Wilken ruled last summer that theNCAA’s amateurism rules violated federal antitrust laws. But this week, as the rest of the country filled out their brackets and geared up for the start of the NCAA tournament, the NCAA was getting ready for another battle – in the Ninth Circuit.  On Tuesday, the appeals court heard oral argument from both the NCAA and plaintiffs’ counsel, as the parties debated the lower court’s decision, which allowed limited compensation for the use of athletes’ name, image, and likenesses.

Central to the parties’ argument was the interpretation of NCAA v. Board of Regents of the University of Oklahoma, a 1984 case regarding football television rights. While the NCAA lost that case, one statement in that case has become central to the NCAA’s current “amateurism” defense:  “To preserve the character and quality of the ‘product,’ athletes must not be paid.”  In Tuesday’s arguments, some of the judges seemed skeptical of the NCAA’s shifting definition of “pay,” they were also concerned about opening the door to “pay for play.”

We can expect a ruling in the upcoming months, though this is unlikely to be the final appeal in the case.

ARTICLE BY

Amanda Norris Ames
Womble Carlyle Sandridge & Rice, PLLC

Does March Madness = Workplace Madness? Some Thoughts on the Legality of NCAA Bracket Pools and the Tournament’s Effect on the Workplace

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With the Olympics now behind us (were they ever in front of us?), this time of year usually marks the sports netherworld between the Super Bowl and the NCAA Men’s Division I Basketball Tournament, which is better known as March Madness. This lull provides employers with an excellent opportunity to contemplate the issues that March Madness creates in their workplace. We explore some of those issues below.

Participating in a NCAA Bracket Pool: Everyone Else Does It, So Why Can’t We?

Nothing presages the coming of spring like the NCAA Tournament, and concurrently, perhaps nothing is as ubiquitous in the American workplace during this time period as NCAA bracket pools. Estimates of participating Americans are in the 50-60 million range and we can totally understand why. Even President Obama completes a bracket each year (he even picked last year’s winner correctly). And we expect those numbers to go up because of contests like these: Quicken Loans is offering a $1 billion prize to anyone who completes the perfect bracket. The chances of doing that: 1 in 9.2 quintillion (9 with about eighteen zeroes after it, or the same odds of the Knicks winning the NBA Championship this year. Please come to New York Phil Jackson. Please.).

The typical workplace bracket pool scenario involves an email attaching a bracket or an embedded link to a website that requires you to sign up for and complete an online bracket; think: ESPN.com or cbsports.com (whose home page even promotes “co-worker” participation). Sometimes these e-mails are sent office-wide, other times they are limited to a select group of employees. The typical entry fee can range from $5 to $20 per bracket, with the winner collecting the biggest payout and the second and third place finishers collecting more moderate sums. Some brackets also return the last place “winner” his or her entry fee (see: probably you at least once in the last 10 years). The pool “manager” may also take a cut for dealing with the administrative burden (including having to stop by your cubicle at least twice a day for your entry fee). Of course, all this varies from pool to pool. We’ve heard of pools where the winner gets to donate the collected entry fees to the charity of his or her choice (awwww). We’ve heard of pools going in the opposing direction: $1,000 per entry, winner takes all (grrrrrr). Overall, close to $2.5 billion is wagered on the tournament.

But is any of this legal? The results are mixed. On the federal level, probably not; on the state level, it depends on the state. Participation in a bracket pool may violate at least two federal laws. NCAA bracket pools that are conducted across state lines (i.e. a company pool involving offices from several states) or which are managed online (the vast majority), could violate the Interstate Wire Act of 1961. There is a “fantasy sports” exception to that law, but bracket pools don’t seem to fit within that exception since they require the individual to bet on the outcomes of the games. Participation in these bracket pools may also violate the Professional and Amateur Sports Protection Act, which prohibits wagers on sports anywhere, except in certain grandfathered states (Nevada, Delaware, Oregon and Montana).

On the state level, while most states ban gambling, their gaming laws provide exceptions for so-called “social” or “recreational” gambling. While the particulars vary, to qualify for these exceptions: (1) all of the money in a pool must go to a winner or a charitable organization (i.e. the “house” does not receive any of the proceeds); (2) there must be a maximum amount a person can wager (like a $20 entry fee), and (3) the pool must be limited to a certain number of people with pre-existing relationships (like co-workers). Thus, in certain states, NCAA bracket pools that meet these requirements may be permissible. In Wisconsin, by contrast, NCAA bracket pools are illegal without exception. Sad, considering the Badgers are set to make a serious run at the NCAA Championship this year.

