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I am involved with my local 501(c)(3) kids’ sports league and want to do a 50/50 Super Bowl pool, where half the money goes to the winner and half the money goes to our local league and another charity.  Is this allowed?

Sports wagering is generally illegal in this country and, depending on your state or local law, your Super Bowl pool is probably illegal.  If you are part of a national league system, it might also be a violation of the national’s rules.

That doesn’t mean that pools aren’t run every year by a whole lot of charities, clubs, businesses and other groups.  They are so prevalent that some state attorneys general have announced that they won’t bother to prosecute if all of the bets are distributed to the winners, so that there is no “house” that skims a percentage of the total pool.  Whether or not these AGs would change their minds if a charity took a fully disclosed cut for fundraising purposes is an open question.

Assuming that it is illegal in your locality, a lawyer should not advise you to do it. Clients often disregard their lawyers’ advice, however.  The problem with doing something clearly illegal is that there is no defense if someone in authority decides to make an issue out of it.  And it doesn’t set a very good example for young athletes.

Comments from our Readers
I have seen an organization that offers non-profits the ability to raise funds by selling a digital entertainment package and "giving" everyone who purchases the package a random sweepstakes ticket.  Swepstakes winners are based on the total scores of specific NFL teams. Is this legal? --T.C. via e-mail

This is also a question of state law and it is impossible to give an accurate answer without knowing a lot more.  Normally, however, a "sweepstakes" is an event open to all without having to pay something to obtain a ticket.  If the tickets are available only to those who purchase the package in your situation, it would not usually be considered a sweepstakes, but would normally be considered a lottery.  In many states a true sweepstakes is legal because there is no requirement to pay to play, while a lottery is treated as gambling and often illegal. -- Don Kramer

12/29/2009