It happens about once a year. Someone writes in asking for advice about how to raffle off a house. "If we sell just 300 tickets at $100 apiece...," they write, daydreaming away. "And if we didn't sell enough, we could always just return the money."

The first thing I point out is that a private raffle constitutes illegal gambling in almost every state. And that's just for starters.

The expense of the project would be considerable. They'd better be ready to buy expensive and extensive advertising. They'd need legal advice about how to hold other people's money, what sort of contract they'd be making with ticket buyers, how to assure fair and impartial drawing of the winner. They'd have stationary, postage and printing costs, and if they really did find many ready to gamble, secretarial help. And they'd need all that whether they ever found 300 eager buyers and went through with the project or not. If it failed, in fact, there'd be the extra paperwork of returning everyone's money.

If the raffle did succeed, the lucky winner would owe the IRS a considerable sum, and had better be able to swing a mortgage loan promptly. That alone could keep potential buyers on the sidelines.

And anyhow -- they'd be breaking the law.

In an attempt to get around that, rafflers have sometimes set up essay or poetry contests with "entrance fees". At that point they'd need to retain expert judges, and might still face lawsuits from disgruntled poets who disagreed with the verdict.

Yes, houses, cars and Caribbean vacations do get raffled, but if you read the small type, you're likely to find that it's being done by a recognized charity. In most states, charities and non-profit organizations are the only ones allowed to sponsor gambling -- except, of course, for the states themselves.

So let's hear it for the lotteries -- hey, you never know!

Published: June 10, 1999

Use of this article without permission is a violation of federal copyright laws.