How to capitalize on March Madness if you are a publicly traded company...
'March Madness' Puts Corporations at Risk of Legal Liability,
$500 Million Productivity Loss, Cautions Websense Inc.
Illegal Gambling, Online Office Pools and Addiction Pose Potential Threats to Organizations
SAN DIEGO, Mar. 12, 2002 - Employees are taking sports fanaticism and office pools to the Web faster than Dick Vitale can say, "March Madness, baby."
That's why this month's NCAA basketball tournament may drive companies mad as they face $504 million in lost productivity due to employees checking scores and viewing game Webcasts during work hours, according to Websense Inc. More importantly, a large portion of this amount is lost specifically to employees participating in online office pools, posing serious legal liabilities for corporations nationwide.
Approximately 14 million people visited sports Web sites during last year's March Madness season, according to PC Data Online. And according to sports gaming site Sandbox.com, approximately 3 million people worldwide entered online pools for the tourney. It's no surprise, then, that the office has become a popular arena for online sports betting frenzies. According to Vault.com, 75 percent of U.S. workers participate in office wagering. In addition, a Society for Human Resource Management (SHRM) report found that 30 percent of employees dive into NCAA office pools, specifically.
As a result, Websense today warned its 16,500 customer organizations - which includes more than half of the Fortune 500 - that online sports betting at work may create productivity drains and serious corporate legal liabilities. According to the FBI, March Madness generates nearly $3 billion in betting - most of it illegal. In fact, betting on college sports is legal only in Nevada, where it now brings in more than $600 million a year.
"Employers need to understand that the friendly Web-based office pool can place companies at risk of lawsuits or bad publicity," said Jennifer Kearns, a labor and employment partner at Brobeck, Phleger & Harrison LLP., a global law firm with offices in the United States, London, Oxford and Munich. "To reduce liability, businesses should enforce policies on workplace wagering with an accurate employee Internet management product."
Only 23 percent of companies have written policies regarding wagering, according to the SHRM survey, and another 11 percent said unwritten "understandings" guide their workplace rules on betting pools. But workplace wagers can quickly grow out of hand. For example, law enforcers recently arrested an AT&T middle manager for running an office football pool in which he allegedly took 10 percent of the $30,000 proceeds. The worker now faces up to five years in jail.
"Seemingly harmless office pools can introduce the lure and excitement of gambling to the five to eight percent of the population who cannot handle social gambling," said Dr. David Greenfield, founder and CEO of the Center for Internet Studies. "A company-sanctioned office pool may be the first experience a person has with gambling, and employers need to be cautious about potentially problematic activities."
Websense Enterprise EIM software helps businesses limit the legal liability associated with online office pools by enabling them to flexibly manage how employees use the Internet. Depending on their corporate cultures, organizations have a variety of management options, including accurate blocking of all access to sports betting sites or limiting online office pools to lunchtime, before or after work. Implementing Websense Enterprise prevents companies from having to terminate employees for inappropriate Web surfing - or worse, facing costly lawsuits. For more information about Websense Enterprise, visit www.websense.com.
About Websense Inc.
Websense Inc. (NASDAQ: WBSN) is the worldwide leader of employee Internet management (EIM) solutions. Websense Enterprise software enables businesses to manage how their employees use the Internet. This supports an organization's efforts to improve employee productivity, conserve network bandwidth and storage costs, and mitigate legal liability. Founded in 1994, the company serves more than 16,500 customers worldwide, ranging in size from 100-person firms to global-sized corporations. These include 261 of the Fortune 500, 75 of the Nikkei 225 and 50 of the FTSE 100, encompassing more than 11.2 million customer seats, pre-paid on a subscription basis.
Websense is listed on the year 2001 Software 500 ranking and has been honored by the Deloitte & Touche "Technology Fast 50" program. The company also has strategic technology relationships with CacheFlow (NASDAQ: CLFO), Check Point (NASDAQ: CHKP), Cisco (NASDAQ: CSCO), Inktomi, Microsoft (NASDAQ: MSFT), Network Appliance (NASDAQ: NTAP) and others. For more information, visit www.websense.com.
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Except for the historical information contained herein, this press release contains forward-looking statements, including statements containing the words "planned," "expects," "believes," "strategy," "opportunity," "anticipates" and similar words. Such forward-looking statements are subject to known and unknown risks, uncertainties or other factors that may cause the company's actual results to be materially different from historical results or any results expressed or implied by such forward-looking statements. We assume no obligation to update any forward-looking statements to reflect events or circumstances arising after the date hereof. The potential risks and uncertainties which could cause actual growth and results to differ materially include but are not limited to, customer acceptance of the company's services, products and fee structures, the success of the company's brand development efforts, the volatile and competitive nature of the Internet industry, and changes in domestic and international market conditions, and foreign exchange rates. Further information on the factors and risks that could affect Websense's business, financial condition and results of operations are included under the "Risk Factors" or "Factors Affecting our Operating Results" sections of Websense's public filings with the Securities and Exchange Commission, available at (http://www.sec.gov).
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Important note: It is not illegal to run an office betting pool... so long as you don't take a cut for your services. Here's the real story:
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Manager of office football pool is arrested on gambling charges
January 10, 2002
SOUTH BRUNSWICK, N.J. (AP) - A middle manager with AT&T was arrested for running an office football pool in which he took a 10 per cent cut of the action equal to nearly $3,000.
Wayne Davis, 34, of New York City was charged Jan. 4 with promoting gambling and could get up to five years in prison, though prosecutors said he is unlikely to do any jail time. "Look, I do not consider Wayne Davis to be Public Enemy No. 1," prosecutor Ron Kercado said Wednesday. "Nonetheless, he is in violation of the statute."
Kercado said Davis ran afoul of the law when he took a 10 per cent cut.
Davis's lawyer, John Murphy, said bettors were told the 10 per cent was meant to pay for a party for the group.
"He's nothing other than a guy in the office who was asked to draw the grid for a football pool," Murphy said.
New Jersey prosecutors regularly uncover illegal sports betting "wire rooms," and many have been linked to mobsters. But Kercado, a 27-year veteran, said Davis's case is the only one he can recall involving an office pool.
The Super Bowl pool was advertised in office e-mails, and a co-worker turned Davis in, authorities said.
Authorities said Davis had collected close to $30,000 in bets of $300 each. Davis's lawyer, however, said he had collected only a few bets, each of $150. He said Davis cancelled the pool when not enough people showed interest, and was returning the money when he was arrested.
Davis was back at work Thursday, AT&T spokesman Jeff Roberts said. He declined to say if the company has a policy regarding office pools.
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