Is March Madness Betting Illegal?

The annual tradition of making a bracket for March Madness is a favorite pastime of many Americans, but does participation in an office pool or other pay-in bracket challenge constitute gambling?  The act of completing a bracket itself is not illegal.  After all, Presidents famously release their brackets, sometimes with tongue-in-cheek favoritism toward an alma mater or hometown.  At what point does making predictions on the NCAA basketball tournament become a form of illegal wagering that may have legal consequences?  If you do gamble in Nebraska, what penalties could you face?

Federal Sports Gambling Laws

As with all legislation, it is important to consider both Federal and State laws. At the Federal level, sports betting was made illegal in 1992 with the passage of the Professional and Amateur Sports Protection Act (PASPA), which applied to every state with a grandfather exception for Nevada.  The exemption allowed Las Vegas to continue to take NCAA tournament bets, but limitations on interstate transactions meant that patrons had to physically go to Nevada to place their wagers.

However, in May 2018 the U.S. Supreme Court struck down the law as being unconstitutional in response to challenges from the state of New Jersey who wanted to legalize sports betting.  The opinion of the Court, delivered by Justice Alito, held that the law was federal overreach into a State’s ability to pass its own regulations.  He elaborated that:

“The Constitution confers on Congress not plenary legislative power but only certain enumerated powers. Therefore, all other legislative power is reserved for the States, as the Tenth Amendment confirms. And conspicuously absent from the list of powers given to Congress is the power to issue direct orders to the governments of the States.”

The legal doctrine that prevents the Federal Law from compelling State government to act is known as the anticommandeering-doctrine.  This principle was laid out in New York v. United States (1992), where the Court’s opinion stated that they:

“have always understood that even where Congress has the authority under the Constitution to pass laws requiring or prohibiting certain acts, it lacks the power directly to compel the States to require or prohibit those acts.  Congress may not simply ‘commandee[r] the legislative processes of the States by directly compelling them to enact and enforce a federal regulatory program.”

The Court Ruled that the PASPA violated the anti-commandeering rule and was therefore unconstitutional.  Functionally, this meant that the Federal Government could not force States to make or keep sports gambling illegal.

However, this does not make sports gambling legal.  Instead, it simply prevents the Federal Government from dictating what each State may consider legal or illegal.  As such, the question of whether March Madness brackets constitute illegal gambling rests with the individual States.

Nebraska Gambling Laws

Nebraska’s gambling laws are generally more prohibitive than laws in other states.  Not all gambling is illegal in Nebraska, and understanding what is permitted or not permitted can help keep you out of legal trouble.

Most of Nebraska’s law can be understood through the definition of gambling laid out in Nebraska Revised Statute 28-1101. The state of Nebraska considers a person to be engaged in gambling:

“if he or she bets something of value upon the outcome of a future event, which outcome is determined by an element of chance”

This definition lays out the three elements of gambling under Nebraska law:

• Consideration: the individual puts up something of value
• Chance: on an outcome that is determined by chance
• Reward: with the opportunity to win something of value

Generally, if an activity meets all three criteria, it is considered illegal gambling.  There are some exceptions to this rule, notably Pull Tabs/Pickle Cards, Punch Boards, and Keno in authorized locations.  Additionally, state sanctioned lotteries like Powerball and MegaMillions are legal for Nebraskans over the age of 19.  Read More About Gambling Laws in Nebraska.

Sports Betting in Nebraska

Because the Nebraska law relies on the action involving an element of chance, there is some ambiguity about sports betting.  Wagers placed on games of skill are not illegal.  For example, paying an entry fee to a darts tournament or placing a fair wager on a game of pool that you are playing does not violate gambling laws because even through there is Consideration and Reward, the outcome is more based on skill than chance.

The question then becomes whether or not it is illegal gambling to place an educated wager on a sporting event that you are not participating in.  Unfortunately for sports fans in Nebraska, the law considers wagers on football, baseball, and basketball games to meet the Chance requirement.  Combined with the Consideration requirement (placing money for a bet), and the Reward requirement (gaining money for selecting the winning team), this completes the gambling triangle and becomes illegal gambling.

The state also notes that any form of bookmaking is illegal. The statute declares that:

“Bookmaking shall mean advancing gambling activity by unlawfully accepting bets from members of the public as a business upon the outcome of future contingent events”

It is illegal to make a sports bet, take sports bets, or facilitate sports betting.

Are March Madness Office Pools Illegal?

The bracket you fill out at work could be either legal or illegal based on entry requirement.  While wagering on brackets is illegal based on meeting the Chance requirement of gambling, they can cease to be illegal by removing the Consideration requirement.  That is, if you don’t have to pay (or provide any other item of value) to enter the bracket challenge, you are not participating in illegal gambling.

If your office conducts a March Madness pool that is free to enter, you are likely not violating the law.  You can even win a prize for having the winning bracket, as long as you did not provide anything of value to enter.

This is not universal permission to participate, and some occupations, students, and employers are barred from making any sports wagers at all.  You should check with your compliance or human resources office to ensure that you are allowed to participate in an NCAA basketball office pool while in your current status.

What are the penalties for Sports Gambling?

The penalties for illegal sports gambling can vary from a misdemeanor to a felony depending on the exact criminal charges that you are facing. Among the various criminal charge in Nebraska, some of the most common for betting on sports are:

• Promoting Gambling in the first degree
• Promoting Gambling in the second degree
• Promoting Gambling in the third degree

Promoting Gambling in the First Degree

According to Nebraska Revised Statute 28-1102, you can be found in violation of promoting gambling in the first degree by receiving or accepting basketball bets totaling $1,500 or more in one day. The charge of promoting gambling in the first degree is treated as a Class I misdemeanor for the first offense (up to 1 year imprisonment and/or fines of up to $1,000), a Class IV felony for the second offense (up to two years imprisonment and/or fines of up to $10,000), and a Class III felony for a third and all subsequent offenses (up to four years imprisonment and/or fines of up to $25,000).

Promoting Gambling in the Second Degree

According to Nebraska Revised Statute 28-1103, you can be found in violation of promoting gambling in the second degree if you receive or accept bets totaling less than $1,500 in any one day or you bet something of $500 or more in value with one or more persons in any one day. If you are charged with promoting gambling in the second degree, you could be facing a Class II misdemeanor punishable by up to six months imprisonment and/or fines of up to $1,000.

Promoting Gambling in the Third Degree

Promoting gambling in the third degree is limited to individuals who place small wagers, such as entering a small stakes NCAA tournament pool.  According to Nebraska Revised Statute 28-1104, promoting gambling in the third degree occurs when you bet something of $500 or less in value in one day.  Notably, there is no lower boundary to this law, so a bet of $1 would still constitute a violation.  Promoting gambling in the third degree is considered a Class IV misdemeanor, which is punishable by fines of up to $500.

Understanding Nebraska Gaming Laws

The state of Nebraska has strict and sometimes complicated regulations regarding what is considered legal vs. illegal gambling.  In this case, participation in a free March Madness office pool is generally considered to be legal, while placing any wager, no matter how small, can make the activity illegal. As seen in the 2018 Supreme Court case, these laws change frequently, so if you are interested in finding legal ways to gamble, you may need to check with the Nebraska Department of Revenue, Charitable Gaming Department if you have any questions. Any gambling you do should be conducted responsibly, and if you need help protecting your rights with respect to any gambling arrests, you can reach out to the experienced gambling lawyers at Berry Law.