Fundamentals of a Bitcoin Lottery [closed]

Question

I'm relatively new to Bitcoin but love the idea and will soon be accepting bitcoin in my own companies. (We provide online training/e-learning.)

But, just for fun I've set up what I would like to call a Bitcoin Lottery. Its a simple website and simple rules/terms.

1. People pay bitcoin into the address provided on the site. (No names, no email, no forms to fill in.)
2. Each dBTC (0.1 BTC) counts as a vote.
3. The winner is chosen by a random number generator, obviously the more votes you have (the larger your initial payment/vote made e.g. 1 BTC = 10 Votes) the more likely you are to win. (If you paid 10 dBTC you would have 9 more chances to win than someone who only paid 1 dBTC.)
4. Winnings (negative a 0.01% management fee and any payment transaction costs) are paid to the bitcoin address that paid the winning vote/payment.

My main objective is not to make money, just to setup a simple lottery for fun.

My questions are:

1. Is my approach to this lottery a good idea, such as using each dBTC as a vote or should the vote amount/value be changed?
2. Would there be any technical difficulties when trying to send payment (winnings) back to the address that paid for the vote. (See the website http://winbitcoin.net for further details.) I would assume large transaction fees would be required as the total amount (winnings) would be made up of lots of smaller initial payments. (I think that's how fees work anyway.)
3. I understand that most of you are not lawyers, but aside from tax issues are there any other legal ramifications?
4. The fee I would be taking (the 0.01%) would properly not even be enough to cover hosting cost, this does not bother me ATM. Would a management/hosting fee be seen to be unacceptable, should there be no fee or a smaller one?

5. Should there be a minimum vote (e.g. the 1 dBTC) and a maximum vote, say 5 BTC?

   The website has only just gone live, so may be a bit bare but I will be personally paying a few votes later on tomorrow :D

Answer 1

Whether or not a particular way to run a lottery is a good idea or not depends on a few aspects - whether it is fair, balanced, earns enough money, and whether the users think it is fun and rewarding. Generally, this is a question of game design, not Bitcoin. Probably it would be better asked on GameDev SE. What you described sounds cohesive, although you might want to adjust the fees depending on the costs you will be facing running the operation.

There are no issues with paying back an address that paid for the vote, as long as someone doesn't try to mine some Bitcoins directly onto your address, in that case sending the coins back would destroy them. This scenario is very unlikely.

You have to take into account the fees charged by the Bitcoin network - usually 0.01BTC per kilobyte. As your winnings might consist of potentially large amount of small Transactions in the future, this might take a toll on the profits. You should try simulating some heavier traffic and see how high the fees get for you.

From a legal problems - it's gambling, which means you should get a gambling license. I don't think it would really be worth the trouble "just for the heck of it". Alternatively, you can operate it without a license and face possible legal consequences in the future.