I was playing with the idea of managing a Kult LARP. If ye ask me the main problem is, that ye cannot use the breaking for the game, unless ye have a lot of money for special effects - and these are just like players: they don't work if ye need it!
Ye will need somebody who is good with creating masks (in my concept this is not a big problem, I'm working in a theatre and I can use their know how). Another problem is the blood factor. Movie blood is very very expensive, and there is hardly a possibility to substitute it. In theatre we sometimes use thinned ketchup, but it is not easy to get that washed out again.

Practically any red liquid with a little flour in it looks a lot like blood. It's an another thing to find such a liquid that washes away easily.

So the concept will have to be totally different. For an outdoor game, there is the possibility to confront the characters with Gaia (hehe, I have a vision of a bunch of naked men covered with mud, playing some humans that now live in a symbiosis with plants). But except that, everything which is bringing the characters into reality, will be almost impossible to use in an outdoor game. So we can say, that scenes like metropolis or inferno, can only be done indoor (and this again is a matter of financial power, as it will not be easy to find suitable rooms for that)
Now for the system. Hold it as easy as possible. Shock and insanity, as well as all the mental balance stuff will be the hardest chapter. I would use a good old point system. Let's say the first encounter with something supernatural just causes some confusion. The second one and the following ones will take away some kind of sanity points (as we have them in Call of Cthulhu), and when enough of these points are gone, the character is shocked. We can also use the less atmospheric version: Nepharite: '5 points terror' - Char: 'I still have 7' - Neph: 'okay, 10 points then'...

Sounds terribly whitewolfish... why not just let the players act it through? Just make sure that your players are "good" players and not munchkins.

Do I have to mention that acting out the growing insanity? I don't think so.

No, I just meant that, well, I haven't used any insanity and few mental balance rules from Kult RPG in any games and just told the players to act it all through. But again, this is just a matter of how do you want to play.

Unarmed Combat. I'd say every character can work out melee values... by comparing them, ye can say which character hit. And the difference between the values is the amount of hit pints lost. When their melee is the same, they may drag matches or something. Whatever, after they worked out combat, they should SLOWLY act it out, and avoid all dangers!
Armed Combat. In close combat, we can say that a dagger causes 1,5 times the normal damage, a sword 2 times, a chainsaw 3... For guns and stuff like that, I have a nice rule that really wokes fine. Every player using fire weapons, has to get a little bag. Depending upon his talent to use a gun, he will find a certain amount of red and a certain amount of white balls. Red balls mean 'hit', white ones 'miss'. Now when he wants to shoot somebody, he just takes one of the balls out of his bag, and if it's a hit he shouts 'Nepharite Hit Magunum' or something like that. In my games a hit my a gun always is lethal, but ye can also work out damage points for the guns.

This [combat]could be possible even without comparing characteristics or such. How about colour codes - a red sash around the arm means that the person is a really good fighter, white means that he's virtually unbeatable. Just let the players act through this too.

This actually is a good Idea, the problem I have with it, is that I wouldn't want everybody to know about my characters fighting abilities. This takes away all possibilities of bluffing: 'Oh a big bad monster with a low melee value, let's smash it'

No, I just meant that, well, I haven't used any insanity and few mental balance rules from Kult RPG in any games and just told the players to act it all through. But again, this is just a matter of how do you want to play.

Have you ever tried using BB (soft air) guns in a larp? They work pretty well, except for those really goofy looking goggles everybody has to wear.

We tried to, but the problem was that most of the players, SCs aswell as NSCs didn't even notice if they got hit or not. I am not a big fan of my red-white-ball system, but until now I haven't found anything better. I am open to all suggestions.

Hmm... that might be a problem... We have ran into that only in killer-games where there's really much action, usually in ordinary larps people have noticed the hits reasonably well.
In the time before SA-guns I toyed with the idea of throwing small peabags or balls I was supposed to use it in a post-holocaust game where firearms are really lousy and inaccurate. The idea was that good shooters would be allowed to throw the thingies with their preferred hand in any way they wanted, the less accurate would have to throw them with their not-preferred hand and so on. But this wouldn't work in Kult, I suppose. More than slightly undramatic.

