Organize a Lottery Pool

Organizing a lottery pool is easy, but it's got to be customized based on who's involved, the regularity of play, the rules of the organization executing the lottery, federal and state tax laws, etc.

Steps

  1. Propose general rules of play to the potential participants. Modify and recirculate until you have agreement on these.
  2. Include provisions for adding & deleting members, use names of the people added with a new contract each time a member is added or deleted.
  3. Fix the amount for buy-in. No one should have a greater share just because they had more cash in their wallet that day.
  4. Designate an administrator for the "pool" (a.k.a., group, syndicate)
  5. Designate person(s) responsible for collecting money
  6. State clearly who can purchase tickets for the group and who will be the primary person responsible for this.
  7. Require contact information be provided for every participant.
  8. Spell out how you will claim winnings. Be explicit about whether this is uniform for all winnings or varies by amount or taxable impact.
  9. Get it in writing. Everyone who agrees to participate should sign your rules document. This becomes your contract.
  10. Provide copies of the winning tickets. Only scan or photocopy winning tickets. Retain the original, non-winning tickets for a specified length of time for audit purposes. Allow any member to the pool's ticket purchases by seeing the original, non-winning tickets along with the photocopied winning tickets. This will save the pool admin a lot of time and unnecessary photocopying.
  11. Keep the names out of public record whenever possible. If you're planning to claim a jackpot, establish a blind trust or similar vehicle, then claim the winnings in the name of the trust. (This should be stated in the claims section of your rules.)

Keep Audits Easy

  1. Provide copies of the winning tickets. Only scan or photocopy winning tickets. Retain the original, non-winning tickets for a specified length of time for audit purposes. Allow any member to the pool's ticket purchases by seeing the original, non-winning tickets along with the photocopied winning tickets. This will save the pool admin a lot of time and unnecessary photocopying.



Tips

  • Consider using a custom contract, such as lottery pool agreements found on the web.
  • Exclude anyone who can't or won't settle on the rules.
  • It helps to set a finite period for play (once a month, every "x" number of drawings, etc.). This should correspond with when you expect people to deposit their money, and makes a nice cutoff for changes in membership.
  • Offer a provision in your claim rules to provide an accountant, financial planner, lawyer, etc., to group members that are paid from the winnings prior to distribution. Individuals can always contract these services on their own, but you'd be surprised how many people won't know how to handle the money. Consider it a public service clause that you can use yourself.
  • Membership adds should be up to a group vote. Otherwise, the administrator can arbitrarily determine how many people with whom you split your winnings.
  • Trusts or other claims vehicles can usually be crafted with language regarding dispensation of assets. When you're putting this together, get as much input from your fellow winners as possible. Some individuals may have special situations (alimony, pending divorce, personal liens, or other legal circumstances) which could cause them problems if they just took a straight cut. Grant them the opportunity to designate an alternate beneficiary, or whatever they need, before finalizing the legal entity. *** Don't forget to specify the lawyer is paid from the winnings BEFORE they're split. ***

Warnings

  • Make it clear in the rules that whomever is buying the tickets is NOT to buy their own for the same lottery game. It's OK if they want to play in other lotteries, or when they're not buying for the pool. This avoids a lot of domain issues in the event someone wins big separately from the pool.
  • Check to make sure lottery pools are legal in your state and within your workplace policies.

Related Articles

Sources and Citations

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