Is March madness a good bet for office output?

At a downtown financial firm, the television is on and tuned in. Not to the war in Afghanistan, or to an address by Alan Greenspan, but to college basketball.

On the screen, there are Hoosiers and Sooners, upsets and college bands roiling far- off stadiums into a froth of emotion. But even here, as employees pore over portfolios with only one eye to spare for the action, there is March Madness.

At Robert Van Securities, as at thousands of companies nationwide, there is an office pool going, and each game is crucial in determining who built the perfect bracket – who came closest to choosing correctly every winner of the 64-game tournament. But even as the third week of games tip off today, the longstanding debate over the wisdom and ethics of office pools is flaring again.

To many, it is a well-meaning rite of corporate culture that binds hoopheads and novices alike. To the winner goes a modest amount of cash and fame to rival the lady who landed the big account or the guy who fixed the copy machine with his hole punch.

To others, though, it's a dangerous indulgence in the illegal world of sports gambling. Office pools can be someone's first taste of gambling culture, as well as a drain on productivity for three weeks, as participants research, refine, and fret over their picks.

It's an argument that's been sharpened by the recent rise of online gambling, making it easier for anyone to bet big money – or simply waste time – trolling the Web. How companies and businesses are responding, though, remains as varied and unpredictable as the tournament itself.

"On one hand, you look at office pools, and companies wonder: 'Are they OK? When does it cross the boundary?' " says John Challenger, an economic analyst in Chicago. "But office pools also give people a chance to connect, like water-cooler conversations. People need that for productivity."

The tradition of copying the spidery 65-team brackets from newspapers, distributing them to coworkers, and consulting Magic 8-Balls or bareheaded basketball guru Dick Vitale to choose the winners has been going on for years. But interest is growing.

Americans make roughly $3 billion in legal and illegal bets on the tournament, the FBI says, rivaling – and by some estimates now exceeding – the amount put on the Super Bowl. Throughout the United States, some 30 percent of companies have an office pool, according to a study by the Society for Human Resource Management (SHRM) in Alexandria, Va.

Some states allow office pools, saying they are legal so long as the organizer doesn't skim money off the top. Others, such as Massachusetts, have considered similar steps, arguing that current laws are unenforceable. Indeed, office pools have been a favorite pastime even on Capitol Hill.

"It was insane," says Frank Scanlan of SHRM, who used to work in the Senate. "There's a lot of stress in that job, and it was one way the offices could add a little levity."

Across the Appalachians, so many workers at a Midwest office of Nestlé enjoy the pool, that organizer Jim Santora is constantly asked if he's "doing it again."

He's got 55 people in this year's pool at $20 each. After each round he tabulates the results – one point for guessing the winner of a first-round game correctly, two points for a second-round game, and so on – then sends them out to all his players.

"I'm already out. I picked Cincinnati to win in one of my brackets," he laments, referring to a top team that was upset early. But he's willing to put in all the time to set up and calculate, he says, because he sees how much everyone enjoys it.

While Santora says he does most of his office-pool management on his own time, the broader question of whether pools hurt companies remains a point of contention. An employee at Robert van Securities here in Oakland, Calif., says his pool is small and doesn't interfere with work. "It's not a big deal," he says.

But he still speaks in hushed tones and asks that his name be withheld.

The SHRM study of workplace gambling suggests that many businesses are on his side of the argument. It found that more than half of all companies surveyed said office pools had no effect on productivity. Moreover, some 13 percent said it helped, while only 6 percent said it hurt.

"People need these things to bring them together," says Mr. Challenger.

Yet others say the distraction is significant. It might not be as great as the temptation to leave early to shop during the holidays, but "employers shouldn't just ignore it as unimportant," says Ted Ladd of the San Diego tech firm Websense, which has studied productivity lost to web surfing at work. He estimates losses from tournament-related web browsing at $504 million.

What's more, pools allow employees to participate in what is – in many states – illegal (though few people are arrested). Even if harmless bonding is the intent, critics say gambling comes at a great cost.

"On the surface, it doesn't look like a big deal," says Kevin O'Neill of the Council on Compulsive Gambling in Hamilton, N.J. "But underneath it sends a message that it's OK to gamble."