Magic. Tell the players who want to use magic, to work out rituals. The more detailed they are, the better. Of course it is not possible, to let the players do all the stuff described in the kult rule book (at least for my taste that would go too far). Anyway... while they are performing their ritual, the gamemaster should do a few dice rolls, and decide what will happen.
I think I've covered everything now. Advantages and Disadvantages, Tributes and Powers, and stuff like that, should be worked out by the players. In my experience they tend to find out some nice rules.

Ok, I may be trying to force feed my concept of live-action rpgaming here. In my opinion rules - if there are any in the first place - should be virtually invisible. There shouldn't be any RPS-tests and neither much of comparing characteristic values or such, at least if I were designing a Kult-larp which is pretty much based on atmosphere.

As I said, the rules should be held as small as possible, and most of the game depends upon how the players act it out. It is true that it is hard to create a sinister atmosphere, when ye have to do stuff like picking balls or comparing values, but until now I found it quiet unavoidable. I used the system I introduced one issue ago in various horror roleplaying games (I have to confess that a lot of it is stolen), and the atmosphere never suffered, as there were not many occasions, where we had to do all that stuff. Nevertheless a KULT Larp will stay a book with at least 5 seals to me, until I found players with a lot of money.

One way that's way underappreciated in my opinion is to turn down the power-level so that many firefights, creatures and such are not needed, and concentrate almost exclusively on the psychological horror. Many horror-games turn out to be not very scary or atmospheric just because the characters and their adversaries are just too powerful and require a lot of game mechanics. How bout a game that's about a few ordinary people who get tangled into a some kind of extraordinary situation, that wouldn't be so big on common Kult standards, but very scary and strange in ordinary persons' standards? This would be reasonably easy to play in larp.

Firstly, for anyone looking at the special effects/make-up angle, I cannot recommend enough Chaosium's "Cthulhu Live" rules. The book offers detailed instructions on how to create make-up effects, tentacles and other nifty SFX on a budget. Less useful is a complete, diceless (IIRC) system.

I can recommend everybody who needs to get information about SFX to go to a theatre or a film studio, and ask professionals. For example there are great effects that can easily be done with light. In a play I was recently participating, the director wanted that loads of blood slowly run down a white wall. It finally got managed by painting the blood-tears on a blue-filter and moving it down along the source of light. Theatres will also be likely to give ye requisites (if ye keep begging) and maybe even costumes, if they can make sure that they will get them back in the status they gave them away.

Now, if I were to run a Kult LARP, I would de-emphasize the supernatural aspect of the game, at least inasmuch as it would require SFX. Rather, I would focus on having a set of Kult-esque characters -- disturbed, passionate people with questionable motives and unmentionable histories. They all have dark secrets and some are working at cross-purposes with each other.

I agree, nevertheless I do not think its good to restrict yourself before knowing what is possible. In my last horror larp we had a number of astral projections done with a overhead projector and some fog machines. The motives we used were created with a computer. I had the luck that a friend is really good with digital imaging and video stuff, and they looked great. Then we also had the often used and hatred 'TV that works without electricity'. Again my friend made a cool 4 min movie with some melting heads and rotting faces, and lots of noise. Everything we needed to do is to put a sheet to the cable saying "it's not plugged in" and a NPC with the remote controller of the TV/VCR and we had a wonderful supernatural element that scared the players - hehehe, man that was fun!

Next, I would work to create a proper atmosphere -- dimly lit, oppressive, with strange noises or chaotic music. I'd probably play around with weird lighting angles and colors to give things an off-kilter look (but I'm no expert in such matters and don't know what would work). Alex mentioned indoors vs. outdoors. I would strongly recommend indoors, as it is much easier to control the environment inside your own home. (Yes, I'd run it in a home if at all possible. Again, more control than in some public rented hall or some such.)

