Question: I recently had an employee ask for permission to host a fantasy football league in the office.  I enjoy fantasy sports and think an office pool could be a nice (pardon the pun) team building activity.  But, I am concerned about allowing something that could be viewed as gambling.  Is an office pool legal?  Are there other concerns or best practices I should consider?
Answer: Allowing for a fantasy football pool in the office may seem like a harmless morale boost (and in fact, studies have found that certain types of office pools can boost morale), but it may present legal and practical challenges for your business.
In California, gambling for money at work is illegal.  Until 2009 even a low-stakes office pool could theoretically result in a misdemeanor.  However, in 2009 the law was revised making most pools an infraction (like a parking ticket, with a $250 fine), so long as the payout is under $2,500 and a few other conditions are met.
Unfortunately, this means that your employee’s suggested office pool is problematic.  In creating the “infraction only” exception the legislature made clear it does not consider small scale pools a problem, and I have found no cases of enforcement occurring except in circumstances that would not have qualified for the exception anyway (such as where the pool administrator is taking a large cut).
That said, condoning any illegal activity at work can lead to significant issues for employers.  For example, while gambling addiction itself is not a protected classification in California – symptoms such as depression are protected and office pools may present dangers for employees facing compulsive gambling issues.  Religious harassment allegations are also a risk if players abstaining for religious reasons are pressured to participate.  Indeed, significant concerns come less from the potential illegality itself, and more from the non-participants.  Whistleblowers reporting illegal activity are protected from retaliation, including those reporting illegal gambling.
It may be legal to institute an office pool with no entry fee or prize of any value (including money, items, perks, or anything of material value).   However, as discussed above, there are numerous issues to consider which potentially outweigh any possible morale gains.
As a practical matter it’s probably impossible to entirely prevent gambling or fantasy sports in the workplace.  If nothing else, employees have rest breaks and smart phones.  Yet, even if the potential for workplace gambling cannot be entirely prevented, cautious employers would still be well served to institute policies forbidding gambling in the workplace, during work time, using work resources (including computers and email), and any involvement with online daily fantasy sports betting (at least until pending legislation clarifies the legality of such websites).
On the other hand, if you do decide to attempt to create an office pool that falls outside of the definition of “gambling” be sure to carefully review California gambling law and implement best practices including describing what types of pools are permitted, describing whether, when and how company property may be used, and specifying that pools cannot be done during work time and cannot interfere with productive work time.  Any policy should also include a complaint reporting procedure, and specify the discipline that applies for violations.