Why You Can’t Raffle Off Your House—and the Legal Loophole Sellers Are Using Instead

When a Phoenix homeowner tried to raffle off his $1.3 million mountainside estate for $10 a ticket this month, it seemed like a creative way to sidestep the traditional market. But Arizona regulators quickly shut it down—declaring the sweepstakes an illegal gambling operation.

The homeowner, working with a U.K.-based raffle platform, promised one lucky ticket holder would win the fully remodeled home—or a cash payout, depending on participation. But according to the Arizona Department of Gaming, the promotion violated multiple state laws by charging for entry, operating for profit, and lacking any connection to a qualifying nonprofit.

Despite the eye-catching promise of a luxury home for a few bucks, the sweepstakes was deemed an unlicensed lottery—a felony offense under Arizona law. 

“Unregulated operations put Arizonans at risk because there is no oversight, and therefore no accountability or safeguards in place," Jackie Johnson, director of the Arizona Department of Gaming, tells Realtor.com®. "The department will continue to take enforcement action to protect consumers, and we urge the public to learn what is legal before participating in or hosting any gambling activity.”

And yet, just last month, a couple in Texas’ Hill Country was able to work with the same platform, same concept, and raffle off their $7 million resort for $10 tickets. The contrast in outcomes has reignited questions about the legality of raffling off real estate and what loopholes some sellers are turning to instead.

Why raffling off your home is often illegal

At first glance, raffling off a home might seem like a harmless gimmick—a way to drum up interest or reach buyers priced out of the traditional market. But Darrell P. White, a California-based attorney, warns that it’s much more complicated.

“What might look like a clever marketing tactic can carry very real legal consequences if done outside the narrow exceptions the law allows,” he says.

At the core of the issue is that a home raffle typically involves payment in exchange for a chance to win a prize—which, under many state laws, meets the definition of a lottery. And lotteries are highly regulated.

To complicate matters, those rules and regulations vary widely from state to state.

“I can tell you the legality of raffling [off] a home depends heavily on state-specific laws,” says White. 

“In California, for example, raffles are generally restricted to certain nonprofit organizations, and even then, the proceeds and rules are tightly regulated. When a homeowner tries to raffle off their property, it often runs afoul of gambling statutes, charitable solicitation laws, or real estate transfer regulations,” he adds.

Many states, like Arizona, permit raffles only when run by registered 501(c)(3) nonprofit organizations, and even then, they must register with the state and follow strict rules about ticket sales, advertising, and prize distribution. Most explicitly prohibit individuals or for-profit businesses from conducting any kind of raffle, no matter the prize.

Raffle vs. sweepstakes

Legally, a raffle and a sweepstakes are very different animals.

A raffle is the most legally fraught. It requires participants to pay for a chance to win—this qualifies as gambling in most places. That’s why a raffle is typically limited to qualified nonprofits with strict oversight.

Sweepstakes, by contrast, offers a little more flexibility—if they include a no-purchase-necessary method of entry. Depending on local laws and regulations, that crucial detail can turn what would otherwise be considered gambling or the lottery into a promotional contest.

That’s the model one Texas couple used to raffle off a Hill Country resort: They structured it as a sweepstakes with a no-purchase-necessary clause and marketed it as a promotion for their Texas Land Dream company. Plus, they offered a promo code that sent 10% of ticket sales to support recovery efforts from the devastating Hill Country floods.

But despite their success, sweepstakes require careful vetting and legal expertise, especially when real estate is involved, legal experts caution.

The $1 home listing: A safer gimmick with similar aims

If raffles and sweepstakes sit on shaky legal ground, the $1 home listing offers a much safer—and increasingly popular—alternative.

These ultralow price listings aren’t intended to actually sell a home for a dollar. Instead, they serve as a marketing tactic: Generate buzz, attract attention, and spark a bidding war. And in a slower market, it’s working.

According to Realtor.com® data, 512 homes were listed for $1 in June 2025, an 82.9% increase from the same time in 2023.

“The number of homes listed for $1 has climbed steadily over the last year as sellers look for creative ways to draw buyer attention,” says Hannah Jones, a senior economic research analyst at Realtor.com.

White says that it’s a safer bet.

“The key difference between a ‘home raffle’ and gimmicks like a $1 auction is that a raffle usually requires the purchase of a ticket for a chance to win—making it look like an unlicensed lottery—whereas an auction involves bidding with the expectation that the highest offer wins, which aligns more closely with traditional sales practices,” he explains.

In essence, it’s a traditional auction-style sale—like one might encounter at a foreclosure or tax lien auction—wrapped in clickbait packaging.

Why sellers are turning to these tactics

Since when did it take raffles and buzzy auctions to sell homes?

Stubbornly high mortgage rates, rising inventory, and buyer burnout have made it harder to get homes off the market. As the market has turned from an extreme seller’s market to a more balanced, buyer-friendly one, sellers are starting to get creative.

These aren’t just gimmicks for gimmicks’ sake. They’re visibility engines designed to make a property stand out at a time when buyers need a little extra motivation to act.

But it doesn’t take a nationwide contest to stand out. In California's Ventura County, a therapy miniature horse named Lemon helped turn an otherwise standard townhome into a viral sensation. 

“I’ve found that the more I lean into creativity and authenticity, the stronger the response is,” says listing agent Lucy Oliveira, whose listing photos featuring Lemon brought in a surge of views and showings. “Now is the time to reimagine how we show up.”

That mindset has clearly caught on. But if you’re considering doing something out-of-the-box for your home sale, it’s worth pausing to consider the legality first.

Legal vs. clever: What you can do and what to avoid

“For homeowners considering these kinds of promotions, it’s essential to consult counsel familiar with both real estate and gaming laws in their state,” says White.

If that kind of expert insight isn’t available to you, it doesn’t mean creativity is off the table. A $1 listing, for example, can still generate attention and bidding momentum without crossing any legal lines, as long as offers are submitted through the standard homebuying process. 

Similarly, sweepstakes can sometimes be legally viable if they’re properly structured—with official rules, legal review, and most importantly, a no-purchase-necessary entry option—but don’t rely on loopholes or internet templates when your home is on the line.