They’re always advertising “you could win this house” and “it’s for charity” – is it all just a scam?
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Omaze was a privately owned, for-profit company that had two models to raise funds for charities. Sweepstake entries for a celebrity experience (set visit, dinner date, tickets to a premiere, etc.) see 60% of the money donated to charity, 25% towards fees and Omaze’s costs for advertising and creating content for the event, and 15% to Omaze as profit.
For prize-based experiences (like a car, vacation, or tuition), 15% went to the charity, 70% to sourcing and shipping the prize, covering the winner’s taxes, processing credit card fees, and Omaze’s costs in marketing and creating content for the experience, and 15% to Omaze in profit.
I’ve not long finished doing some work on the Omaze house on the North Norfolk coast & I got to know the guy who won it. I can confirm that it’s a legit competition!
It’s like a lottery but with a more specific prize. Lotteries work by taking in more money than they give out. If 100 people pay $1 each to play the lottery, you might award a $75 jackpot and keep the remaining $25 (in fact, most lotteries are run by the government and used to fund public services, so they have roughly the same end result as Omaze – the surplus money goes to ” a good cause”). This means that lotteries are generally a bad deal because people who play them will lose money on average.
In the case of Omaze, instead of getting a lot of money that you could spend on a house if you want, you just get the house. So Omaze is only a scam in the sense that it’s a lottery, though that shouldn’t be a shock. Of course the charity drive is going to be a financial loss for its participants. But if you’re suspicious that the promised prizes were never awarded, there’s no evidence that Omaze was that kind of scam. With that said, it bears mentioning that Omaze is a “for-profit fundraising company,” which means that it has no obligation to direct all of the surplus money to charity. Some of that money goes to the owner just because he feels like it.
For the UK version of Omaze which gives away houses and cars and cash, it’s pretty simply: People buy tickets. The amount that comes in from ticket sales is more than amount needed to buy the house/car. There’s no scam, people just really love a lottery. There’s just a lot of people buying tickets.
As others have noted, it’s a lottery and people have won the houses. I believe it’s the case that a minimum value of tickets need to be sold for the house to be the prize, so costs are covered, otherwise the winning prize is a lower value of money/other.
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