Your NCAA bracket may cause you to go mad if you wind up losing all the money you bet. But even if you aren't a borderline addict, there is another important reason why your March Madness pool could be a bad idea.
According to the American Gaming Association (AGA), Americans are estimated to bet more than $2 billion on over 70 million brackets during this year's March Madness.
"Sports betting has played a major role in making March Madness the big-time event it is today," said Geoff Freeman, the CEO of AGA. "With more people filling out brackets than casting a ballot for President Obama – who makes his NCAA predictions in the Oval Office each year – it's clear that Americans embrace gaming."
But even though most sports fans will spend the next few days consumed by college basketball – even while at work – chances are your office March Madness pool is illegal.
According to the AGA, over three-quarters of March Madness gambling is illegal. Although some states like Pennsylvania and Connecticut have considered ways to legalize March Madness pools, betting for money violates many state gambling laws.
"There is no tax reason for these pools to be illegal," said Ryan Ellis, an enrolled agent and the tax policy director of Americans for Tax Reform. "They are illegal due to rent-seeking regulations on the part of casinos. All voluntary economic activities should, by default, be legal. The burden of proof is on the state to show why not."
Not only does your March Madness office pool violate state laws, it's also a federal offense. Pay-to-enter internet pools break three federal laws. One federal law in particular says it's illegal for a person to offer a wage based on a competitive game in which athletes participate.
But this news isn't a slam dunk for those who have bet. It's highly unlikely that you will be prosecuted for gambling at work. Laws get complicated from state to state, and they typically go unenforced because so many Americans participate.
"Unless somebody is bringing a pool to the police attention or the IRS notices an unusual gain on someone's tax returns, the government is not going to investigate March Madness pools," said Marc Edelman, law professor at Baruch College.
March Madness brackets have become part of office culture, with 50 million people taking part in office pools last year.
Even though it's technically a crime, there are so many offenders that you should be okay staying in your pool. To be on the safe side, be sure to have a full understanding of your individual state's laws, because certain states allow recreational gambling among friends.
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Photo: Chilli Head | Flickr
Photo: Alon | Flickr
