Inside PBS Blog

March Madness is just as crazy as ever. But this year, it's gotten a little dangerous for the thousands of NCAA basketball fans who use social networking sites like Facebook to participate in betting pools.

Facebook is one of several social networking sites that's facing federal scrutiny for allowing users to set up March Madness pools online. Even before the major games have begun, more than 20,000 NCAA pools are up and running on Facebook. Some let users bet money through the online pay service PayPal and tout potential payouts in the hundreds of dollars. The trouble is, anyone who hosts an online pool that collects a fee and awards prizes could face criminal charges and jail time if found guilty of operating an illegal online gambling operation.

"It is fair to say this raises questions," FBI spokesman Ross Rice told the Chicago Tribune. "There could be a violation if there's a payout and if the operators take a cut."

Internet gambling of any kind is illegal in the United States, although that hasn't stopped the online gaming trade to pull in an estimated $15 billion annually. And since the online March Madness pools are likely to have players from various states, they would also run afoul of laws restricting interstate wagering.

In an artfully bland statement, Facebook says it "does not condone the use of the site for any unlawful purposes, and users must agree as part of the Terms of Use not to conduct illegal activity."

But the company has made no move specifically to target and police the thousands of betting pools currently on its site. In fact, Facebook is even offering an application that lets users create their own private NCAA Tournament bracket competition with friends and compete against all of Facebook for a chance to win $10,000. Since the Facebook competition is free to enter, it is not considered to be gambling, although the bracket information could easily be repurposed for illegal online wagering.

Neither the FBI nor the U.S. attorney's office will say whether they plan to investigate NCAA pools on social networking sites. But it seems clear that the law is squarely on their side.

If the feds decide to move against the online March Madness pools, all bets are off.