As we enter football season, workforces should prepare for the estimated 25 million fantasy sports enthusiasts who spend at least an hour of work time managing their teams each week during the 13- to 17-week football season. (See more here.)  Distracted employees can reduce productivity, cause workplace accidents, and potentially impact the bottom line. As such, employers that are concerned with such productivity issues should put proper procedures in place to address these issues head on.

The first question of course, however, is are fantasy football leagues even legal? On the federal level, the Unlawful Internet Gambling Enforcement Act (“UIGEA”) provides that “no person engaged in the business of betting or wagering may knowingly accept” funds “in connection with the participation of another person in unlawful Internet gambling.” It does, however, exempt fantasy sports so long as the outcome of any contest reflects the relative knowledge or skill of the participants rather than chance, has an outcome that is determined predominantly by accumulated statistical results of sporting events, but not solely on a single performance of an individual athlete. In addition, for the exemption to apply, all prizes and awards must be established and made known before the start of the contest.

By contrast, it would appear that the popular NFL survivor (a/k/a suicide) pools in which participants must pick the winner of one NFL game each week (selecting a different team each week) is of questionable legality under the UIGEA because a participant’s winning or losing is based on the results of an actual NFL game. Employer-sponsored survivor pools, therefore, might technically be illegal under federal law under either the Interstate Wire Act of 1961 (if the pool is conducted across state lines or using the Internet) or the Professional and Amateur Sports Protection Act, which prohibits (other than in Nevada, Delaware, Oregon and Montana which already had legalized some form of sports betting) anyone from operating “a lottery, sweepstakes, or other betting, gambling, or wagering scheme…in which amateur or professional athletes participate.”

Whether fantasy football leagues are illegal under state law of course depends on the state. Although most states ban gambling, state gaming laws typically provide exceptions for “social” or “recreational” gambling. For the exception to apply, however, most states require the following:

  1. all of the money in a pool must go to a winner or a charitable organization (in other words, the “house” cannot receive any of the proceeds);
  2. there must be a maximum amount a person can wager (like a $20 entry fee); and,
  3. the pool must be limited to a certain number of people with pre-existing relationships (like co-workers).

So, fantasy football leagues that meet these requirements may be permissible under various state laws. Ohio’s Constitution bans gambling, except for lotteries, charitable bingo, casinos and racinos, raising the issue of whether fantasy football leagues are lawful under Ohio law. The question in Ohio likely hinges on whether winning the league is considered to be based on skill or chance. Interestingly, in Ohio, poker is statutorily considered to be a game of chance. Therefore, while employers probably don’t have to fear the FBI or state law enforcement breaking down the door and shutting down a typical workplace fantasy football league, they at least should be aware that if they choose to sponsor a league, they theoretically at least risk fines and criminal penalties.

Though there may be questions about the legality of fantasy football leagues, we all know that the leagues are extraordinarily popular with people in all walks of life. Of course, the safest and easiest approach for employers is to prohibit gambling, including fantasy football, in the workplace altogether and describe acceptable and prohibited behaviors. For example, an employer could draft a policy to prohibit use of company-owned computers and servers for gambling purposes or to identify work areas, such as offices, cafeterias, and parking lots, where gambling is prohibited.

Recognizing, however, that many employers will not want to interfere, employers who choose to allow workplace gambling should consider implementing a workplace gambling policy, or update their current one, to include the following:

  • The policy should describe the type of permitted gambling. If gambling is limited to fantasy football leagues, the policy should expressly say so. If, however, an employer wishes to also allow for March Madness brackets, OSCAR polls, Super Bowl pools, etc., the employer should take the time to make sure all allowed workplace gambling is included in the policy;
  • The policy should define if and how the employer’s property can be used to engage in workplace gambling. For example, if workplace televisions, copiers, computers, and email are not allowed to be used for such activities, the policy should expressly say so. If they are allowed, the policy should clearly communicate policies regarding employee breaks, email, and Internet use so employees know when this type of use is acceptable;
  • The policy should inform employees that the gambling activities cannot interfere with production or work;
  • The policy should outline the employer’s complaint procedure in the event there is an issue; and
  • The policy should outline the discipline that may be lodged against an employee in the event of a policy violation. 

As a bonus, employers that are particularly concerned about fantasy football leagues in the workplace should:

  1. require employees to complete their fantasy football activities on paper, instead of participating through online forums;
  2. prohibit employees in offices located across multiple states from participating in the same pool;
  3. prohibit employees from using company equipment, including email or copiers, to operate the league;
  4. limit entry fees; and,
  5. ensure all winnings go to the winner or a charitable organization.