I live in a wonderful city that has a lot of churches, gothic cemeteries, and baroque cathedrals. The atmosphere when walking over one of the hills that surround it, is more than kultish. We have dark corners and a lot of places that just fit in some industrial-kult mood. It would be a sin not to go outside.
It is not easy to control the players, that's why a player group in my larps is not bigger than 10 people. The NPCs should be twice as many. I do have at least 2 co-gms that are equipped with handy's to contact me every time they find it necessary. A big part NPCs can choose player-npcs, to use when they are not busy, besides I plan some, just to play their character and run with the group(s). I myself mostly am around as shadow... the last games were too busy for me to play a role.
Another thing I am going to use in me next game will be the 'I wanna'-box. It's a little box in the player's headquarter, where they shall deposit a few lines about what they are going to do the next day. This makes me much more flexible in planning. As I do many vampire the masquerade games, I take the day as time out, and so I have lots of time for planning my next steps. I also have an npc briefing after the bigger scenes, to get myself and them updated about what is going on. I have different starting places and times for the players, this is also helping a lot.

Haven't given much thought to SFX, but here's a random sampling of ideas:
They should be sudden, shocking and vague -- frightening to the player, not just the character. Things like a sudden strobe light, or the sight of bloody... something, or a hideous thing with teeth, -- but never fully seen, merely glimpsed.

Well.. I have something I wanna share with ye. A character in a library full of occult books. I left him alone in there, to have a look at some of the books. He didn't know I deposed some boxes in there, and once I left him alone in there, I pressed the play button of the ghetto blaster in the other room. The tape was just running without any sound or noises for 15 minutes, and then he heard some strange scratching and knocking noises. Then came the voices. I told an npc to lock the door, but to keep care in case of something dangerous would happen. Anyway.. then the voices started... those in his head... and they whispered horrible stuff. Then came the moaning I took from a porn tape played backwards and extra slowly. Then he heard something scratching at the door. He opened it and a dead man was lying there. He had no face, but he was bleeding out of his chest and his hands were terribly burned. The player ran away and called the other characters, but the man was gone, and there was nothing to prove that the character saw something real...

I notice that most of what people have discussed so far is the CTHULHU LIVE style of LARPing where you create a sort of 'interactive theater' experience for just a small group of players and try to scare them as authentically as possible. This is a fun-sounding way of doing it, but I am more experienced (and a fan of) the White Wolf-style LARPs based on the 'party' structure (which isn't necessarily as lighthearted as it sounds, honest).

In Finland almost all larps are free-form, just like those you described.

In this form of LARP, there are no real 'NPCs'; the idea is to get twenty to thirty people in a small space, all in character, and let the action begin with only mild DM prodding as the players attempt to accomplish their various in-character goals. It requires several weeks of planning, and a large group; basically, the DM(s) (the more the better, to handle such a mass of people) decide on the basic setting and 'plot', and then encourage people to submit KULT-style characters who would be appropriate for such an event. For example, a game might be set at 'The First Meeting of the Golden Dawn, hosted by Aleister Crowley, in the 1800s'. Or in 'A Crumbling Apartment Building In the Middle of a New Orleans Slum, On the Night of Mardi Gras.' The DMs would set up the basic premise, including a few power-factions and 'NPCs' who would need to be played by PCs (such as Aleister Crowley in the first game); but the majority of the characters are made up by the players, within the realms of what's appropriate for the scenario (i.e., no Cyborg Assassins in the 1800s... though this is KULT after all...). The DMs then work to tie together everyone's background story, so that all the characters have other people whom they know 'in character', their accomplices and enemies. Some groups might be trying to stop a cult, while others might be cultists.

Why let the players design their characters? In my opinion it will almost always make the plot much more coherent when GMs write all the characters and distribute them to the players.

True, it's often difficult tying together all the plot-threads, but usually the players will want to be involved in the 'main story' so they'll make characters which have a reasonably good motive & background story. The GM should always have the power to veto stupid character ideas, of course; when I played games like this I usually had to submit three or four characters and the GMs would pick the one they liked most. But I'd say it's definitely more fun in any RPG to play a character you've designed yourself, so if I ran a game like this I would probably let at least 75% of the players use characters of their own design. If you want to play a good guy and the character you're given at the door is a crack fiend/Heller/devil worshiper, you might not have a very fun evening, after all.

