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possible to form a lottery club in mass?

Topic closed. 9 replies. Last post 12 years ago by Jake649.

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United States
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March 15, 2005
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Posted: March 15, 2005, 6:16 pm - IP Logged

hellow, everyone. I am new here.

Several friends were talking about forming a lottery club. I think it is a good idea to decrease the average cost of bets. But after searching the internet, I do not see one single place says that Massachusetts accepts group claiming of winning price. That would cause a huge tax problem if we DO win the Jackpot. In several other states, claiming price with FEIN and split W2G is possible.

Anyone have some idea about that?

Thanks

    dvdiva's avatar - 8ball

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    Posted: March 16, 2005, 1:18 am - IP Logged

    I would avoid a lottery club period just because it gets really messy if someone wins. You would have to have rules ,etc.

    If you win a trust would claim any prize then just split the prize. Personally I would never even get involved in a lottery club.

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      Pretoria
      South Africa
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      Posted: March 16, 2005, 1:25 am - IP Logged

      I am running a small (I would like it to get bigger) syndicate in South Africa. We have no tax problems as winnings are tax free.

      Cheers,

      Datenda

      Tata Syndicate Boss

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        Posted: March 16, 2005, 6:32 am - IP Logged
        Quote: Originally posted by dvdiva on March 16, 2005


        I would avoid a lottery club period just because it gets really messy if someone wins. You would have to have rules ,etc.
        If you win a trust would claim any prize then just split the prize. Personally I would never even get involved in a lottery club.



        Thanks for the reply, dvdiva.

        Assigning a trustee to claim price would only work for small price. For Jackpot, on top of income tax, anything over $10,000 distributed per person will be subject to gift tax. :(

        We form group to aim big, second price or above. Anything smaller would just be a discount for the tickets. We are researching for the rules. It would be a huge obstacle if there is no smart way to claim the price.

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          Posted: March 16, 2005, 7:48 am - IP Logged

          This post could provide a clue to our problem - using a trust fund. I am wondering what is the tax consequence of using a trust fund for the lottery price. Any one knows how difficult and how much it would cost to establish a trust fund? On the other hand, we do not have to establish one before we win the Jackpot.:)

          Any other ideas?

          Thank. 

          Mystery winner claims $7 million Ohio lottery jackpot

          http://www.lotterypost.com/news/106469.htm

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            MA
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            Posted: March 16, 2005, 9:24 am - IP Logged

            I've done a little with lottery pools in MA. In short, it's possible, but a real pain.



            First off, you know how on the back of the ticket it's got all that legal mumbo jumbo about the official rules and administrative bulletins, etc? Well one of the rules is that you agree to have your photo taken for lottery promotional stuff. So you can't legally go the anonymous trust fund route.



            Second, only one person can claim the prize if you win. This doesn't mean only one person can own the ticket, just that only one person can claim it. It's then that person's responsibility to distribute the winnings according to ownership of the ticket. The lottery gives you a W2G, then you give them a 5754 form that says what each person's share is, and has all their tax info. Then they cancel the first W2G and issue everyone new ones at the end of the year. Which sounds like a good way to attract the attention of the IRS, if you want to get audited.



            If everyone trusts the person running the pool when the ticket is claimed, and you pretty much need to, since there's not all that much stopping him from claiming that it's his ticket alone, then there isn't any real advantage of using a trust unless the payment is an annuity. If it's a cash payment, any written agreement should be fine. You'd only want a trust to claim the winning ticket so the trust gets the payments from the annuities each year.


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              Posted: March 16, 2005, 10:04 am - IP Logged

              NewClub:

              DO NOT play Megabucks because the jackpot is still annuity-only.

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                United States
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                Posted: March 16, 2005, 11:06 am - IP Logged
                Quote: Originally posted by Bingo Long on March 16, 2005


                I've done a little with lottery pools in MA. In short, it's possible, but a real pain.

                First off, you know how on the back of the ticket it's got all that legal mumbo jumbo about the official rules and administrative bulletins, etc? Well one of the rules is that you agree to have your photo taken for lottery promotional stuff. So you can't legally go the anonymous trust fund route.

                Second, only one person can claim the prize if you win. This doesn't mean only one person can own the ticket, just that only one person can claim it. It's then that person's responsibility to distribute the winnings according to ownership of the ticket. The lottery gives you a W2G, then you give them a 5754 form that says what each person's share is, and has all their tax info. Then they cancel the first W2G and issue everyone new ones at the end of the year. Which sounds like a good way to attract the attention of the IRS, if you want to get audited.

                If everyone trusts the person running the pool when the ticket is claimed, and you pretty much need to, since there's not all that much stopping him from claiming that it's his ticket alone, then there isn't any real advantage of using a trust unless the payment is an annuity. If it's a cash payment, any written agreement should be fine. You'd only want a trust to claim the winning ticket so the trust gets the payments from the annuities each year.



                That is Great! Thanks Bingo Long! You solved our problem. One more question: Do we need a federal employer identification number (FEIN) to claim cash price the way you described? Several web sites suggested FEIN, but based on your method, it is not necessary.

                Thanks to dvdiva, Datenda and CASH only too. You are all very nice people.

                I am the most active and trusted one among my friends, so I guess I will be the leader and no need to worry about the trust issue. :) If the idea in our club turns to be true, I will share the good news with you guys.

                It is fun browsing on your site. I don't think I can be the leader in the following post and not kill myself. So I will always pitch in my own money if it turned out to be short. I guess that means on the agreement we will add that I can take over other people's share if they fail to pay the due before bet. Will there be any problem regarding this statement? Is there any necessary to add condition for take-over reversal?

                I wish all of you good luck!

                Syndicate Misses Out on Lottery Fortune

                http://www.lotterypost.com/thread/101746

                 

                  RJOh's avatar - chipmunk
                  mid-Ohio
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                  Posted: March 16, 2005, 2:23 pm - IP Logged
                  Quote: Originally posted by NewClub on March 16, 2005


                  I am the most active and trusted one among my friends, so I guess I will be the leader and no need to worry about the trust issue. :) 



                  If you ever win a lottery, you'll have a chance to see if your friends agree with you.

                  RJOh

                   * you don't need to buy more tickets, just buy a winning ticket * 
                     
                               Evil Looking       

                    Jake649's avatar - scene sunovermountains.jpg

                    Canada
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                    Posted: March 16, 2005, 3:52 pm - IP Logged

                    NewClub,

                    Yes, you need a federal employee identification number. I belong to a lottery group and that is what we had to do to claim a group prize.

                    As far as trust is concerned, the group should have some controls in place to minimize the risk. For example, photo copying tickets before the draw or distributing the list of numbers played to everyone in the group is a good idea. We do that and have no problems.

                    Good luck,
                    Jake