Buying Lottery Tickets with Colleagues: What Could Go Wrong?

The gravitational pull of the $1.5 billion Powerball drawing on Jan. 13 is attracting even people who don’t typically play the lottery. And, in some cases, employees are pooling their resources with the promise of splitting the windfall from a winning ticket.

That’s not such a great idea from an employer perspective, according to Meredith Biggs, who specializes in employment law for the law firm Gunster in West Palm Beach, Fla. Organizations are the ones who lose because of an exodus of suddenly rich employees who no longer need jobs. Or the workplace becomes a war zone as employees likely end up suing each other, she told SHRM Online.

“That’s obviously not going to be good for your workplace.”

It’s not common for groups of people to win the lottery, but there tends to be litigation when it does happen, she noted.

“Chances of a lawsuit in these types of situations are pretty high. Most of the time, employees have an informal, oral agreement—‘Let’s all get together and go buy a lottery ticket.’ Nobody’s keeping track of which tickets are part of the group or not part of the group.” There have been cases where the person buying for the group claimed he or she also purchased one for themselves—the winning one.

Tension can develop among employees and productivity will decrease if employees’ attention is focused on a lawsuit. Employers may want to consider establishing a policy prohibiting workplace lottery pools, Biggs suggested, and remind employees of it when lottery fever hits.

Guidelines to Consider

How a group handles a winning ticket can paint a vivid picture of that organization’s culture. In May 2013, Jennifer Maldonado had been working as an administrative assistant at Keller Williams Partners Realty in Plantation, Fla., for only two weeks when colleagues decided to buy a group lottery ticket. She hadn’t yet received her first paycheck and, trying to be frugal, opted not to participate. She came to work after the drawing to find that 12 co-workers had won the $1 million Powerball—about $83,000 apiece before taxes. Her new colleagues decided to cut her in on the winnings—the amount she received was undisclosed—according to a South Florida Sun Sentinel news report.

However, buying a winning ticket with co-workers doesn’t always end well, as an article on AOL.com, “10 Office Lottery Pools Gone Terribly Wrong,” vividly illustrates.

In fact, Midge Seltzer, president of Florida-based HR firm Engage PEO, pointed out ways the situation can end disastrously:

• An employee claims he or she bought the winning ticket for himself or herself, not for the group.
• The employee’s agreement to be part of the group purchase was verbal only—“I’m in” or “Yes, I’ll give you the money tomorrow.”
• It is unclear who participated in the pool.
• An employee had participated in prior pools but was absent and didn’t contribute monetarily to the current pool.

The odds of purchasing the winning ticket of the current jackpot—the largest ever—are 1 in 292.2 million, according to The New York Times, but it doesn’t mean people won’t try.

Seltzer recommended the following guidance for employees purchasing lottery tickets together:

• Decide who will act as the lead on the purchase—the person who will be responsible for purchasing the tickets and putting them in a safe place.
• Ensure that all participants pay in prior to the purchase of the tickets.
• Ask all participants to write and sign their names to a list of participants, and have the lead person confirm those individuals have paid in.
• Agree ahead of time how employees will choose the numbers that are selected. Will they be random? A certain set of numbers?
• Agree ahead of time how the money will be distributed. Will participants take a lump sum or in 30 payments over 29 years? How the payment is distributed will affect taxes on the winnings.
• Make copies of the tickets purchased for the group and distribute them to pool participants.

Biggs also suggested agreeing ahead of time how—or if—the names of winners will be announced. Not everyone wants to broadcast their good fortune. Additionally, she recommended that pool participants consider creating an entity, such as an LLC, to receive the winning funds so that they are not funneled to any one person’s bank account. A bank account can be created for the LLC and parameters can be established to limit the possibility that one person controls all of the money.

Kathy Gurchiek is the associate editor at HR News. Follow her @SHRMwriter.