Usually the game has a 'grand conjunction' or 'big meeting' feel, and some excuse for why the different opposing groups do not immediately kill one another (i.e., they have to work together to solve some problems, they don't know what's going on, the most notorious and dangerous characters are in disguise or are protected by their flunkies, etc.) As the evening progresses (these games usually only last a few hours), 'timed' events occur, perhaps building up to some grand conclusion or apocalypse at the end of the night, and all the players in the game are forced to react to them, whether to act together for the common good (if such a thing exists) or just to take advantage of the chaos to stab Character X in the back. Most of the evening passes relatively peacefully with lots of conspiratorial talking, getting to know friends, allies and strangers, and infrequent combat, which we usually handled with some not-very-atmospheric, but nevertheless easy-to-use solution like small plastic disc guns or modified games of rock-paper-scissors. ("Okay, I'm a lictor, so in every combat I take place in I can use three 'Fiats', which beat rock, paper, _AND_ scissors unless you have 'Dodge'... oh, you say you only have three hit points?") We never stuck very close to any pen-and-paper rules system, but usually found it necessary to use cards or something like that to keep track of attributes -- it's one thing for everyone to just role-play combat and insanity when they're with friends, but when there's a competitive element added, you have to have something more like objective rules and skills.

Depends on the maturity of the players...

Believe it or not, though this may sound somewhat dinky (Parties!... Rock-paper-scissors!...), it's incredibly fun and can be quite involving.

It's really funny fact that those "staged" games for small groups tend to be quite exotic around here, I have heard only about two or three of those being arranged. They might be much more effective in scaring the players than big free-form games, but it depends.

Players and DMs can make impressive costumes, people can do excellent acting and/or hamming it up, the setting can be well-decorated and full of music and sound effects, and the feeling of urgency, risk and power-struggling is enjoyable. It's a little difficult to do large-scale Haunted-House-type tricks like in a smaller LARP (since 20 or 30 people can't be monitored all the time without a half-dozen DMs, and the point is to create situations where the players can have fun by interacting with one another), but it's still possible to create good props and 'monsters', perhaps even to have the DMs' assistants play particularly large and threatening creatures who only show up at particular moments. For creatures which can take human form and mingle in society, as well as evil and insane people in general, this form of LARP is perfect -- you never know if you're talking to a Lictor until they flash you their 'Commanding Voice' card and say 'Go shoot the private detective and don't talk to anyone on the way. Now.' To simulate the Illusion raising and lowering, people could suddenly whip out masks and props, or the DMs can simply enter the room and say "All right, Chris, Steve, you see that Bob is now a gigantic dinosaur-like creature with a metal exoskeleton and a vaguely human skull... your Mental Balances both drop 10 points." It requires plenty of imagination, so the illusion of the game experience is never perfect, but it's still got most of the good aspects of a tabletop RPG, plus the fun of getting to interact with tons of people. In the games we ran, it was often a pain to die early in the game, as you had to go off to some other room of the house and watch TV or something while you waited with the other corpses for the game to be over; but in a KULT game, you could easily have another room for the In-Character Afterlife, and PCs who had the power could walk in and out of Inferno to taunt or to fetch slaves back from beyond the grave!
Of course, this sort of game is only as good as its players and DM, and it does tend to have its not-entirely-serious moments ("Aaargh!... Rock-paper-scissored to death by ASTAROTH HIMSELF! Damn!")

THE reason why I never play WW-style games.

But I wholeheartedly recommend 'em if you can get enough people together who'll take it seriously and who like KULT or other occult/horror RPGs. I've played science-fiction and space opera games using this method; other people I know have played superhero, historical drama, and horror games. I'd love to be in a KULT game like this, come to think of it. You don't get to individually tie up the players and pour maggots on them, but it has its own rewards.

I have played many LARP games based in the White Wolf World of Darkness using the mythos described in the above article. I have to agree that it is the best way I have found that doesn't require you having the budget of a small South American country. It requires the players to actually role-play *shock horror* and not just be lead by the nose through the entire LARP.
Never actually tried with Kult yet but I cant see why not.... try it.. its worth it