THE BLOG
03/20/2013 06:55 pm ET Updated May 20, 2013

Office Gambling Is Unethical

March Madness office pools involving cash are common, exciting, and potentially lucrative. But they can violate corporate policies and the law. Even where they are legal and not in violation of company protocol, however, they're ethically unintelligent, and we shouldn't participate in them.

Here's why.

The Fundamentals

Arguments about ethics are not entirely dependent on what the law, public policy, and corporate rules and regulations happen to be. An action can be legal but wrong, or it can be illegal but ethically required. One would like to believe that laws, regulations, and policies are always based on what is right, but we know that too often they are shaped by special interests, outdated beliefs, or pure and simple prejudice. For any law or policy, we can and should ask: "Is it right? Is it fair? Is it just?"

This is not a call to civil disobedience, however. The law is an important first step in deciding what we should do and why we should do it. For example, we are legally required to file a federal tax return each year, so anyone who wishes to be a citizen in good standing (or at least not to become a member of the prison population) wisely chooses to pay his or her taxes. For all of the problems in the legal system, it is hard to imagine that a civilized society could survive for long without laws and the serious consequences of failing to honor them.

When examining the propriety of office pools, it is thus important to look at the relevant law. Before doing so, I must emphasize that I am not an attorney, and nothing in this blog should be considered legal advice. Based on my research, however, I've discovered the legality of office pools in which employees bet cash on professional or college sports teams varies from state to state. In other words, in some states, office pools are illegal. Yes, it is true that these laws are rarely enforced, and yes, it makes sense for police to investigate homicides, bank robberies, sexual assaults, and other serious crimes before they pursue rumors that employees in the local coffee shop are betting on the Louisville Cardinals over the Kansas Jayhawks.

But before you conclude that office pools have few legal consequences, consider this: Some employees, including those at the management level, have been fired (and in at least one case, arrested) for participating in these games, on the grounds the practice was either illegal or in violation of company policy.

Because pool participants risk violating the law, the rules they have agreed to when they accepted their jobs, or both, the games are of questionable value. But this isn't the main reason we shouldn't place bets at work.

The High Cost of Low Living

My argument that it is wrong to participate in office pools is not based on the ethics of gambling as such. In the right social setting, gambling is a fun way to spend some time and, one hopes, not too much money (provided one does not have an addiction to gambling). When I'm in Las Vegas -- to give talks on, of all things, ethics -- I usually make time for the roulette tables. Yes, roulette has terrible odds, but I like the quiet atmosphere and the fact that there is absolutely no skill involved.

The office, however, simply isn't an appropriate place for gambling. It's called a workplace for a reason: It's the place where we're supposed to work. Things that interfere with doing our jobs well should be done before or after work. The same goes for talking politics at work , having sex, drinking single malt whisky, surfing the Web for bargains, or yakking with friends on our smartphones.

The issue isn't whether a particular activity is high- or lowbrow. If you're on the job, it's just as questionable to spend 45 minutes debating the Cartesian mind-body distinction as it is to play your favorite game app for that long. Whether either activity is your cup of tea is up to you; what isn't up for grabs is the propriety of doing either at work for a significant amount of time.

But what about the folks who just place their bets and get back to work--what's the problem there? Let's look at some frequently marshaled defenses of office pools and why these claims are mistaken.

Misguided Justifications

1. "Office pools build morale and camaraderie." Next to the thrill of winning, this is the most popular justification for office pools. "Companies are fighting like mad to bring people together, and office pools are a great way to stimulate watercooler conversations," said John Challenger, chief executive of Challenger Gray & Christmas, to The Business Review in Albany, N.Y., in 2002. But there are lots of stimulating things to talk about that just don't belong at work.

Besides, winning a sporting event is extremely important to some of us, and arguments about sports can out of hand. It's one thing to have a heated discussion about a project on which you and a colleague are working. It's quite another to have a shouting match about something that has nothing to do with one's job.

2. "It's harmless fun." At the beginning of March Madness, you kick in a few dollars, then follow your team over the coming weeks and months. Most people lose. A few win. What's the harm in that? Even if there happens to be no legal or policy issues at stake, the harm has to do with how stakeholders would view the business if on-the-job gambling activities were revealed. "If the stakes are high, the result of the pool could create disharmony in the workplace, and the problems could escalate," says employment law expert B. David Joffe of the law firm Bradley Arant Boult Cummings LLP.

If even a small percentage of customers, board members, and shareholders is likely to be troubled by the practice of on-site betting, that alone is sufficient cause for concern. Some stakeholders may have religious objections to it. Others might be concerned that employees will not give their full attention to their work. A third group may simply view gambling on the job as unseemly. Whatever the objections are, they deserve to be taken seriously.

3. "The CEO allows or encourages it." This is, quite frankly, a cop-out. The fact that the head of an organization sanctions a practice says little or nothing about whether the practice is justifiable or not. After all, Kenneth Lay and Jeffrey Skilling of Enron thought it was perfectly fine to play with employee pension funds as if they were Monopoly money, but no one today is saying that their leadership roles made what they did O.K. When David Frost asked former President Richard Nixon in 1977 if it is acceptable for a President to do something illegal, Nixon replied, "Well, when the President does it, that means that it is not illegal." Nixon was mistaken, and so is any corporate leader who believes that "if I say it's all right, then it must be all right."

Bottom line: The workplace shouldn't be a joyless Orwellian nightmare. Some of the best moments in our lives occur at work with close colleagues. But it's ethically intelligent to draw the line between fun that's appropriate in the workplace and good times that are better had elsewhere. Betting money on sports (or the Oscars, or anything else) falls in the latter category.

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A slightly different version of this article was published originally on Bloomberg Businessweek Online.

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