For workplace lottery pools, it pays to plan ahead

MAYVILLE, N.D. – About a decade ago in December, Tim O'Brien and 16 co-workers in the Athletics Department at Mayville State University won $10,000 in the Powerball lottery.

Well, technically, most of them won.

O'Brien bought tickets for the office pool twice a week and kept track of who had made their weekly payments and who hadn't. Lucky for the few that were in arrears, it was not uncommon for the group to give members credit.

Still, O'Brien said he tested them a little by asking them to pay up without revealing how much the group had won. "There were a couple that were down quite a bit, $20, which equates to close to half a year that they were behind. They ponied up pretty quick. When I told them, they were pretty excited."

This week, with the Powerball prize reaching $1.5 billion, the group is hoping lightning will strike twice. And they're using the same informal rules they've used for years.

But informal rules have a way of attracting lawsuits. National news reports show co-workers have sued co-workers over winnings as small as $175,000.

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So you've won, now what?

Friendships ruined

Laws governing the lottery in North Dakota and Minnesota generally recognize that whoever has the winning ticket in hand is the owner unless the back of the ticket is signed, then everyone who signs is the owner.

That doesn't mean those who fail to sign the ticket have no recourse.

In 2010, five construction workers in Elizabeth, N.J., sued Americo Lopes for a share of a $38.5 million prize. Lopes was responsible for buying the pool's ticket, but claimed that he bought the winning ticket separately for himself. In 2012, a jury found that the five co-workers, some of whom considered Lopes family, did have a right to a share of the winnings. The Star-Ledger newspaper in Newark, N.J., reported at the time that the winning ticket was among 12 that he bought for $12, a pattern used by the pool, and that he repeatedly lied about the fact that he'd won.

In some cases, even those who didn't pay into a pool have sued, preventing the winners from immediately enjoying their winnings and forcing them to pay for attorneys.

In 2008, four city workers in Piqua, Ohio, sued 15 of their colleagues for a share of a $207 million prize. The four had been absent the day the tickets were purchased, but claimed that pool members regularly covered for each other. They also claimed that money from previous wins were used to buy the winning ticket.

The lawsuit was dropped in 2009. Records kept by one of the winners showed that for at least three years the practice was that only those who pay can win. The winners also had evidence that money from previous drawings weren't involved.

Legal advice

It's not hard to see how these conflicts can arise. The stakes can be higher when pools start buying tickets, yet because the odds are so great, few are familiar with the legal precautions or recognize that there's even a need.

Legal experts generally recommend lottery pools put everything in writing so there is no ambiguity. For example, do those in arrears get credit always or sometimes? Will the prize be split evenly, even if there have been multiple rounds of tickets bought and some members joined late?

Kim Steffan, an attorney in the Durham, N.C., area, advises on her website that pool members should have a signed agreement explicitly spelling out who's in the pool, who will buy the tickets and how winnings will be split. A sample agreement provided by the Western Canada Lottery Corp., which manages the lottery for Manitoba and five provinces and territories, is even more specific, spelling out the ticket number, the name of each player and their share of any potential winnings.

Steffan also advises that those buying the tickets should find a way to avoid confusion over whether the ticket was purchased for the pool or for personal use. One way is to make photocopies or scans of the tickets and give them to each member.

Keeping records

Many who run lottery pools follow some of this advice as a matter of common sense, but few go to the trouble of signing a contract.

"I just got a list of people, who paid and how much they paid," O'Brien said, explaining the Mayville State pool varies in size from 14 to 17 members. "Some people pay ahead so they don't have to worry about it. But, yeah, if there's ever a time where we won $1.3 billion (the jackpot was smaller when he said this Monday), there's nothing legal as far as the splitting. We assume it'll all be even."

"We haven't gotten lawyers involved yet is what that amounts to," he added with a chuckle.

Candy Rusk, who sometimes runs the lottery pool at Norseman Motors in Detroit Lakes, Minn., said the group usually gets active when the jackpot reaches, say $100 million, or when there's enough buzz. Most play on their own in addition to playing with the pool, she said.

"Going around both times, they're like, 'Yeah, I don't want to be coming here alone.' Not that we don't love our jobs."

Rusk said she keeps track of who pays – more than 30 with the jackpot as big as it is – and makes a copy of the tickets for each pool member.

But they don't have a legal agreement, she said. "No, it's kind of like a family here. If we actually did win, we'd probably contact a lawyer first and go from there."