Bitcoin Forum

Currently BitLotto.com runs a *raffle* style lottery. It takes all the sales from tickets and gives 99% to one person. We would like to now branch out into a more *traditional* style of lottery. The main problem with the traditional type is that extra funds need to be on hand in case the players are unusually lucky. You could potentially have more BTC won than taken in and we would have to always pay a winner.

The game will have similar cheat-proof technologies as the raffle game. We will use the transaction hash as the ticket and base the winner by comparing it to a hash of a block hash combined with mega milions numbers. By comparing the two hashes we can determine if someone won the lottery. This method prevents anyone from cheating no matter how much hashing power or insider knowledge they have. Everyone has the same odds of winning and it's impossible to fake paying the wrong person. All results can be independently verified. We will operate payments manually with careful oversight just like BitLotto has been running this past year and a bit.

The exact details of the game are still being worked out and we will consult with the community to find a type of game they are interested in playing. Our goal though is a long term profit margin of 4% to investors and 1% to BitLotto.

Profits after each draw will be given to all the private investors based on % of funds they have as reserve at BitLotto. If the reserves are low the profits will go into building them back again.  

We have decided to go this route rather than listing on GLBSE because it allows for more flexibility and we would rather not depend on a third party holding or managing funds. It also allows investors to decide on the level of anonymity they want.

It is a fairly safe investment but it depends on the popularity of BitLotto. If the game slowly loses popularity it could eventually close down. In such case the reserves will be returned. If the reserves are low they will be returned based on % of investment. (You will know total investment so you know what share is due) If you wanted the funds back we would have to find a replacement before the investment could be returned. They would be coming in replacing your exact amount. (So even if the reserves were low they would be stepping in then and would have to wait till they reached the point of your initial investment before they saw profit)

We would much rather have few large investors than a bunch of small ones.

The amount we get for investment will largely determine the jackpot we have up for grabs. We should probably have at least 3x times the jackpot on hand.

Of course even larger amounts for investment are accepted! Nothing is set in stone here and we are open to changing these terms or suggestions. THANKS!

In traditional lottery, the jackpot should really be more in proportion to the predicted amount of "tickets" that will be sold, not according to the investment, although those two are related as well.  But the size of the jackpot should be smaller than the total amount of the ticket sells, otherwise you wouldn't make any profit from the lotto.

Yup it's based off of tickets and the chance of winning. But sometimes there could be unusual lucky streaks and I need back up BTC for those cases.

I'm not really familiar with these type of investments and I have a couple of questions if I may.

1. Is it possible to get your money out of the investment if you decide to do so at a certain point in time.
2. How much would a possible ROI be? Let's say the jackpot is 200BC. The investors take a 4% share, that's 8BC. Let's say I invest 100BC (1/8th) does that mean I would receive 1BC?

Thanks in advance.

ps. Time to update your signature, 280 already broken! :)

i believe it's more like.. we fund the principal 800 BTC, if 1 person funded it all, they have full share of the investment, meaning that of all the profits earned (profits are probably calculated by anything > than the principal + whatever buffer in the case of someone winning the jackpot) you get a continual dividend per "draw" at whatever % is agreed upon.

1. Yes, but to protect the game we would have to find a replacement before the funds were transferred back. (Otherwise I could have investors leave with no BTC to pay if by some fluke a couple people won)
2. The odds of winning will probably be set up to be 1/256. The game is still in the design stage. Once we account for carry over tickets, and paying jackpot, we'll set it up so statistically 1% to BitLotto with 4% shared amongst the investors. It really depends on how popular the game is for determining the profit.  4% of all ticket sales.

edit: we can't guarantee a steady profit because of the probabilities but our aim is the have 4% be profit that goes to investors. If the investments are needed to pay winners, the 4% will go to rebuilding the backup funds.

Also: we are pretty new to this. We've never done lottery investments before. Hopefully it makes sense. Any other ideas that are better are appreciated for sure. Hopefully though we can get 5% operator profit with 4% going to investors over the long term. (There will be fluctuations but over the long term we should be close to that)

So...it sounds like if you were to invest 100BTC then you would expect to average around 1.3BTC each month in profit for that investment (since the ticket sales would be around the jackpot and the jackpot is 1/3 of the total investment amount).  Does that sound about right?

It all depends on ticket sales. It would be: yourinvestment/800 * (4% of total ticket sales)

What is your projection of ticket sales on a pot of this size? How much would tickets be?

It's hard to say as it hasn't really been done before. It's hard to tell how big the bitcoin economy is. I imagine at first it may be slow but should see a steady growth. We hope.

We are working on odds of 1/256 and hoping for approx 200 BTC jackpot plus carry over. For 1 BTC tickets. We are also looking to setting up a .5 BTC ticket game too.

If we can match the BitLotto that's about 200-300 BTC per month. But that's IF we can match it. BitLotto does have pretty hard to beat odds.

I think bitlotto is seeing that interesting pots like my shameless plug below can make money.  :)

https://bitcointalk.org/index.php?topic=77442.0

The problem I see is asking others to invest quite large sums of money for such small returns. The lending subforum easily offers 1.5% for your coins per week with relatively well established players.

Ya, I just looked through the lending forum...

gigavps, I think you may be right. It's pretty hard to beat some of those rates.

Bitware: It will be built so tickets do pay for the winnings. But there COULD be short term anomalies where the tickets haven't been sold yet to cover winnings.   

Bitware:

Say we start a lottery that has 1/256 chance of winning. If we start it with just tickets and only ten people play the first week we have a 1/256 of winning 10 BTC or even sharing it if someone else who won. BitLotto raffle is way better than that. So we want it to be at least 1/256 to win 200 BTC PLUS any carry over. The tickets should cover the winnings over time but sometimes, say the first week someone wins. I need that extra BTC even though I haven't earned it yet. With time the investors money won't be needed. It's more insurance to cover weird cases. 

After consulting some people we've decided to wait just a little bit longer before we explore this...we don't want to hurt the BitLotto raffle or start it too soon.

I'll lock the thread. (We've probably found someone who may help anyways when that time comes)