Would You Buy a $150 Raffle Ticket For a Chance to Win a $350,000 House?
Posted on
Wed, 28th February, 2007 by
Jeremy
Before you answer let’s take a look at some facts about the raffle. First, this is a real raffle (local for me). Each entry into the raffle costs a cool $150 cash, which is quite a bit of money that you could be just throwing into the trash. But, when you break down the raffle into pieces you can determine if this is a good idea or not.
The most important thing to consider is that this raffle is only selling a fixed number of tickets. This means there are exact odds to winning, and the odds are significantly better than any lottery. Only 3,800 tickets will be sold, once they are sold out no more will be available. That means you have a 1 in 3,800 chance of winning the grand prize. Not too shabby, but still a long shot. But the house is not the only prize, there are many more. They are also giving away two brand new vehicles valued at $21,000 each, or you can elect to receive a cash award of $15,000.
Beyond the three large prizes they are awarding many other prizes. All said and done they will be awarding 40 prizes that are worth more than the ticket price. This means the odds of winning anything and making your money back is 1 in 95. Now those are slightly better odds.
But are those odds good enough for you to throw $150 at it? There is one last issue to consider and that this whole thing is for charity, two very important organizations around here. While you cannot deduct the value of the ticket as a charitable donation at least you are giving money to an organization that could use the help.
So would it be worth purchasing a ticket? I’m still undecided myself. Common sense tells me no, you’ll never win, you never win anything so use the money for something else. But the other side of me says sure why not, somebody has to win and it isn’t like you can’t afford losing $150. Plus the raffle directly helps one of my employers.
I guess we’ll have to wait and see once tickets go on sale in a few weeks. Who knows, maybe I’ll be reporting back with news of my winnings.
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The odds are way better than a trillion to one for the lottery. But factor in your taxes for your prize winnings. That’s coming out of your pocket with the raffle ticket cost if you win.
Reminds me of those dream home reality show winners who couldn’t keep the house because of the property taxes, or the space flight winner who turned down the prize because of the tax bill.
mapgirl, the good news is (which I forgot to mention) is that for the house and vehicles you can elect to receive a lump sum cash option and they just automatically withhold the taxes from that.
That is what I would do personally since I have no need for a new vehicle (plus registration, insurance, taxes…) and we already own a decent home. And since the location of the home is in a more affluent area and given the value I don’t think I would want to be stuck with owing taxes on the prize plus the property tax bill!
It’s not such a bad deal. The expected value of one of these tickets (before taxes) is about $100.
Here’s how you get that: $350k + $21k + $15k = $386k
Odds of winning: 1/3800
Thus: $386k / 3800 = $101.58
For the record, last friday night I went to a fund raiser that included a raffle. I bought 3 tickets (for $2 each) just for fun and to support a good cause. I guess there were 1000 tickets sold. Surprisingly I won a 1GB iPod Suffle (worth $80). Sooo… based on past experience… I’d buy that ticket.
We recently had a raffle like that in my town. The charity was selling $40 tickets, maximum of 1,400 tickets. We thought the odds of winning sounded pretty good, but the prizes were not anything of interest to us. After the raffle there was a board posted announcing the winners. Only 1,007 people had bought tickets! I was sure they would sell out, but it turned out that the few who bought in ended up with even better odds than expected.
My spouse and I recently purchased tickets on a similar draw in my area at the end of last year. We purchased the tickets in November for the draw held on December 28th. In that case there were only 2500 tickets sold, and we each had some spare cash for the month so we figured it was better than a couple of nights out at a high calorie meal. The sheer thought of having a 1 in 1250 chance of winning a brand new house for a month was worth it to us, especially because we were just ramping up to buy a house in the beginning of the new year.
It’s sad to say we didn’t win, but now we are moving from our apartment in to a brand new house we just purchased anyway. If a similar thing happens this year I’ll probably buy a ticket again, as long as we have the cash set aside for it. Plus, in Canada, no tax on winnings
I have participated in a raffle like that. The house was worth a million, but they also sold more tickets. I think it was also for $150. Strictly speaking, the odds are bad, and you shouldn’t do it. (expected value
If you keep entering contests, the odds that you’ll win at least one of them improves with each one you enter.
Well I guess it doesn’t matter now. I found out today that the tickets were all sold out in less than 48 hours. So I didn’t get to purchase one, so now we’ll never know. Oh well.