Just to add to the other guide:
To do this with 3 controllers, have all controllers connected BEFORE hitting 'Mini Games' on the main menu. This will then take you to a screen where you can sign in the other controllers. Choose GUEST for both (unless you have a second gold account you want to boost with) and click A to sign in. Choose to CREATE a game, and set it to PUBLIC.
As soon as you load into the 'lobby' area, hit X on all 3 controllers to begin a game before anyone can get in. Should someone get into your game or join in progress, don't worry. You can kick them from the lobby by hitting the BACK button to bring up the list of people in the game, go down to their name and hit A to kick them. Then quickly ready up with X on all controllers to start the game.
My main note to add is that I did this with 2 regular 360 controllers and 1 Guitar Hero controller, so for anyone that doesn't have 3 controllers but has a Guitar Hero guitar, this is an option. In this case, menus are scrolled using the strum bar, and buttons correspond to their colour e.g. ready up is X, so hit the blue button on the guitar.