In nine days, the NCAA will release its bracket for the 2015 men's basketball tournament: one of the most watched sporting events of the year. For marketers, the NCAA Tournament presents the ideal opportunity to drive website traffic through promotions related to picking individual game winners. However, it is also imperative that marketers running NCAA Tournament promotions understand the legal implications of different contest formats.
In short, marketers that are planning to drive website traffic through traditional NCAA Tournament bracket contests need to make these contests free to enter. In addition, entrants cannot be required to do anything arduous in exchange for the opportunity to enter. This conclusion is based on the amalgamation of numerous federal and state laws.
First, the Interstate Wire Act of 1961 disallows individuals from “engaging in the business of betting or wagering [through the knowing use of] a wire communication for the transmission in interstate or foreign commerce.” Any chance-based contest with most an entry fee and a prize would constitute "wagering." Meanwhile, any contest that takes place over the Internet entails a "wire communication." Thus, to comply with the Interstate Wire Act, NCAA Tournament pick'em contests, which are generally perceived as contests involving substantial chance, must be free to enter.
In addition, the Professional and Amateur Sports Protection Act ("PASPA") makes it illegal for any private person to operate a wagering scheme based on a competitive game in which “professional or amateur athletes participate" irrespective of whether the outcome be based on skill or chance. Although PASPA includes a grandfather clause that exempts previously authorized government-sponsored sports gambling in four different states, PASPA does not include any carve-outs for business promotions that would otherwise fall within the definition of "wagering." Thus, March Madness pools with both entry fees and prizes would similarly violate PASPA.
Finally, the Uniform Internet Gambling Enforcement Act makes it illegal for those "engaged in the business of betting or wagering" to “knowingly accept” funds in connection with the participation of another person in unlawful Internet gambling. Although the UIGEA offers a special carve-out provision for certain forms of “fantasy sports,” this carve-out only applies to games that are skill-based, where winning outcomes are not based on the final score of actual game results and not to traditional March Madness bracket pools. Thus, traditional March Madness bracket pools would not fall under this exemption.
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Marc Edelman is an Associate Professor of Law at the City University of New York’s Baruch College, Zicklin School of Business, where he published “A Short Treatise on Fantasy Sports and the Law.” He also is an attorney and consultant for numerous companies in the sports, online gaming, and social media industries, and has consulted specifically on legal March Madness promotions. Nothing contained in this article should be construed as legal advice.
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