Super Bowl XLV is coming up on February 6th, featuring the Green Bay Packers versus the Pittsburgh Steelers. Las Vegas odds favor the Packers by 3 points, but how many of us are going to make the trip to Vegas to bet on the big game? Most people are more likely to place their wagers in small-scale Super Bowl pools with friends or coworkers. But are these friendly wagers legal?
Social gambling exceptions usually require that participants have a bona fide social relationship outside of the gambling activities, and that all the proceeds of the gambling activities are distributed among the participants (so the organizer can’t take a cut). Some states also limit the amount that a gambler can win or lose.
However, in California, under California Penal Code Section 336.9, betting in an office football pool is an infraction punishable by a $250 fine. Texas Penal Code §47.02(a)(1) states that a person commits an offense if they make a “bet on the partial or final result of a game or contest or on the performance of a participant in a game or contest.”
Even if office football pools are legal in your state, you still have to watch out for the IRS. Gambling winnings, even for casual gamblers, are taxable and must be reported to the IRS. Interestingly, the IRS allows deductions for gambling losses up to the”amount of gambling income reported on your return.”
Small-scale football pools are rarely prosecuted even in states where they are technically illegal. But if you want to make sure your pool is truly legal, you may want to check your state’s statutes, your pool’s rules, and with your accountant. I think I’ll just be watching the big game with no money on the line.