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On the face of it, Omaze seems to be a perfectly legitimate charity funding platform. However, many are suspicious of its ability to generate large profits and offer prizes worth over a million dollars purely from sweepstake entry donations.
Omaze is a legitimate charity online funding platform. It admits that 85% of donations go to profit-making and cost-covering when offering high-value prizes, leaving only around 15% for charities. Also, donators seem to receive more sweepstake entries than applicants not donating.
The legitimacy of Omaze sweepstakes hinges on what is commonly understood as a legitimate or legal sweepstake draw. Legal sweepstakes cannot induce anybody to pay to enter, and all entries must have an equal chance of winning.
- The Question Of Omaze’s Legitimacy
- The Link Between Donations And Omaze Sweepstake Entries
- Are Omaze Sweepstakes Actually Lotteries?
- Legit But Only Just
The Question Of Omaze’s Legitimacy
In 2019, an investigation was opened against Omaze in California to determine whether its fundraising sweepstake was actually an illegal “raffle” or lottery under California law since it violated the 90% of proceeds to charity rule.
In January 2020, Omaze settled by paying $90,000 to cover investigation costs and $30,000 in penalties and late fees “for operating without being properly registered.” Omaze also agreed to clearly inform entrants that no payment is needed to participate.
Omaze settled without admitting to any wrongdoing. Megan Reilly, the spokesperson for Omaze, stated that the settlement did not result from any complaint, case, or litigation but purely from an informal inquiry by the attorney general’s office.
Months after Omaze’s U.K. launch, the Advertising Standards Agency upheld complaints that its fundraising was misleading because it did not clearly and prominently explain the free entry route option.
Despite reservations about whether Omaze’s sweepstakes are actual sweepstakes and whether donors have a higher chance of winning than free entrants, there is no evidence that the sweepstake is directly rigged, where the highest donor is guaranteed to win, and free entries are guaranteed to lose.
There is no evidence that winners are not randomly chosen. However, this does not prove that free entries have an equal chance of winning.
As a charity fundraising machine, there is no doubt that it is very successful. It generates an annual revenue of $100 – 500 million, employs 100-500 people, and by 2020 raised over $130 million for over 350 various charities. All sweepstake draws have well-documented winners who win high-value prizes such as cars, homes, and meetings with celebrities.
The Link Between Donations And Omaze Sweepstake Entries
Its official rules section found on Omaze’s official website explicitly states in big, bold letters that no donations are required to enter a sweepstake draw and that all entries have an equal chance of winning. There are 2 ways of entering the sweepstake draw:
- Entering by donating: On the website, click the Enter now button, and fill in your name, contact, and payment details. Once you donate, Omaze allocates you a number of entries, depending on the dollar value of your donation.
- Entering for free: After clicking the Enter Now button, click on the Enter Without Contributing link and fill out the Alternative Method of Entry form. Every free entry is assigned 2,000 entries, and the same maximum number of entries limits both free and donating entrants.
Like me, I am certain that most readers will find the information above very unclear. Presumably, if the number of entries allocated is proportional to dollars contributed, contributing some dollars must get you more than contributing none.
By this logic, if contributing none gets you 2,000 entries, then contributing some must get you more. However, the donator’s advantage seems to be nullified by a common number of entries limit.
Confusingly, according to the rules, before January 5, 2021, A free entry was allocated 2,000 entries which were equivalent to the number of entries given to an entrant donating $100. From this, it is not clear whether the $100 donation purchased an additional 2,000 entries or whether, like the free entrant, the donator was left with only 2,000 entries, the same as free entrants.
I was curious to see how the above information on the rules page compares to the information given on the actual sweepstake entry page. On entering the Omaze official webpage, I clicked on the celebrity tab, which offers as a prize a meeting with celebrities and interesting people.
The page offered an Antarctic adventure and a meeting with the American singer-songwriter Jimmy Buffett. Donations go to Ocean Conservancy, an advocacy group to keep oceans clean and healthy.
Clicking on the Enter Now button directs you down the page offering the following number of entries per amount donated:
- $10 donations = 20 entries
- $25 donations = 125 entries
- $50 donations = 500 entries
- $100 donations = 1,200 entries
- $150 donations = 2,000 entries
The Alternative Method of Entry form does not indicate that you get allocated 2,000 entries for $0. The ‘stuff, lawyers want you to read‘ section states that each entrant, irrespective of entry method, is limited to 6000 entries.
Now, if, according to the rules section, free entries receive 2,000 entries, does that mean that if you fill the Alternative Method of Entry 3x, exhausting your 6,000 entries limit (3×2,000 entries), one has the same chance of winning as someone donating $150 times, since 3×2,000 = 6,000? Also, why would someone not donating receive 100x more entries than some contributing $10 (20 entries)?
Are Omaze Sweepstakes Actually Lotteries?
One way for a firm to promote its brand is to run a sweepstake, open to the public for free. Winning entries win a prize and are chosen at random. Importantly, legitimate sweepstakes are purely promotional and not funding platforms. In the case of Omaze, sweepstakes linked to donations seem to be the primary funding vehicle for targeted charities.
Omaze sweepstakes seem to fund rather than simply promote. Omaze uses the loophole, which allows free entry. Also, the donation method of entry is optional. Therefore, the payment is a voluntary donation rather than an entry price.
Since entries seem to be weighted according to the dollar value donated, it appears that higher doners have a greater chance of winning, thus violating the ‘equal chance of winning’ rule. Why doesn’t Omaze declare their events as lotteries or raffles, which allow entry tickets to be sold?
Traditionally, in the U.S., the problem is that lotteries were only legal for the federal government and states, not for private gain.
The states of Alabama, Utah, and Hawaii, prohibit lotteries altogether. In the other 47 states, they are allowed but must be properly registered and are highly regulated. For example, under California law, lotteries designed to raise funding for charities must donate at least 90% of their proceeds to charity. Only around $1.5 for every $10 donated to Omaze actually goes to charity.
Legit But Only Just
There is no evidence of Omaze not delivering. It really does help well-known and registered charities with millions of dollars, and winners really do win high-value prizes. There is no hard evidence that free entrants cannot win.
However, Omaze is a for-profit organization, and donors should be mindful that around 85% of their donation stays with Omaze. It also seems likely, that high donors have a better chance of winning, even if there are no guarantees.
Looking for some sweepstakes to enter? Try our giveaways mega list here, we do not list Omaze giveaways at the moment though.