... [+]With the month of March upon us, one of America’s favorite pastimes will soon return in the form of NCAA men’s basketball tournament pools. However, whereas historically most contestants have joined NCAA tournament pools by personally handing money to coworkers, this year the work-from-home environment will lead more people than ever to pay for these contests through online payment processors.
While it would be silly to think that the U.S. Department of Justice has much interest in trying to prosecute small, social betting activities, larger March Madness contests that are operated for profit absent a state license could present a very different issue—especially where these illegal contests siphon money away from licensed sports gambling providers that provide tax revenue to federal and state governments.
Not only does operating an illegal, online March Madness pool reasonably cost the government tax dollars—because winners would not likely receive 1099s or declare their winnings on their tax returns—but the federal governmentto bring criminal charges against both contest operators and payment processors under federal gambling laws.
Further, the Unlawful Internet Gambling Enforcement Act of 2006 allows the federal government to go after financial companies that process payments of illegal betting contests.
There is no reason to believe that stopping illegal forms of sports gambling on the internet is particularly high on the Joe Biden administration’s agenda. However, as more states begin legalizing and licensing sports betting operators, the legal and licensed operators are likely to use efforts to detect unlicensed, interstate competitors and encourage their shutdown, if not criminal prosecution. Given as much, it will be interesting to see how the federal government responds, if at all.
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