Home raffle may open door to legal trouble

In these challenging economic times, homeowners and their agents are getting more and more creative in how they try to sell their homes.

One tactic popping up across the country is a raffle in which sellers offer a limited number of raffle tickets to prospective buyers then draw one winner who gets the home. One problem with this approach is that holding a raffle for a house is not legal in many states, including Pennsylvania.

“In Pennsylvania, paying for an opportunity to win a prize awarded by chance is defined as gambling,” said Hank Lerner, director of professional practice for PAR. “The only gambling activities allowed in Pennsylvania are horse racing, the lottery, bingo, casino games and certain games conducted under The Small Games of Chance Act. In short, a home raffle isn’t going to be legal under any of these rules.”

Lerner says there can also be problems for participants who purchase raffle tickets for this sort of giveaway.  Aside from the chance that the raffle will eventually be called off, buyers should also be aware of raffle scams.

For example, thousands of ticket holders hoping to win a $1.6 million five bedroom mansion in Massapequa, N.Y. were victimized by a scammer who used more than $100,000 in raffle money on luxury items including airline tickets, lavish hotels and rental cars before his arrest earlier this year.

Even after warnings about the legality of this approach including a home raffle shut down by the Pennsylvania Attorney General several years ago, individuals and groups that see successful raffles in other states might still try a home raffle in Pennsylvania.

“Just because something occurred elsewhere doesn’t make it legal in Pennsylvania and in fact it might not even have been legal where it happened,” warned Lerner. “If you’re going to try anything out of the ordinary, be sure to check with your broker and brokerage counsel in advance so you don’t put yourself in a bad position by trying something that isn’t allowed.”