You might have heard about
https://dvc-lotto.com. I want to bring up the same based in Litecoins, bet in LTC, get paid in LTC.
But instead of running it completely by myself, I'ld like to share the risk and the profits with interested investors.
I put together a first draft of a possible contract, feel free to comment, correct and improve it.
ObjectivesOperate a LTC denominated Lottery system based on the results of the Germany 6aus49 system.
Share Issue:
12,000 shares, 2,000 will remain ownership of share issuer, 10,000 shares will be sold at 10LTC each.
Share issuer will not sell his assigned shares within the first 90 calendar days after the security has been listed
The shares have no voting rights.
Costs/Expenses:
Running the lottery will incur costs for:
Onetime:
- Security listing fees
2,500 LTC
- initial payment for the lottery software
25,000 LTC
- setup costs for the server infrastructure (server, SSL certificates, eMail service, backup services)
3800 LTC for email sevices (2 years)
1000 LTC for SSL certificate
- Marketing activities, advertisements, promotions such as onetime lottery events
Adhoc, as and when deemed necessary
- Stock buy backs
Adhoc, as and when deemed necessary
Monthly recurring costs:
- server infrastructure hosting
2000 LTC per month
- software maintenance
DVC-Lotto will receive 10% of the lottery fees collected for ongoing software maintenance and support
- application operation and support
DVC-Lotto will receive 10% of the lottery fees collected for ongoing application support
- 5% of collected fees will be withheld and saved for unplanned expenses, or any of the above mentioned one time activities
The capital raised by the IPO is used to pay for the operational costs for the first two years. After two years, the operational costs will be paid out of the fees collected from the lottery. Should the fees not suffice to pay for the operational costs, then either further shares will be issued or the business closed.
Exchange rate risks:
To mitigate exchange rate risks, the funds raised required for paying the monthly infrastructure costs (2000 LTC*24 months) will be exchanged to USD once the business is established and the shares sold, thus the monthly operations is not endangered by adverse exchange rate effects.
Dividends:
Dividends will be paid monthly in LTC, in the first week of each month.
In a simplified version: Dividend paid out = Total collected fees – 2000 LTC server hosing fees – 10% of collected fees for software support – 10% of collected fees for application support. – 5% withheld payouts
Long Term Profitability:
For the Lottery to reach a break even, a weekly average betting volume of 13,333.33 LTC, assuming a 5% fee, is required.
Calculation:
Fees collected = 0.05 (Fee) * 4 (weeks) * 13,334 LTC (weekly volume) = 53,333.32 LTC
Profit = 2,666.66 LTC
- 2000 LTC hosting fees
- 266.66 LTC (Software support)
- 266.66 LTC (Application support)
- 133.33 LTC (accrual)
= 0.01 LTC
For the lottery to achieve a 1.5% monthly dividend yield, the weekly average betting volume must exceed 25333 LTC.
Risks Fluctuation of LTC/BTC price
Liquidity of LTC/BTC trades on the exchanges
Legal risks of operating an online lottery
Security breaches
Insufficient interest, collected fees not covering the operational costs
Assumptions / Preconditions:
This contact comes only into effect once more than 8,000 shares are sold. In the event that the shares are not sold within 2 months of the security listing, then the security issuer will cancel the listing and offer a buy back of all shares at the issued share price. Note: each party will pay the incurred trading fees.
All calculations have been made based on an assumed 0.0035 BTC/LTC rate
