NEW YORK -- With the Super Bowl just completed and the NCAA basketball tournament not far off, employees of small businesses across the nation are likely to be a little sidetracked, either talking about the games or setting up office pools to bet on who's going to win.

Company owners need to be sure the work gets done, but they might want also want to cut their employees a little slack -- these sporting events can be a morale booster.

"Why not try to maximize the experience and try to capture some of the excitement," said Rob Wilson, president of Employco, a Chicago-based human resources firm. "We don't see the downside," he said.

Still, there are issues surrounding Super Bowl fever and March Madness that owners need to be aware of. First, talking about and betting on these events do take employees away from their work -- the consulting firm Challenger, Gray & Christmas Inc. had estimated that nationwide, $810 million in productivity would be lost in the week before the game.

There are also legal pitfalls surrounding those NCAA brackets that people love to buy into or fill out -- in most places this is illegal gambling, even if the bets are only $5, and theoretically that could cause problems for a business owner.

But labor lawyers say work time lost to sports talk and betting is the biggest issue for most companies.

"Lost productivity is the main problem with any sort of gambling situation in the workplace," said Rich Meneghello, a partner with the labor law firm Fisher & Phillips in Portland, Ore.

With the Super Bowl, there's plenty of talking about the game. The NCAA adds another dimension -- the first rounds of the tournament include games that are televised during working hours.

Trying to stop the chatter and the betting might hurt your relationship with your employees. Letting them have some fun, on the other hand, can foster a better working atmosphere.

"Employees are going to continue to take part in these activities notwithstanding what an employer does to stop it," said Tony Campiti, a partner in the Dallas office of the law firm Thompson & Knight. "Some [owners] do take the position that 'I'm going to turn it into a positive situation.' "

The increased use of the Internet can create more problems around major sporting events, because some employees may be spending time visiting gambling sites. Software including an Internet browser's history function allows an employer to keep tabs on what workers are doing. It's possible to block workers from using specific sites.

Mr. Campiti said a lot of employers don't want to be heavy-handed with their workers, but he said they also need to let employees know that they can't abuse the privilege of using the Internet.

Workers also need to know the consequences of such abuse.

Allowing betting can open up a small-business owner to legal problems, attorneys said. First, even if the laws against office pools are hardly ever enforced, they are usually illegal.

Moreover, allowing -- in effect, condoning -- betting or gambling at work could conflict with a company's code of ethics. Mr. Campiti noted that a company that allows gambling might find it harder to enforce other ethical issues.

Owners -- and their managers -- also should think twice before running a pool themselves, attorneys say. Other issues include theft -- what happens if someone makes off with the pool money?

Some companies deal with the legal issues by administering the pools but removing all monetary winnings. Mr. Wilson said his company runs no-cost pools, and the winners get nonmonetary prizes.

Jordan Chanofsky, CEO of Fusion Public Relations in New York, encourages not just Super Bowl and NCAA betting in his company, but also holds periodic poker nights as part of a year-round program of events to build morale and teamwork. He said his company also gives out prizes such as gift cards and lunches.