1. Recruit Some Friends With as Little Dignity as Yourself, Realize You are Not Morbid
Participating in a death pool makes you a jerk if, and only if, you do one or more of the following: Publicly rejoice upon a death (e.g. post it to Twitter or Facebook, brag at the office about how you totally called that one!!, etc.), or cause the death yourself. Other than that you can relax- you don't know these people anyway. Everyone dies, so who cares if you're not upset that someone you never met meets the fate everyone is guaranteed to meet?
Self-professed moralists may try to tell you that you're profiting from death, and that is morally wrong- but is it? Best Buy and iTunes sure loved it-financially at least- when Amy Winehouse died. So if that moralist has an iPhone, iPod, or uses any Apple products, they are no more moral than you since they support such soulless companies (Oh God, and what if they bought their iPod at Best Buy??!!!). You can't really blame music retailers for profiting- someone had to make money from it once the demand increased, afterall.
And remember, you at least have the moral highground over Microsoft after their post-Winehouse-death tweet inviting people to buy her .mp3s from them.
If corporations can un-apologetically profit from deaths, so can you. Trust me, you've done worse.
2. Set the Stakes
Will the winner receive money, bragging rights, or free dinner next time you're all together? If the death pool participants are separated geographically or don't really know each other you should make the stakes for money and get the money upfront. Any football fantasy veteran can tell you the worst idea for setting the stakes is a gentleman's agreement where everyone agrees that at the end of the season the losers will send a check to the eventual winner. That never happens. Get the cash up front and have someone hold it. If you don't pay up, you don't join.
The only good to come out a celebrity death pool where your friends don't pay up is making really bad puns based around the word "stiff" as both a noun and a verb, as in, "Dude you totally stiffed me over those stiffs!". And if you think about it, that isn't even all that awesome.
3. Make The Rules
There are two ways to do this. One is simple: Everyone takes 20 celebrities and the first one to a set number of deaths wins. Let's say you agree to play first team with two deaths wins- when your first celeb dies you, you don't pick a fill-in, you stay with your 19. When someone loses two, the game is over and you pay the winner and opt to either re-draft, or you keep your remaining celebs and pick replacements for any deaths you incurred.
The other way to play it is a little more complex. You don't play for total # of deaths, rather for a point total. Points are based on the age of the deceased. If a 100 year old celebrity dies, it wasn't all that difficult to predict. But what if a 20 year old celeb dies, shouldn't that death be weighted more because they were younger, and therefore harder to predict? It's like the Degree of Difficulty in high-diving.
My formula for that is to start with the # 110 (since no celebrity is ever above that age) and you subtract the age of the deceased from 110, and that is your point total for that death. If 95 year old dies, you get 15 points. If a 20 year old dies, you get 90 points. Then you just agree to play to 100 points, or 200 or whatever total you and your soulless friends agree to.
4. Who Defines Someone's, "Celebrity" Status?
You do when you draft. If there isn't consensus, they aren't a celebrity.
5. Game Theory
If you're playing for points are you gonna swing for the fences and take a line-up of troubled young Hollywood stars/ starlets and hope to score your points in increments of 70? Or are you gonna be slow and steady and pick only old geezers? Or what balance between the two will you have? Then you have to consider occupational hazards as well- race car drivers, politicians in unstable parts of the world, Ice Road Truckers, and anyone sponsored by Red Bull.
6. I Hope You are not Going Anywhere; This may Take a While
Celebrity deaths don't happen everyday. It's likely that not every celebrity who dies will have been in your death pool, and you may have a lot of teams in your pool. If you're playing first-to-two-deaths in a league of 6 people, it may take 10 celebrity deaths to crown a winner. That's also why I recommend selecting such a large # of celebrities (20) per team- to increase the chances that any given celebrity death was covered in your pool. If you each picked only 5 celebrities, the pool could take a very long time to play out. So try to make sure the participants in your death pool are people you plan on being in touch with for at least a few years.
You're in it for the long haul, even if you're betting that certain celebrities are not.