Lottery Licence Help

[adam88]

Hi,

I'm interested in starting my own online lottery site for personal profit. I have been looking into acquiring a lottery license but I'm a bit lost.

What I plan on doing is running a bog standard lottery where people put money into a cash pool, and once the pool is full a single person is chosen at random to win all the money in the pool (except for a small percentage that I keep).

I'm an experienced coder and I have been coding this script for this on and off for quite some time now. I plan to handle all money through PayPal. Users can credit their accounts via PayPal and mass payouts will be made daily via PayPal, I don't plan on taking or storing any credit card details. There will be several different draws each with a different jackpot. The top jackpot will be £500, although this will probably increase once traffic picks up.

The thing is though, I know nothing when it comes to legal matters. And I know that if I plan on doing this then everything must be legal.

Here is what I need to know:

1. Where do I buy a lottery licence and how much will it cost? I live in the UK, but I plan on hosting the site on US soil, or on a dedicated server in Maryland to be exact. Do I need a licence for the UK or for the USA, or both? All I can find on Google is companies trying to sell me offshore lottery licences, and it all seems a bit shady to me. I would rather do it all through the proper authorities and be 100% legal.

2. TAX. I know nothing about TAX. I work full time, the government take a cut of my salary each month, that's everything I know about TAX. How will TAX effect what I plan on doing? And will the fact that all cash will be handled via PayPal be a problem?

3. I plan on starting this as a personal project and I plan on keeping my current job, and if things take off then I will go full time with it. But do I need to be a registered business in order to run an online lottery, or can I run it as an individual?

I know it sounds like I'm jumping in at the deep end and this will probably be a disaster financially for me. But I know that if it was just a case of me coding a script, buying a domain and advertising the site. Then I know that this could take off for me. And even though what I'm planning on doing is nothing new, I have certain ideas and marketing schemes that I think will go in favour of what I'm doing and make the service I'm providing unique.

But unfortunately there is all this legal rhubarb that I know nothing about, and its essential that I get it sorted before going any further with this. What I need is for someone to tell me what I need, where to get it from and how much it will cost.


Any help on this would be greatly appreciated.

Thanks,
Adam

[squalid]

You may not use PayPal to buy or sell tickets, vouchers, or any other "opportunity" to participate in a lottery or any other game of chance, whether privately-run or administered by a state. This includes, but is not limited to, raffles, drawings, sweepstakes, pools, or any other form of game/contest involving the distribution of prizes or monetary compensation.

Even if you got a lottery licence, you could not use paypal.

[tomgallagher]

I found the following links that may give you a starting point. The last link is about someone else who set one up it does recommend open an offshore license. The first two links may provide an avenue to get some advice from hopefully.


http://www.solihull.gov.uk/section.asp?catid=425
http://www.manchester.gov.uk/licensi...es/lottery.htm
http://www.boards.ie/vbulletin/archi...054865396.html

It may be beneficial to look at the national lotto site as well.

If you look at the national Lotto site it allows people to transfer funds from credit cards into their account and from limited experience I know that some gambling sites do the same. Do you really need to use paypal?

To start a small business you will need to open a Business Account and make sure you are paying the correct tax. Could a small business advisor at the bank help or speaking to the tax office direct? You will probably need an accountant to sort out finances and tax returns at first anyway. I would look into setting up a registered limited company as well. You might want to look into copyrighting the site as well.

I am trying as well to start an online business if you find any useful information I would appreciate an email to tomgallagher at breathe.com

Hope this helps and good luck.

[Eagle]

I wouldn't use PayPal - imagine the potential for chargebacks!