Do you remember about a year or two back there was a lot of media attention around a group of A&W employees out on the West coast? So far as I remember it (I wasn’t following the story by any means, I was subjected to it by the major media outlets) the group regularily played one of the major lotteries together, but in one instance a few people did not play (for whatever reason). That happened to be the time that the group won the jackpot. Suddenly the people that didn’t play that week wanted their cut, the people that won said they had no cut, and then the lawyers got involved. Ugly. I don’t even know how it ended (and am not curious enough to bother Googling it to find out).
About the same time, my extended family and I entered into a lottery pool. I eventually took over the administration of it (a job I’m still doing well over a year later) and wondered if there was some way to avoid what happened to those A&W employees. With family it could either be a lot less messy, or a lot more messy if the same situation happened. I decided to come up with an equitable way of playing as a group that would not exclude someone simply because they couldn’t cough up $2 one week.
The way most lottery pools that I’ve been involved with work is simple: everyone pays in a certain dollar amount, and any winnings are either re-invested into more tickets or split equally among the people who have bought in. It works well enough until you get a situation like the one above. The problem with that system is that it ignores the history of the group; people may have been playing for years together, but if they ever miss a week, they’re SOL if the group wins.
The method I’m now using fully tracks the history of the group, and uses the accumulated information to determine how to split any winnings. Instead of just splitting winnings based on if you’ve paid in or not, winnings are split based on the historical total contribution you’ve made to the group, based on the historical total contribution of the entire group.
There’s no getting around doing some math to show an example, so let’s dive in. Three people, each paying $2 per week, play for 3 weeks. Each person has paid $2 x 3 = $6, making the total contribution $18. Say in the next week one of those people is recovering from the Bacardi flu and can’t play, so only $2 x 2 = $4 is added tot the total historical contribution for $22. They win that week! Two of the people have contributed $2 x 4 = $8, and one has contributed $2 x 3 = $6. So the winning will be divided based on 8/22 (36.4%) for the two people and 6/22 (27.2%) for the one that missed a week. The one who missed a week gets less, but still gets something.
This also allows for some flexibility; if you don’t WANT to play one week (because the jackpot is a paltry $2.5M, and you can’t retire off your split of that), you don’t have to. Your split ratio will go down some, but not much. Heck, you could even work it such that each group member pays in as much or as little as they want, and tickets are purchased with whatever the group contributes each week. You can even participate in multiple lotteries at the same time, and track them individually or all together. It’s fair, and fairly flexible!
In my case it’s relatively complex: We’re playing two different lotteries (6/49 and Super7), and the group only starts playing with jackpots at or above $10M, save for one of us that plays starting at a $15M threshhold. I also allow everyone to make “deposits” into their “lottery account” so I don’t have to chase them every week (which I can’t do because we live so far from each other); I just pay for all the tickets, knowing I’ve been pre-paid for them. Thus I track not only split ratios but how much everyone has in the “bank”.
So far the most we’ve ever won is $20 plus a few free tickets, so there hasn’t been any squabbling. If we ever do win the jackpot, however, the only squabbling going on will be over how many decimal places we calculate our split ratios to. (I say 3 decimal places or one percentage decimal place [.364 versus 36.4%], and rounding goes in favour of the one keeping track of it all!)