Lottery Pool Contract Questions

Questions that your lottery pool agreement should cover

A lottery pool contract sets down the rules that govern how the lottery pool is run, avoiding lottery pool problems like questions of fraud or lawsuits if you win.

But what should be in a lottery pool agreement? Here are some of the questions that you might want to answer in your contract.

When Will Your Lottery Pool Buy Tickets?

Lottery Tickets
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Some lottery pools buy tickets on a regular schedule -- once per week, or once per month, for example. Others buy every time a jackpot hits a certain value. And still other pools are a one-off deal; they form anew every time an interesting lottery drawing comes up.

Your lottery pool agreement should specify which drawing or drawings will be covered. It should include both the lottery games you play and the specific drawings you will participate in.

Who Is Participating In the Lottery Pool?

It's a very good idea to outline exactly who is participating in the lottery pool. Lawsuits have been brought against winners in the past ​when coworkers claimed that they were unfairly excluded from a jackpot.

Other questions your lottery pool agreement should cover include whether (and when) new people can join the pool and whether members can participate in some drawings while sitting out from others.

Can Members Buy More than One "Share" In the Drawing?

Some lottery pools allow members to put in more money to receive more shares in the prize if they win. For example, if a single ticket costs $1, a member can choose to throw $5 into the pot to receive 5 shares of the jackpot they could win.

Other lottery pools keep it simple by creating an even split; every member puts in the same amount of money, and every person receives the same amount in the case of a win.

Your lottery pool agreement should specify which variation your group wants to use.

How Are the Lottery Numbers Chosen?

When you buy lottery tickets, you have two options: let the computer choose your numbers randomly, or pick your own numbers. Which method will your lottery pool choose?

Simplest is to agree to let the numbers be chosen randomly.

If you do agree to let members choose their own numbers, you might also want to have your lottery pool agreement waive responsibility if the person buying the tickets accidentally chooses the wrong numbers. Imagine the bad feelings if the wrong numbers were purchased and the right ones won!

What Happens to the Small Prizes Your Lottery Pool Wins?

Everyone joins a lottery pool in the hopes of winning a jackpot. But oftentimes, the winning tickets only pay off a dollar or two. Your lottery pool rules should clearly state what happens to small prizes.

You can try to divvy up the prize among all the participants, no matter how small. Or you can put the small prizes toward another drawing. Or you can choose to donate small amounts to charity or to an office coffee fund ​or save up those small drawings for a group lunch.

If you do choose to put the smaller prizes toward the next lottery drawing, it makes sense to say that only people who chip in to participate in the next drawing get the benefit.

For example: Say that this week, your pool of 20 people wins $5. That $5 is put toward the next week's drawing. In the next week's drawing, only 15 people participate, each putting in a dollar to buy a $1 ticket. With this suggestion, only the 15 participating people have the chance to win in the new drawing. Although 20 tickets are actually purchased, the 15 will split the prize 15 ways, if they win.

Your lottery pool agreement should state not only what to do with small prizes, but what the cut-off is for a small prize. Is it $5? $20? $100? $1,000?

Can Lottery Pool Members Buy Tickets Privately?

Imagine that you're in a lottery pool, and you find out that the pool manager has won, but isn't sharing the funds. Why? Because the manager says that they bought the winning lottery ticket privately, not with the lottery pool's funds.

This scenario has happened in the past, resulting in hard feelings and bitterness. To avoid it, make sure your lottery pool rules state whether participants, especially the person in charge of buying tickets for the group, can purchase lottery tickets outside of the pool as well.

If your group does allow members to buy lottery tickets privately, be sure to make copies of the group's tickets and distribute them, to be very clear which tickets belong to the pool.

Will Your Group Take a Lump Sum or Annuity?

If your lottery pool does win a big jackpot, they'll have to decide whether to take a lump sum immediately or spread the winnings out over a number of years.

It's a good idea to lay this out in your lottery pool contract, so that you won't have any fighting over the answer if you actually win.

Will Your Lottery Pool Remain Anonymous If You Win?

Many states allow the winners to remain anonymous in case of a win. This helps the winners to avoid some of the negative fallout of winning the lottery, such as losing friends over jealousy, having reporters always at your front door, or being deluged with requests for handouts.

With a group winning, keeping your identity anonymous becomes more difficult, if a minority isn't on board. To help avoid bad feelings down the road, have everyone agree at the outset whether they'll stay anonymous or announce their win, assuming you're in a state which allows you to make the decision.

Finishing Up Your Lottery Pool Contract

This is not intended to be a comprehensive list of all of the questions you could possibly cover in a lottery pool agreement, but rather a place to start talking among your group. If members of your lottery pool have additional questions or concerns, you can include them as well.

To make your lottery pool agreement have legal weight, it's important to have everyone read it, make sure everyone understands it (don't let anyone just skim through it!), and have each member sign it. You can add weight to the contract by having an uninvolved third party witness the signatures (even more if the third party is a notary!)

There may be local and state laws that influence your lottery pool agreement. Your state, your company, or your region may prohibit lottery pools. Be sure to speak with your company's legal or HR department, or consult with an experienced lawyer, with any questions.

For some additional tips about writing a legally-binding written contract, read Essentials of Making a Business Contract from the Small Business Guide. While the article is intended to cover business agreements, many of the tips apply to lottery pool contracts.