March 12, 2007
NCAA Tournament Pools & Nonprosecution
Posted by Christine Hurt

I'm sure many of our corporate law readers get kind of sick of my posts on gambling.  What does gambling have to do with corporate law?  Aside from the obvious speculation comparison with investing, I am also interested in the "can a whole industry be criminal" aspect.  In recent years, we have seem criminal prosecutions for corporate misconduct that was not only widespread in certain industries but also not perceived by many to be criminal in nature.  (Think "earnings management" or backdating.)  Well, this week begins our nation's traditional revelry in illegal gambling:  the NCAA Tournament Pool.  Can a whole country be criminal?

Note that the Glom pool contains no wagering; it is clearly above-board and good, clean fun.  However, the other office pools that charge $2, $5, or more are seen by almost all as also good, clean fun.  I have received several emails today from licensed attorneys or future attorneys inviting me to participate in these fun pools.  According to some counts, almost one-third of U.S. workers this week will participate in a pool, with some of them spending work time to contemplate their entries.  And yes, in most states, these pools are clearly illegal.  (Vermont actually passed a law a few years ago making such pools not illegal as long as all entrance fees are paid out, interestingly.)  In Illinois, it is a Class A misdemeanor to "[m]ake a wager upon the result of any game, contest, or any political nomination, appointment or election," yet I'm sure it's happening right now, as I type! 

So why do we care, if we now that state regulators have historically turned a blind eye to something they have zero resources and zero incentive to investigate?  Because who knows when the tide will turn?  As Monty Python fans know, "Nobody expects the Spanish Inquisition!"  Perhaps U.S. prosecutors will take organizers of office pools away in handcuffs for "theft of honest services" for using employer time and materials to print out brackets.  Or perhaps those of us who received the brackets via email will be arrested for violating the Wire Wager Act and face federal prosecution.

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