See also: Sock Party
A blanket party is quite horrific, actually, despite the name.
It can be done in military basic training, summer camp, etc., and any place
with bunk beds and at least ten or so people.
All of the people "throwing" said blanket party need to put their
soap bars in a sock.
So getting back to the actual blanket party, this is best done when the
unlucky "birthday boy" is on the top bunk. Four people pull the
sheet down from the sides so as to restrict movement (it must be tight), one
person gags them with a sock or rolled up rag, and the rest take turns beating
the person with the soap-in-a-sock.
This can be seen in the movie Full Metal Jacket by the great Stanley
Kubrick. The obese and slightly retarded Private Leonard Lawrence, USMC
(or Private Gomer Pyle) fails numerous times, and his platoon pays for his
mistakes. For this, one night, the recruits throw him a blanket
party. It's quite scary, if you think about it from Pyle's
perspective.
Blanket parties are not that common, but from what I hear they do happen.
In any case, to allude to the short story "The Lottery" by Shirley
Jackson, everyone must have a hand in it, so no one can be blameless and thus
expose it.