Will Your NCAA Tournament Bracket Be Legal in the State of Michigan?
Saying that the NCAA Tournament and bracket pools do not go together is like saying that I-75 and "10mph over the posted speed limit" do not go together. We know it happens. Law enforcement knows it is the norm. We may or may not realize it stretches legal limits. We do it anyway.
The recent hype over the legality of daily fantasy sports is directing a lot of attention toward relevant state and federal law. With respect to Michigan's point of view on the matter, it gets a little risque. I have written on Michigan's stance on daily fantasy sports as of 2015, but making brackets is a different type of simulation that is also forced to live under an outdated rule.
How does Michigan law view your March Madness tourney bracket?
Section 301, Accepting money or valuable thing contingent on uncertain event, states, "Any person or his or her agent or employee who, directly or indirectly, takes, receives, or accepts from any person any money or valuable thing with the agreement, understanding or allegation that any money or valuable thing will be paid or delivered to any person where the payment or delivery is alleged to be or will be contingent upon the result of any race, contest, or game or upon the happening of any event not known by the parties to be certain, is guilty of a misdemeanor punishable by imprisonment for not more than 1 year or a fine of not more than $1,000.00."
This chunk of law is a lot to take in, but we can break it down rather easily to see the real elements of what constitutes illegal gambling according to the Michigan penal code and the folly in this context.
1. Consideration - "directly or indirectly, takes, receives, or accepts from any person any money or valuable thing"
In this context, consideration is ordinarily the entry fee you pay for your pool or league. This makes sense because if you pay for something, that quid-pro-quo or, in other words, that act of exchanging money for something else, is direct evidence of your consideration. Michigan law does not take the traditional view of what constitutes "consideration," however. It takes a stricter view that "adopts the true contract-law meaning of the word 'consideration." Yes, there is a meaning, and then there is a "true" meaning.
Contract law says consideration may be direct or indirect, and that is what Michigan follows in determining illegal gambling. A Michigan court would say that this gambling element is met where "the contest participant expends substantial time or effort that benefits the contest's host in some way." This dates back to a case in Michigan from 1936. In Sproat-Temple Theater Co. v. Colonial Theatrical Enters. (267 N.W. 602, 603), the court found indirect consideration that satisfied this gambling element where patrons attended a "lottery" with a cash prize at a movie theater and attendance was free of monetary cost.
Therefore, it does not matter whether you pay an entry fee for your NCAA Tournament bracket pool with your co-workers or whether you play for free to win Warren Buffett's $1 million prize despite the near-impossible odds. Michigan says that when you are induced to do something you would not otherwise do, like fill out a NCAA Tournament bracket in hopes of reaping a reward, that is consideration.
2. Reward - "with the agreement, understanding or allegation that any money or valuable thing will be paid or delivered to any person"
The reward here is the prize at the end of the NCAA Tournament according to your pool or league's rules. It can be $5, it could be $500, or it could be $5,000 or more. So long as it is tangible, that is enough to satisfy the second element in an illegal gambling case here.
3. Chance - "contingent upon the result of any race, contest, or game or upon the happening of any event not known by the parties to be certain"
First, let us all agree that filling out a relatively successful NCAA Tournament bracket involves some degree of chance. Awesome! Moving on...
Michigan is one of the handful of states where participating in variations of simulated sports games comes with heightened liability risk. Some states have the "any chance test." With that test, results based on even the slightest amount of chance are illegal. The good news is that Michigan is not one of those highest risk states, necessarily, like Tennessee, Iowa, or Arkansas, but Michigan does not allude to what ratio of skill-to-chance is required for gambling to be legal as opposed to illegal. In other states using a "predominant purpose test", only results that rely mostly on chance rather than skill are illegal (e.g., a game involving 60% chance and 40% skill could be illegal, but swapping the ratios could create a legal game).
The sports bracket pool situation is similar to fantasy sports. Although Michigan law does not expressly rule out daily fantasy sports, it is at heightened risk in the state based on section 301's language. "Any event not known by the parties to be certain" can be construed to mean any events involving chance, and the Michigan Gaming Control Board believes daily fantasy sports are illegal, but it is up to the attorney general to prosecute daily fantasy sports matters. The board states on its website that "[i]f the lottery or gaming is part of the business and cash or other payoffs to winners are regularly occurring, the activity is most likely illegal." NCAA Tournament bracket pools would fall within that scope, but prosecutors have wisely chosen not to go after the average bracket-filling population.
Under Michigan law, if your NCAA Tournament bracket pool offers a reward, it is illegal gambling regardless of whether it is organized online or on paper since it involves some chance. The Michigan Department of Health and Human Services warns against the risks involved with sports gambling on its website. Among other things, it states:
"It doesn't matter whether the pool is organized by: people at work, family, friends, or through the Internet - It's all gambling...
"Since sports betting is so widespread and often organized by non-professional gamblers, it's sometimes looked at differently from other forms of gambling like casinos and lotteries. But the truth is, there's very little difference between putting your money on a deck of cards or a roulette wheel and going in on a basketball pool. Remember, the fact that there are no slot machines, cards, or dice doesn't make sports betting any less risky than other forms of gambling.
"In many cases sports gambling is illegal (not legal). Participating in betting pools based on sports, or anything else, is illegal. It's also illegal to allow others to organize or participate in betting pools on your property. So if you allow others to gamble in your home or place of business, you're breaking the law, even if you're not participating in the gambling."
Will Michigan enforce this law during March Madness? No, unless your pool gets ridiculously large like this guy's pool to where state officials become suspicious of banking activity. It would be near impossible to regulate activity, especially the ol' pencil and paper routine among a smaller group with an affordable fee to play. Nonetheless, it would be more realistic for prosecutors to target pool administrators. Michigan's gaming laws are old - like really old - considering this law was enacted in 2003 and its history dates back to 1931. The Internet has changed societal views on illegal gambling, and that is not just the millennial in me talking. Michigan law enforcement has bigger, badder, more dangerous, and more relevant crimes to tackle than the general population's March Madness brackets.
Furthermore, one could argue that NCAA Tournament bracket pools violate federal law. It is different from traditional season-long fantasy sports in that there is no federal exemption as support that it is legal. More importantly, I am not even going to get into the fact that we are talking about betting on college athletics. I shall save that article for another day.
Remember that participating in a NCAA Tournament pool is like speeding down I-75 - going 10mph over the speed limit is typically acceptable (unless you are driving in the Ohio stretch in a car decked out with University of Michigan auto accessories), but once you start going past that acceptable range, you might get caught. Moreover, we could use this as evidence of the law's impractical, archaic stance on sports gambling and also as support in a unified push to clarify and modernize sports gambling laws.