I think it’s mostly that everything here has to be a scam and a con all of the time.
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Add to the TL;DR version:
They only award the Dream House if it reaches a reserve threshold-- and that has only ever been reached 2 of the 11 years of the charity.
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A massive new casino opened nearby recently, and when I went to check it out, noticed that some of the slot machines have displays of “jackpot prizes” – usually in the $10k to $25k range – for top lucky winners. And in very tiny legalese on the machine, there’s a disclaimer that all jackpot prizes are paid out in yearly installments over a 10 year period and of course are subject to tax etc etc etc.
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If the raffle’s entire business model is based on participants’ misunderstanding of the stakes involved then it is a fundamentally dishonest business model and needs to be shut down.
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Under that principle you could put pretty much every company in The United States out of business. So, what @anon61833566 said.
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♬ Bait and switch, con as old as time. ♫
At least here the switch is something big.
Someone should look into the “charity” organizers accounting. A lot of these business pulling in lavish profits are using loose non-profit regulations to dodge paying their own share of taxes, ironically. Those laws should be tightened up with much more stringent restrictions on what these hustlers can avoid owing the government.
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Actually I think the VAST majority of lottery winners opt for the lump sum payout which is considerably less than the 20 year annuity value that they advertise. Right now, for example, Powerball is being advertised all over as a $40MM jackpot, but if you go to the website they say the cash value is $28MM (and that’s still before taxes). But at least there’s no hidden threshold.
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I will buy one… when the jackpot gets high. Because next to nothing chance is better than no chance. However twice/thrice next to nothing is still next to nothing so I stop at one ticket.
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I just do it when I happen to have a few ones in my pocket…which is rare to be perfectly honest. I hardly ever have cash and even when I do there is one of my kids saying “I want boba tea” or “Can we get a snack?”
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Also the daydreams about what you’d do with the winnings (which is what you’re REALLY buying) are just as fun with one ticket as they are with multiple tickets.
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What sets this apart is multiple prizes. Two states in my area changed regulations for raffles and contests involving real estate when homeowners having trouble making loan payments or selling started using this tactic. Auctions might be another area with problems. The idea was to use a contest to collect enough in fees to pay down or pay off the mortgage. Some running contests had no intention of giving the house as a prize, because their goal was to live in the house themselves. If it’s not marketed well enough to get lots of suckers players, it doesn’t always work as planned:
Don’t forget those machines that announce the player has won, only to have it invalidated because of a mysterious malfunction.
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It sort of makes financial sense- take the tax hit right away, sock the rest away in various accounts and investments, and live off the interest.
(and the tax hit is pretty massive- figure about 40-50% of the cash payout going to taxes.)
Most people would take the cash option instead of a prize, simply because of the ‘oh, you won a 10 million dollar house- here’s the tax bill for it, DUE IMMEDIATELY’ because they don’t have the money to pay the taxes on their brand new asset.
Remember the show “extreme makeover, home edition”? A family in my area was on it. They had to sell their dream house the next year, because they couldn’t afford the property tax bill on the house’s new value.
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I dream about winning, but have never bought a lottery ticket.That’s even cheaper.
My big plan is to just buy once, probably without real planning, on some important day. But I keep forgetting.
So I missed the chance on my 60th birthday two weeks ago. NI’m not sure when another suitable day will come along.
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When I lived in SF I would get big glossy advertising material for this contest in my mailbox every year. It seemed on par with the ridiculous spending for local elections. That in itself told me that this was more of a marketing exercise than fundraising exercise.
That’s really the key take away. Offering a cash prize as an alternative to a the advertised prize is a good thing since most people couldn’t afford the property taxes let alone the income taxes on a $10,000,000 house. However, advertising a house but only awarding awarding it or the cash alternative in 2 out of 11 years is legalized fraud.
It used to be that the FTC said something to the effect that you can’t legally advertise promises in big text that you take away tiny text, and that is what they have done here, to the tune of tens of millions of dollars.
I’ve always wondered how those “dream house” raffles were legal and what the catch was since gambling is largely illegal in California. I didn’t know that they were for charities since I saw no mention of the beneficiaries on the big billboards. (And that they are perhaps really for the marketing company that makes millions putting these on.)
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I think that should be illegal unless they allow the purchase of $1 tickets for 50 cents if you say the 50 cents is an annuity.
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The raffle is depicted as the $10m house and the cash alternatives are small print. It might not be illegal, but it’s gross, and the marketing is nearly identical to predatory lending for home loans.
Consider why they don’t say “raffle for cash” or “raffle for $2m condo with all fees and taxes paid for 10 years” or whatever. It’s about hooking poor folk dreaming BIG.
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I’d argue it’s gross and also foolish to enter into these kinds of contests at that ticket price as well.
You are not wrong. But just as I find the Televangelist despicable, I am not too fond of their flock either.
Edit to your edit: Oh it absolutely is hooking them and reeling them in. but all these sorts of “lotteries” do just that. If its too good to be true…right? At some point grown adults need to make good decisions.
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Alternatively it is a hope tax.
Either way it is bad
If we want to get into maths, then the logical way to take part in a lottery is:
Don’t spend money you can’t afford!
Don’t buy scratchcards, they are designed to get you to buy more.
Buy only one ticket, you will never win without one and buying more than one won’t significantly improve your odds over just one ticket.
Pick what numbers you like, they are as likely to come up as any other combinations.
I choose to not buy tickets though.
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