March Madness is here. References to pools, brackets, and Cinderella are popping up during meetings and hallway conversations across the country. Chances are your employees are organizing co-worker NCAA Tournament pools, which typically involve predicting the outcome of tournament basketball games. Many office pools require a “buy in,” in which participants contribute a certain dollar amount to be divided among the victors at the end of the tournament.

As a savvy professional, you might wonder: are office pools legal in the Washington workplace?

The simple answer is no. Office pools with a monetary component are illegal. Gambling activities are illegal in Washington unless they are specifically authorized by state law. The state’s Gambling Act was passed in 1973 – several years before the rise of ESPN and extensive television coverage of the NCAA tournament. As a result, the only authorized sports pool in Washington is the 100 square sports pool board, which is limited to buy-in of $1 per square, must have 100 squares, must randomly assign game scores to each square, and may only be offered once per athletic event.

So will the vice squad be raiding the workplace if March Madness office pools continue? It’s not likely. Although NCAA pool participants could be subject to criminal charges, enforcement is unlikely if the monetary component is low. Unless your employees are high rollers, your workplace is unlikely to be featured as a crime scene in the local paper.

Successful pool participants should also remember that pool winnings are recognized as income for IRS reporting purposes. (Of course, the employer should not include prize money on the employee’s W-2.)

Putting aside the specter of prosecution, March Madness pools have been known to severely distract large portions of the employee population. With many games available via live webcast, corporate bandwidth capabilities may be strained as employees access streaming media.

At the same time, there are also benefits to the workplace. March Madness can increase worker morale, including positive interactions among employees as they discuss bracket selections and support their chosen teams. Some employers set up viewing parties in company break rooms to further engage employees.

So, as an employer, how do you balance the competing legal and employee relations issues? As a best practice, employers should not encourage or sponsor NCAA office pools where money changes hands. Office pools organized for bragging rights alone are the safest bet for Washington employers.