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March Madness Comes to Kansas

The NCAA Men’s Basketball Championship, better known as “March Madness,” is just around the corner. Things will be extra crazy in Kansas this year, with KU, K-State, and Wichita State all qualifying for the tournament, and Wichita hosting first- and second-round games.

March Madness also means betting pools in which participants fill out brackets to predict the winners. While the practice is common, it may be illegal. And when done on company premises, it can create legal concerns for the employer and affect employee productivity.
Technical Fouls
Gambling is a class-B nonperson misdemeanor in Kansas. In other words, it’s against the law. The penalty can range from a fine to six months in jail.
Kansas law defines gambling as making a bet. A bet is a bargain in which the parties agree that dependent upon chance, one stands to win or lose something of value specified in the agreement. A bet doesn’t include prizes paid to the contestants in any bona fide contest for the determination of skill.
Unauthorized lotteries are also specifically prohibited by the state’s gambling law. A lottery is "an enterprise wherein for consideration the participants are given an opportunity to win a prize, the award of which is determined by chance." Thus, the three elements of a lottery are consideration, chance, and a prize. “Consideration” is the payment of money or anything of value.
Basketball pools, in which contestants fill out a bracket to predict the winner of each game and pay an entry fee into a pot, which is awarded to the entrant who picks the most games correctly, may violate state gambling laws. Although the winner of the office pool will boast with bravado at the water cooler that his or her victory was the result of skill, not chance, law enforcement officials may be unconvinced.
Why should you, as an employer, care about such legal issues? Allowing premises to be used for commercial gambling is also against the law. Therefore, if you knowingly let an employee run an office pool and the employee takes a cut of the pot for his or her time and effort, thereby making it commercial gambling, you may be violating the law as well. Nevertheless, according to a survey conducted by an HR management association, nearly one-third of HR professionals know that basketball pools exist at their organization.
As a practical matter, law enforcement officials typically have better things to do with their time than crack down on low-stakes sports pools. So while the odds of being prosecuted for running or allowing a basketball pool in the office are probably low, it’s still something to think about.
Personal fouls
Aside from legal issues, a more practical concern for employers is the effect office pools may have on productivity. According to the survey, however, more than half of the HR professionals who reported having knowledge of such activities at their workplace said there was no effect on worker productivity as a result of workplace gambling. In fact, 13 percent found that the gambling had a positive effect on productivity, while only six percent believed it had a negative effect. Less than a quarter of employers reported having written policies that address gambling.
Get a ‘TO,’ baby!
If you choose to prohibit gambling in your workplace, adopt a strong policy and stick to it. Here are several points you might want to include in your policy:
  • Define gambling or the type of behavior you want to restrict.
  • Emphasize that gambling is illegal.
  • Acknowledge that gambling can interfere with employee productivity and morale.
  • Be prepared to discipline violators.
If you believe a basketball pool enhances productivity or fosters camaraderie in your workplace, but you’re concerned about its legality, consider having the company fund the contest and award a prize to the winners. Employees will be happy because they can make their picks and enter the contest without putting up their own money. And because they don’t have to pay to play or risk losing anything of value (other than their pride), the game shouldn’t violate state gambling laws.
One last thing. If an employee requests that you let him or her operate an office pool to accommodate his or her gambling addiction, remind them that compulsive gambling is excluded from coverage under the Americans with Disabilities Act.  

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Don Berner, the Labor Law, OSHA, & Immigration Law Guy
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Boyd Byers, the General Employment Law Guy
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Jason Lacey, the Employee Benefits Guy
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