Lottery Pool Agreement and Taxes

By Jacky Jian · Updated October 2, 2026 · Tax rules from the IRS, linked below

An office lottery pool lets a group buy more tickets than anyone would alone and split whatever they win. Most pools never win more than a few dollars. When one does win big, a simple written agreement is what keeps friends and coworkers from fighting over the money.

How a lottery pool works

One person, the pool manager, collects the money, buys the tickets and keeps a record of who paid for which drawing. Each member's share is usually equal, or in proportion to what they paid. If a ticket wins, the prize is claimed once and divided among the members, and each member pays tax on their own share.

Lottery pool agreement: what to write down

Download the fill-in lottery pool agreement template (PDF). Fill it in digitally or print it to complete by hand. It includes a member roster, payment deadline, ticket records, prize distribution and signatures. Fill in every blank and give each member a copy before the covered drawing.

Disputes in winning pools usually come down to one question: who was in for that drawing? A written agreement signed by every member answers it. Cover these points:

1. Members and shares. Every member's full name and share, and how shares are set (equal, or by amount paid).
2. Contributions. How much each member pays, for which drawings, and the deadline to pay. A member who has not paid by the deadline is out for that drawing.
3. The manager. Who buys the tickets, and that the manager sends copies or photos of every ticket to all members before the drawing.
4. Which tickets belong to the pool. Only tickets listed in that message are pool tickets; tickets members buy on their own are not.
5. Small prizes. Whether small wins are paid out or used to buy tickets for the next drawing.
6. Big prizes. Who claims, how the group chooses cash or annuity, and how ownership is documented under the lottery’s group-claim rules, including IRS Form 5754 when required.
7. Leaving and joining. How members leave or join, and from which drawing.
8. Signatures. Every member signs and dates the agreement and keeps a copy.

The template is a starting point and must be adapted to the group’s state and lottery rules. For a large prize, have a lawyer review the claim process (see what to do if you win the lottery).

How lottery pool winnings are taxed

When several people share a winning ticket, the person receiving the payout provides the payer with each owner’s information and share, using IRS Form 5754 when requested. The payer uses this information to prepare separate Forms W-2G and holds Form 5754; you do not send it to the IRS. Follow the state lottery’s group-claim process before claiming (IRS Instructions for Forms W-2G and 5754).

Federal withholding is decided by the prize on the whole ticket, not each share: when the ticket's prize minus its cost is over $5,000, the lottery withholds 24% from every member's share, even if a share is small. Each member then owes tax at their own rates. For a $1,000,000 prize split 10 ways, a single member with no other income keeps about $86,830 of a $100,000 share after federal tax.

What each member takes home

Enter the whole ticket's cash prize and the number of members. The result estimates your individual share after tax, using your filing status and other income. Equal shares are assumed; for unequal shares use “Your share (office pool)” in the main calculator.

Equal shares, each member a single filer with no other income, 2026 federal tax, no state tax. Enter your own share under “More options” in the lottery tax calculator to include your state and other income.