Based on the above, especially because of the Professional and Amateur Sports Protection Act, the simplest and safest approach for (non-Nevada, Delaware, Oregon and Montana) employers would be to prohibit NCAA bracket pools in the office. But realizing that this will likely not be the majority approach, if you are an employer comfortable enough to allow your employees to run an NCAA bracket pool, we would recommend setting certain parameters, including: (1) requiring employees to complete paper brackets instead of participating online, (2) prohibiting bracket pools that will result in employees participating in offices located across multiple states; (3) prohibiting employees from using company e-mail or printers to administer the pool; (4) limiting the entry fees (i.e. $20 or less), (5) ensuring that the collected entry fees are distributed to the winner(s) (or charitable organization) and no portion goes to the house; and (6) threatening discipline if any employee pressures any other employee to participate in a bracket pool. Another option altogether is to allow your workers to participate in a bracket pool for free, with the winner collecting a prize.

Watching the Games: Everybody Else is Watching, So Why Can’t We?

Completing a bracket is one thing, but watching the games is where the fun really begins. You wake up Thursday morning annoyed that there’s still five hours before the first game tips off. Wait, this is 2014, not 2000; the tournament now boasts of 68 teams and starts on Tuesday with the “First Four” play-in games. But in reality, the tournament “starts” on Thursday, and in anticipation, your employees (and maybe even you) have probably done the following:

(a) downloaded the CBS Sports app onto their computer, tablet or mobile device that will allow them to stream the games into their workspaces

(b) arranged to watch some games at an “extended” lunch with some co-workers

(c) called in “sick” (or did the honorable thing and took a preapproved vacation/PTO day) so they can watch games

(d) All of the Above

(e) None of the Above (because, instead, they are busy binge-watching the first three seasons of Game of Thrones before the April 6 Season 4 premier)

Regardless of how your employees (or you) would answer that question, the point is that come Thursday (and Friday) they will probably be focused on something unrelated to their job. And when their focus is elsewhere, job productivity suffers. And boy does it suffer. According Challenger Gray & Christmas, an outplacement firm, this equates to $134 million in lost productivity on just the first two days of the Tournament alone where at least 3 million employees will spend between 1-3 hours watching games at work and2/3rds of all workers will track games during the workday. We wouldn’t be surprised if this number climbs again this year as CBS continues to make it easier to stream games live. (And if it really wants that number to climb, it needs to offer a better “boss button” than the one it offered last year. And on that front, when are we going to see a lawyer-friendly boss button – maybe one that clicks away to a draft brief or a redlined employment agreement? C’mon already. But we digress.)

So we know that lost productivity is an issue. But what about the related issue of employee morale? A survey conducted last year by OfficeTeam found that 20% of managers believe that the NCAA tournament has a positive effect on employee morale. Only 4% believed it had a negative effect and 1% didn’t know what effect it had. Perhaps the most shocking statistic is that 75% of the managers surveyed believed that it had no effect whatsoever.

To us, the result of the productivity-morale equation is employer-specific and depends on the nature of your workplace and your business goals. For example, we can certainly see how management at an accounting firm may grow uneasy at a lack of focus from its employees as their clients’ tax filing deadline nears. At the same time, we can also see how management at this firm (perhaps if it’s located by Syracuse or Kentucky) may want to convert this into an employee appreciation moment, gather its employees in a conference room for an extended lunch and game-viewing session and take a breather from their overwhelming workloads (and maybe be lucky enough to catch a top-5 all time buzzer beater.)

Employees in downtown Richmond, Viriginia probably had trouble focusing on their work in 2011.Only you can best gauge what will motivate your workforce against how it will affect your bottom line. If you could care less about employee morale or don’t think it’s a factor, then consider blocking access to the streaming site or mobile app, remind employees of your acceptable computer use policy, and threaten disciplinary action as necessary. If you are concerned about lost productivity, but want to maintain or enhance employee morale, consider allowing employees to wear or display items related to their favorite college teams that day (whether it is Villanova, Wichita St. or “Anyone but Duke”). Consider designating certain times where employees are “free” to check scores, or consider going further and allowing employees a time and place to watch games. By tuning break-room television sets to the NCAA tournament and possibly adding pizza or popcorn to the mix, it represents a cheap investment that may boost employee morale and reduce some of the short-term productivity losses while producing long-term productivity gains.

