On May 14, the U.S. Supreme Court struck down a 25-year old federal law that largely outlawed sports betting outside Nevada.

In Murphy v. National Collegiate Athletic Association, the Supreme Court held the Professional and Amateur Sports Protection Act (PASPA) — which prohibited states from authorizing sports gambling — was unconstitutional. In ruling that the PASPA impermissibly violated New Jersey’s 10th Amendment Rights, the Supreme Court stated, “Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own.”

New Jersey was already betting on this ruling and is well-positioned to permit legalized sports wagering within weeks. At least one New Jersey racetrack is reportedly ready to open betting windows by early June, and casino operators in New Jersey already have much of the infrastructure in place for legalized sports gambling. Other state legislatures will likely follow suit and enact state legislation to govern sports gambling on a state-by-state basis. Some estimates predict as many as 32 states will offer sports betting within five years, with New Jersey, Mississippi and others beginning as soon as next month.

Texas law currently prohibits sports gambling, and early responses from top Texas officials suggest there is little interest in repealing this prohibition.

Betting in the Workplace?

What does this ruling mean for the workplace? Informal office wagering, such as Fantasy Football leagues and March Madness pools, is commonplace, although illegal in most states. According to a 2013 Vault Office Betting Survey, an estimated 70 percent of employees have participated in a betting pool in the workplace. An estimated 50 million Americans wager approximately $3 billion in office March Madness pools alone. More than 57 million people play fantasy sports, with the average player estimated to spend over $550 per year on league fees and other fantasy costs.

Even with the Supreme Court’s new ruling, sports wagering is still illegal in most states. Moreover, as states enact their own legislation governing sports betting, the applicable regulations and definitions governing establishments and gamblers will likely vary widely from state to state. Moreover, several federal laws potentially impact gambling in the workplace, including the Interstate Wire Act and The Racketeer Influenced and Corrupt Organizations Act. This patchwork of state and federal laws is confusing, and often contradictory, for employers.

How should employers respond? First, employers should be aware of the state laws governing sports gambling in each state of operation. Multi-state employers will be particularly challenged by the varied state laws to be enacted in the aftermath of the Supreme Court’s decision. As a best practice, employers should not officially sponsor fantasy sports league or tournament/game pools. Technology policies should define the scope of authorized use of company computers and prohibit use of company resources for sports gambling. Use of Internet firewalls can block fantasy sports or gambling sites.

Policies Must Be Applied Uniformly

Employers must be mindful that any policies must be applied uniformly to employees, e.g. if a white male employee is permitted to run his fantasy football league in the office, but a black female employee is disciplined for distributing a March Madness bracket, the female employee may point to her exclusion from workplace wagering as evidence of discrimination.

Currently, compulsive gambling is explicitly excluded from the definition of “disability” under the Americans with Disabilities Act. Good news for employers: you don’t have to let an employee run a fantasy football league out of his office to reasonably accommodate a gambling addiction.

Employees should be mindful of company policies regarding use of company computers or other devices for sports gambling. As with any excessive personal use of company resources, sports gambling — while legal in some states — can result in termination if done on company time using company computers.

Beware of Signs of Problem Gambling

Managers and employees alike should be aware of signs of problem gambling in the workplace: increased absenteeism, decreased productivity, requests for pay advances, borrowing money from co-workers, and preoccupation with gambling.

While nothing is a safe bet, being aware of the legal issues that arise with workplace sports gambling can increase an employer’s odds of maintaining productivity and reducing legal risk.

Clouse Brown PLLC helps employers, executives, and licensed professionals comply with state and federal laws affecting the workplace, including sports wagering and Internet/computer usage policies. For more information, contact Clouse Brown PLLC.

Alyson Brown

About Alyson Brown

Alyson Brown represents employers and executives in all facets of the employment relationship. Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization, Ms. Brown has tried cases in state and federal courts throughout Texas and in other states. She represents clients in a broad range of industries, including health care, banking, energy, high-tech, retail, manufacturing, hospitality, and nonprofit organizations. She can be reached at abrown@clousebrown.com.

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