Quick Hits

• Employers considering hosting NCAA bracket pools should be aware of state gambling laws, as the structure of these pools could potentially classify them as illegal gambling.
• Sweepstakes, as free-to-enter contests, may face fewer legal concerns, but businesses must still comply with specific state regulations that govern such promotional activities.

Millions of Americans will fill out brackets for the NCAA Division I Men’s and Women’s college basketball tournaments, often called “March Madness,” and enter bracket pools and contests. Some businesses may consider hosting a bracket pool of their own, and they may also want to use the contest to encourage certain behaviors, such as donations to a particular charity, overtime work, or collecting contact information for potential new customers or clients, by making such an action a requirement to enter the pool.

However, beyond employee distraction and productivity concerns, businesses operating bracket pools or similar contests/promotions may face potential legal risks under state gambling and sports betting laws and regulations. Here are some considerations for employers.

Gambling Laws

While some state-to-state variations exist, state laws generally prohibit or restrict gambling and other games, such as raffles, sweepstakes promotions, and contests. In general, states may find a game or contest to be illegal gambling when there is (1) consideration required to enter (Consideration), (2) an element of chance (Chance), and (3) something of value won (Prize or Reward).

Raffles

A raffle involves participants purchasing a ticket for a random draw, the winner receiving a prize or a portion of the proceeds from the ticket sales. The typical raffle is likely to be considered gambling in most states and potentially unlawful. There is consideration in the form of a fee to purchase a ticket, chance in that the winner is picked randomly, and a prize. Some states have exceptions for nonprofit organizations to use raffles to raise funds, but even then, many require the entity hosting the raffle to register with or obtain a permit from the state.

Sweepstakes

Sweepstakes are free-to-enter (“No Purchase Necessary”) games in which the winner is randomly selected. They are often used as promotional tools. Since sweepstakes are free-to-enter, they involve consideration and likely raise fewer concerns about illegal gambling. However, many states have specific regulations or other requirements regarding sweepstakes, with some requiring certain sweepstakes to be registered. 

Contests of Skill

A contest of skill is a game that depends on the participants’ skill, and an entry fee may be charged (e.g., baking contests, art contests, or three-on-three basketball tournaments) without raising concerns that it is a form of illegal gambling. However, most games involve elements of both skill and chance. The more the outcome depends upon an element of chance, the more likely the game will be considered a game of chance and involve gambling laws.

Most states follow a “predominate factor test” where a game will be considered a game of chance if the outcome is predominantly based on a random occurrence, even if skill can improve chances of winning. Other states follow the “material element test,” which examines whether the outcome depends on chance to a material degree. A minority of states follow the “any chance test,” a stricter standard that, as it says, considers a game to be a game of chance if it involves any chance whatsoever. 

Sports Betting

Since the Supreme Court of the United States struck down a federal prohibition on sports betting in 2018, legalization by states has spread rapidly across the country. Sports betting is now legal either online or in-person at casinos in thirty-nine states, and the American Gaming Association (AGA) estimates that as much as $3.1 billion will be wagered legally on the men’s and women’s college basketball tournaments in 2025. However, sports betting is still not legal in several states, including California and Texas; and, even in states where it is legal, there are strict regulations for where betting is legal and who can operate sports betting pools.

Bracket Pools

Men’s and women’s college basketball tournament contests or pools involve participants filling out the tournament brackets with projected winners. Typically, points are awarded for correct picks, with point amounts increasing each progressive tournament round. The winners are based on those who made the most correct picks or received the most points for correctly selecting game winners.

However, such pools may raise illegal gambling concerns, particularly if participants are required to pay a fee to enter. Moreover, even if a monetary fee is not charged to enter, requirements that participants take some action, such as donating to a charity to gain a “free” entry, could be interpreted as a form of consideration. Free-to-enter contests raise fewer concerns, but eliminating such a requirement to enter may undermine a purpose for hosting a game if one goal is to entice entrants to take a certain action.

Beyond the issue of consideration, bracket pools could be viewed as games of chance, even though research and knowledge of college basketball may improve chances of winning. Filling out a bracket requires selecting the outcome of sixty-three games (not including the “First Four”) in a tournament involving sixty-eight teams, meaning the outcome still depends on many factors outside participants’ control.

Next Steps

Before launching a March Madness bracket pool or similar contest, employers might want to consider the program’s structure, whether there is a cost for entry or if it qualifies as a contest of chance, review specific state laws where they operate, and consider the legal risks. Businesses may further want to consider the legal status and requirements for operating sports betting in their state. While there have been few major prosecutions or enforcement actions targeting office college basketball tournament bracket pools, the larger the scale of the contest and the higher the amount of the prize money could draw scrutiny from regulators.