Lottery Pool Contract Questions to Ask Before You Start

Questions that your lottery pool agreement should cover

Lottery pools are an effective way to boost your odds of winning the lottery without spending any additional money. They can also add fun to a workplace, bring neighbors closer together, and give members of any organization something to talk about. But all those benefits can be negated if you don't have a lottery pool contract.

A lottery pool contract doesn't have to be extremely formal. The idea is to make sure that everyone knows, understands, and agrees to the rules that govern how the lottery pool is run. This can help you avoid lottery pool problems ranging from hurt feelings to accusations of fraud or lawsuits.

Before you start writing any legal document, you want to gather the information you are going to need. 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 like once per week, or once per month. Others buy tickets 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 your pool will play and the specific drawings you will participate in.

Who Is Participating in the Lottery Pool?

Before you start to write your contract, you need to know exactly who is participating in the lottery pool. Should your group hit a jackpot, some people are going to really regret not participating, and regret make those people litigious.

Lawsuits have been brought against winners in the past when coworkers claimed that they were unfairly excluded from a jackpot. So you might want to outline who will be invited to play and how the lottery pool will be broadcast.

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 $2, a member can choose to throw $10 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 contract should specify which variation your group wants to use.

How Will the Lottery Numbers Be 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?

The simplest option is to agree to let the numbers be chosen randomly, but if you do agree to let members choose their own numbers, you need to specify how and by whom the numbers will be chosen.

If you go that route, you might also want to have your lottery pool contract 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 with Small Prizes Your Lottery Pool Wins?

Everyone joins a lottery pool in the hopes of winning a jackpot. But you are much more likely to win a smaller prize. Your lottery pool contract should clearly state what happens to low dollar-value prizes.

You can try to divvy up the prize among all the participants, no matter how small. Or you can put the money toward buying tickets for another drawing. Or you can choose to give small amounts to charity, or to an office coffee fund, or save them up 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 two dollars to buy a 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 any jackpot 15 ways.

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 hit a jackpot, 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 bitterness. To avoid it, make sure your lottery pool contract states 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 contract 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 (this is a good idea in any case).

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 there won't be any conflict over the answer if you actually win.

Will Your Lottery Pool Remain Anonymous If You Win?

Some states allow their lottery 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 jealous friends, having reporters knocking at your door for an interview, or being deluged with requests for handouts.

With a group prize, keeping your identity anonymous becomes difficult when some members aren't on board. To help avoid problems 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 issues that need to be covered in a lottery pool contract, but rather a way to start a conversation about your goals with your group. For legal advice, you should always consult a professional lawyer with familiarity with this kind of contract.

Once you have a legal document drafted, it's important to have everyone read it, make sure everyone understands it (don't let anyone just skim through it!), and then 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!) Your lottery pool manager should keep all of the copies. 

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 if you aren't sure if you are allowed to start a pool.

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.