All right, that is all. We hope this helps you prepare your workplace for the upcoming NCAA tournament so that when it’s over you can proudly belt out One Shining Moment, including…

And when it’s done

win or lose

you always did your best

cuz inside you knew…

(that) ONE SHINING MOMENT, YOU REACHED FOR THE SKY

ONE SHINING MOMENT, YOU KNEW

ONE SHINING MOMENT, YOU WERE WILLING TO TRY

ONE SHINING MOMENT….

Article by:

Of:

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

What Do You Get When You Cross March Madness With Insurance?

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A chance to win one billion dollars.  Quicken Loans and Berkshire Hathaway recently announced that they are teaming up to award one billion dollars to be shared by persons who correctly predict the winners of every game in this year’s men’s college basketball tournament.  Quicken is running the competition and paying Berkshire Hathaway an undisclosed premium to insure the prize.

While this may be one of the largest promotions tied to a sporting event, it is just another example of a growing trend.

For example, during the 2013 Super Bowl, Beyonce’s halftime performance was just a precursor to a larger celebration for certain customers of Gardiners Furniture Company (“Gardiners”), a furniture company with locations in the Baltimore, Maryland area.

Baltimore Ravens return man Jacoby Jones took the second half kickoff one hundred and eight yards for a touchdown.  As part of a Super Bowl promotion, Gardiners promised to give free furniture to customers who purchased furniture between January 31, 2013 and 3 p.m. on Super Bowl Sunday if a player returned a kick for a touchdown at the start of the game or after half-time.  As a result of Jones’s dash, Gardiners gave away approximately $600,000 of free furniture.

Gardiners’ customers were thrilled and, according to Kasee Lehrl, the advertising and marketing manager at Gardiners, the company was “just as happy.”  Kelcie Pegher, Gardiners Furniture Refunds $600,000 in Furniture on Super Bowl Bet, Carroll County Times, Feb. 6, 2013.  That is because Gardiners reportedly paid $12,000 for an insurance policy in case the store had to follow through on its end of the promotion.  According to Gardiners co-owner Gary Mullaney, it was worth every penny for the publicity and the winning feeling it gave his customers.  Ron Dicker, Gardiners Furniture Store Loses $600,000 Super Bowl Bet on Baltimore Ravens Kickoff Return, The Huffington Post, Feb. 6, 2013.  No doubt, Quicken and Berkshire Hathaway are enjoying similar publicity linked to their March Madness tournament.

Promotions tied to sporting events or other events of chance are limited only by the imagination of marketing teams.  Some of the most common examples include:

  • Hole-in-one competitions;
  • Shoot the puck games;
  • Basketball shots;
  • Soccer or football kicks;
  • Sweepstakes; and
  • Scratch and win games

Contests such as these continue to increase in popularity and are becoming a staple of marketing departments.  The size of the awarded prizes also continues to grow, resulting in an increased demand for prize indemnity insurance.

Prize indemnity insurance is a category of contingency insurance that works by transferring the risk of somebody winning the prize from the promoter to an insurance company.  The insurance company calculates the cost of the insurance coverage based off of the probability of a winner.  In case you were wondering, the chances of somebody predicting all sixty-three games in the men’s college basketball tournament accurately is approximately 1 in 9.2 quintillion (eighteen zeroes).

Typically, insurance carriers charge policyholders a premium of approximately five to twenty percent of the value of the prize being offered.  However, the premium will vary based on the type of promotion and the statistical likelihood of the customers winning.  The three most significant factors in determining the premium level are:  (1) the difficulty of the promotion; (2) the number of attempts to win; and (3) the value of the prize.

Instead of keeping cash reserves to cover large prizes, the promoter pays a premium to the insurance company, which then reimburses the insured should a prize be given away.  As a result, in exchange for the premium payment, there is no risk on the insured that the prize will be awarded.

As marketing departments increasingly utilize promotions such as these as another arrow in their advertising quiver, it is important that risk managers work in concert with their marketing department to ensure that financial risks to the company are properly managed.  Increasingly, that includes purchasing prize indemnity insurance.

So remember, get your bracket in on time and GO BLUE!

Article by:

Jason S. Rubinstein

Of:

Gilbert LLP