Is Selling a Home by Using a Lottery Legal?

Written by Candace Webb; Reviewed by Jodi Thornton-O'Connell, GRI, Fitness & Nutrition Coaching Certificate; Updated January 24, 2019

If your home is not selling on the market, or you don't want to deal with having your life interrupted for showings and an open house, you may have considered converting to a lottery give-away to get the sale done. As good of an idea as that might seem when compared to going through the process of a traditional sale, you should note that a lottery/raffle sale of a home is illegal nationwide, except under narrowly defined circumstances.


It's generally illegal in the U.S. to sell your home using a lottery or raffle. However, some exceptions exist.

What Exactly is a Lottery?

The words lottery and raffle are often used interchangeably. It is a game that is left up to chance and does not have any skill or talent involved in playing or winning. In most cases, lotteries or raffles are used to generate funding. Examples include buying a ticket and hoping to win tickets to a concert or a fun vacation. The premise is that there are enough ticket sales to offset the cost of the prize and provide a profit for the organization running the lottery.

How Would a House Lottery Work?

Hopeful participants purchase tickets at a fixed dollar amount. On the event date, a ticket is drawn from all the tickets sold, and the holder of that ticket wins the house. The winner would, of course, be responsible for the house, property taxes, etc., once the title gets transferred. The lottery is publicized before the drawing, and typically photos of the interior and exterior of the home are posted.

Sounds like a win-win, right? The winning ticketholder gets a house, and you have sold your house, hopefully for a tidy profit.

There is One Little Problem

In almost every state in the U.S., lotteries and raffles are considered gambling and, as such, are illegal in most places. Even in states that allow gambling through casinos and state-run lotteries, there are stringent guidelines about who can conduct such events. If a housing lottery is legal in the state it is in, it can only be raffled off through a specific type of organization, almost always non-profit.

Turning it Over to the Non-Profit and Offer Some of the Proceeds

It sounds good. Find a non-profit that is willing to let you sign the house over to it. Then have that organization publicize and conduct the lottery. When the winning ticket gets drawn, the non-profit signs the house over to the winner after all the proper paperwork is complete. The non-profit takes a share of ticket sales, and you get the rest, hopefully above and beyond what you were going to ask for on the market. Unfortunately, you can't do this.

Every state has laws on the books that prohibit a private person or business from profiting in a lottery. All proceeds must be used for the charity that held the event, minus any costs of running it. Costs can include printing tickets, paying employees and other things such as marketing. However, at no time can you as the homeowner make a dime.

A Bit of Good News

California law states that at least 90 percent of gross receipts must benefit the non-profit organization. Also, no part of the raffle ticket sales can be done over the internet. Without that ability, it would be almost impossible to sell enough tickets to meet your price point, even if you were allowed to profit from it, which you are not.

If you are in pressing need of a massive tax deduction, then donating your house to the non-profit for a raffle and letting them keep the proceeds might work for you. While you cannot get any money from the sale of your house through a non-profit's lottery for it, you are allowed to claim the tax deduction from it. Let's face it. To get to this point, it means you have given away a house. Therefore, you are entitled to the tax break.

Some states require the charitable organization to be in business a certain number of years before conducting a lottery, while other states do not have such restrictions. For example, Illinois allows political committees to apply for a raffle license regardless of how long the committee has been in existence.

About the Author

Candace  Webb


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