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What Lottery Pools Are and How They Work

Boost Your Odds — Without Paying More Money

Have you ever seen one of those mega lottery jackpots giving away hundreds of millions of dollars and thought, “I’d be happy to win just a fraction of that amount?” If so, a lottery pool might be for you.

What Are Lottery Pools?

Lottery pools let you get better odds of winning a lottery without paying more money for tickets. A group of people pools their money together to buy lottery tickets. If any of the tickets they buy wins, they then split the pot. Sometimes, the pool members agree to let smaller prizes “roll over” by purchasing more tickets with them, instead of cashing out.

The result is a trade-off: The odds of winning rise, but the payout drops.

How Lottery Pools Work

Here’s an example: your office lottery pool has 50 members. Each of your coworkers contributes a dollar into the pool. The lottery pool manager then buys 50 lottery tickets at $1 apiece and holds them safely until the lottery drawing.

Now, say that lottery pool was very lucky and won a $50 million lottery jackpot. Each of the coworkers who participated will receive a million dollars (before taxes, of course). For the $1 buy-in, the lottery pool participants had 50 times the chance of winning for 1/50th of the total prize value.

Some lottery pools are more complicated. For example, some let people buy more “shares” of the pool by contributing more money. If one of the participants in the example above had contributed $5 instead of $1, and the lottery pool manager had used the extra money to buy 55 tickets instead of 50, that big spender would be eligible to receive 5/55ths of the jackpot instead of 1/50th.

What Do Lottery Pools Do With Smaller Prizes?

Of course, it’s much easier to win $5 in a lottery than $50 million, and $5 divided by 50. well, it’s hardly even worth doing the division to split the money among the lottery pool participants. So what do lottery pools do with small prizes?

There are two options, depending on the size of the prize. The lottery pool can either divide the small sum between the participants or, if the group buys lottery tickets regularly, they can choose to put the prize amount toward buying more tickets for the next lottery drawing.

For example, if the pool hit a $10 prize, instead of giving $0.20 to each participant, they could agree to buy $10 worth of additional tickets in the next drawing.

Do Lottery Pools Work?

The chances of winning the lottery are very small no matter what you do, and there’s no guarantee that you’ll hit a jackpot. But lottery pools do let you boost your chances without increasing your risk of losing your investment.

Lottery pools have won big jackpots in the past. For example:

  • A 49-person office lottery pool at SEPTA, a Pennsylvania transit agency, won a Powerball jackpot for $172.7 million in April of 2012.  
  • A 7-person office lottery pool at New York State’s Division of Housing and Community Renewal in Albany split a $319 million Mega Millions jackpot in March of 2011.  
  • An office lottery pool at Quaker Oats that shared a $241 million Powerball jackpot among 20 employees. A few months later, they won a $10,000+ prize as well.  
  • After 20 years of trying, the Mountaineer 26 lottery pool scored a million-dollar jackpot.  
  • In July of 2018, 11 coworkers decided at the last minute to form a pool to buy Mega Millions tickets. They won $543 million.  
  • In August of 2018, a group of 11 officemates hit a $4.9 million prize. They’d been chipping in $3 a week for four years!  

Who Participates in Lottery Pools?

Office lottery pools are popular because it’s easy to get a big group of people to chip in a few bucks toward a chance of winning. A pool also encourages people to get to know one another across departments and can boost morale.

But any group of people can create their own lottery pool. Groups of friends or relatives, your local sweepstakes club, neighbors in an apartment complex, or members of any other social group might be interested in participating.

Do Lottery Pools Ever Cause Problems?

Unfortunately, yes. With a lot of money on the line, people can act badly and try to cheat fellow players. Lottery pool members have been sued for various reasons, including conflicts over who participated in the pool, whether tickets were purchased privately or for the group, whether the proper numbers were played, and more.

There have also been cases where unscrupulous people collected money for lottery pools then pocketed the cash without ever buying the tickets. These problems can be avoided with a little preparation.

Are Lottery Pools Legal?

Depending on your location, lottery pools may be restricted or illegal, so it’s important to check before you decide to start one. Lottery pools are a form of gambling. In the United States, there are no federal laws prohibiting gambling, but individual states can, and do, regulate it. If gambling is prohibited in your state, lottery pools are as well.

If you’re wondering whether playing the lottery is legal in your state, check whether your state runs a lottery. If your state has no lottery, it’s a strong indication that gambling might be illegal.

You can also search for your state’s gambling laws. Findlaw.com has a list of gambling and lottery laws by state which could help.

Does Your Workplace Prohibit Lottery Pools?

Aside from laws prohibiting gambling, you also want to be sure that your workplace does not prohibit lottery pools during work hours. In some companies, gambling on the job is a fireable offense.

Before you start an office lottery pool, check your business’ code of conduct or employee handbook to see if there’s a no-gambling policy. If you’re still not sure, check with your company’s human resources department.

If you are a government employee or a civilian working at a government facility, you face additional restrictions. Lottery pools that take place “on Government-owned or leased property or on duty for the Government” are prohibited, according to Cornell Law School.

Summary

Before you get started, check with local laws and with your company’s human resources department (if you’re starting an office lottery pool) to ensure you are not breaking any laws or guidelines that could turn a fun lottery pool into a serious problem. If you decide to go ahead with your pool, make sure you have a good contract to protect yourself and your coworkers. Good luck!

Thinking of joining a lottery pool? Here's everything you need to know including how lotto pools work and how to avoid problems and misunderstandings.

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 raise morale in the workplace, bring neighbors closer together, and give members of an organization something to talk about. But there is also the potential for a lottery pool to cause hard feelings. To avoid this, you need a lottery pool contract.

A lottery pool contract simply outlines the way that the pool will be run, so that everyone is on the same page and knows what to expect.

A lottery pool contract doesn’t have to be extremely formal. The idea is to make sure that everyone knows, understands, and agrees to a set of rules. This can help you avoid lottery pool problems ranging from hurt feelings to 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.

Who Will Be Your Lottery Pool Manager?

It’s always a good idea to have one person who is in charge of the lottery pool. This person doesn’t have to do all of the work; they can delegate, too. But they are the point of contact if anyone has questions or concerns. They also make sure that every participant has a copy of the lottery pool contract, they keep track of the signed copies, and they make decisions like where to store the tickets after they have been purchased or who should be the one to buy the tickets this week.

When Will Your Lottery Pool Buy Tickets?

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 other pools are valid only for a single drawing, then form anew every time an interesting lottery drawing (like a big jackpot prize) 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 Will Participate in the Lottery Pool?

Before you start to write your contract, you need to know who the pool members will be. Should your group hit a jackpot, some people are going to regret not participating, and regret make those people litigious.

Coworkers have sued winners because they claimed that they were unfairly excluded from participating in a pool that resulted in a jackpot. So you should be sure to outline who will be invited to play and how people can find out about the lottery pool.

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 passing on 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 win. The pool would then buy five extra tickets, raising everyone’s odds of winning.

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 outline how the jackpot will be split.

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 luncheon.

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. It’s a good idea to do this in any case.

Will Your Group Take a Lump Sum or Annuity?

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

It’s a good idea to make the decision ahead of time and spell it out in your lottery pool contract to avoid 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 if 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.

A lottery pool contract is a set of rules that participants agree to before buying tickets. See questions your pool should answer in their contract. ]]>