Risk Management

Office Pools: A Safe Bet?

Pools are in bloom again as the NCAA gears up for its March Madness tournament. But even though most of them are small potatoes, they are not risk ...
Marie LeoneMarch 14, 2008

Cinderella teams are hard to resist. So regardless of your alma mater, you may be tempted to pick the feisty Drake University Bulldogs for your office pool in the NCAA basketball tournament. Water-cooler chatter at offices around the country is already buzzing about the David-versus-Goliath matchups that await the little Des Moines–based school (undergraduate enrollment is only 3,150) when its men’s basketball team takes to the hardwood in the upcoming “March Madness” tournament, set to tip off March 20.

If CFOs are looking to take their finance departments to new heights in the next few years, they may want to keep an eye on the team’s three finance majors: senior guard and Academic All-American Adam Emmenecker — who is maintaining a 3.97 grade-point average this year while juggling four majors: finance, business, entrepreneurial management, and management — junior forward Jonathan Cox; and junior forward Brent Heemskerk, who is working on a double major in finance and marketing.

But for fans more interested in a player’s scoring numbers than his ability to calculate net present value, Sunday marks the start of the office betting-pool ritual. That’s the day the National Collegiate Athletic Association releases “the brackets,” the official playoff schedule that provides a map to team matchups. Once that information is made public, pool organizers around the nation begin working to pass out betting sheets — electronically or by hand — to co-workers and collect bets.

Reportedly, a few years ago, the FBI calculated that in aggregate, office pools hit the $2.5 billion mark. But for the most part, single-pool proceeds are relatively small potatoes, ranging anywhere from $200 to a few thousand dollars. So companies that look the other way when employees run pools really don’t run a big risk of being the target of a federal or state criminal investigation, says Steve Miller, a labor-employment partner in the Chicago office of Fisher & Phillips.

Still, Miller says there are some risks related to betting pools that management should understand. To start, under state penal codes, sports gambling is illegal. And even in states that allow casino and racetrack betting, for example, running a gambling operation without a license is a violation of the code. As a result, some companies specifically prohibit office pools that involve money, and issue written corporate policies to that effect. That could be a good idea even if a company has no intention of prohibiting pools, just so it has something to point to if the game somehow gets out of control.

Corporate policies on gambling go deeper than just office pools, according to a human-resources client advisory released by publisher BLR. It poses several questions that companies should think about regarding policies related to gambling, such as: Can sales staffers entertain clients by taking them to lawful gambling events? Is all gambling in the workplace prohibited, or just illegal gambling? What disciplinary action can be taken if the policy is violated?

Many companies follow an unofficial “don’t ask, don’t tell” policy and turn a blind eye to pools, especially if employees conduct the activity in a discreet manner. However, some employees may feel that gambling is immoral, or at the very least, not appropriate in the workplace. In that case, if an employee feels uncomfortable about the office pool and confronts management, it is up to supervisors to address the issue as they would address any workplace complaint: specifically, management should assess the situation for violations of policy or regulations; take action, if needed, to rectify the situation according to company policy; and check back with the employee who filed the complaint to make sure the situation was resolved to his satisfaction.

It is unlikely that a company would face serious liability issues in terms of a civil suit or criminal charges for a $200 office pool, says Miller, but no company wants to create an uncomfortable work environment, especially one that is fostered by an illegal action. In the extreme, workers who view gambling as being against their religious beliefs could make a case under federal discrimination laws that an office pool represents a hostile work environment. “But that’s a stretch,” reckons Miller. Nevertheless, he adds, management’s response to a religious discrimination complaint, even if it relates to an office pool, should not be handled any differently than its response to a complaint about other protected categories under the Civil Rights Act.

Some companies actually embrace office pools and use them as an employee-incentive tool. Miller says he knows of companies that run betting pools as a team-building exercise, shelling out such prizes for the winners as a day off, gift certificates, and gadgets. “Office pools can sometimes inspire camaraderie among employees,” he says.

The key to avoiding any trouble related to office pools is summed up in two words, says Miller. No, not “Drake Bulldogs.” Rather, “common sense.”