What kind of scam is this?

[v2prwsmb45yhuq3wj23vpjk]

Not that I'm falling for any sort of scam.


Entity A presents population consisting of 100,000 people each with a prize certificate that entitles them to a chance at a given prize. They have a 1/100,000 chance of that certificate winning them a $100,000 prize and a 99,999/100,000 chance of that certificate winning them a $1 prize. The prizes have already been randomized for assigned to each certificate, but the certificates only say that each certificate is a winner and that they could win up to $100,000. In order to claim their prize, they must pay a $5 handling fee. They do not know the amount of their prize until after they have paid the fee.

[This name sucks]

1m certificates = 5m dollars in handling fees.

Assuming the prizes are real they should end up shelling out 2m dollars.

Net gain of 3m dollars.

Ok its actually 100 000 and not 1m but the point still works

[Dald]

A lie? Each one has probably a 1 dollar prize, so they do win.

[Underverse]

sounds like a lottery to me

[Zardi]

Not too different from regular lotto. Some people win big, others get nothing, with a percentage of the earnings going to the host. Now, the amount of benefit they may be getting is ridiculous (40% prizes, 60% benefit), so yes I'd say this is a scam. Cleverly disguised, but unfair enough to be one.

[Tribunal]

Up the scale (number of tickets, charge to play, amount of prizes, number of winners) and you have the lottery. Amount coming in is > amount coming out. It's not so much a scam as it is gambling with a major house advantage (which can be scammy, but not a scam where it is legalized).

Best part is state-run lottos then get to tax the prize money on top.

[v2prwsmb45yhuq3wj23vpjk]

sounds like a lottery to me

It's a bit different from a lottery, though. You aren't picking something and then having something else picking something and seeing if they match, you are being given something that has already been picked with a handling fee to find out what you have won.

Not too different from regular lotto. Some people win big, others get nothing, with a percentage of the earnings going to the host. Now, the amount of benefit they may be getting is ridiculous (40% prizes, 60% benefit), so yes I'd say this is a scam. Cleverly disguised, but unfair enough to be one.

I know it's a scam, I'm looking for a specific name for it. I'm not planning to pull it off or anything, I'm just wondering what it's called.

[KeirAdish]

So let me get this straight 99,999 people will pay 4 dollars to learn they lost where as one person gets 99,995$?

[v2prwsmb45yhuq3wj23vpjk]

So let me get this straight 99,999 people will pay 4 dollars to learn they lost where as one person gets 99,995$?

That's pretty much it.

[sizzlinsauce]

He offers just $100,000 but gains $300,000 at the most if he is offering $100k on one ticket and the rest are $1. even then i doubt they will get enough people giving them $5 to come up with the $300k profit.

[Underverse]

It's a bit different from a lottery, though. You aren't picking something and then having something else picking something and seeing if they match, you are being given something that has already been picked with a handling fee to find out what you have won.

Only difference is that the number chosen is known by a human

[KeirAdish]

That's pretty much it.

Ok, That's what I thought...

Yeah I wouldn't do it.

[Tribunal]

It's a bit different from a lottery, though. You aren't picking something and then having something else picking something and seeing if they match, you are being given something that has already been picked with a handling fee to find out what you have won.

Scratch-offs are predetermined, and you pay for them in order to find out if you've won. It is the lotto, just with a different prize distribution (20% return for 99.9999999% vs distributed returns for regular scratch off).

Not sure that it has a direct name (not every scam does), especially since a variant of it is legal, but I will see what I can find.

[Sunseeker]

That's basically how the lottery works. It's only a scam if you play. It comes out to a net gain for whoever sets up the event.

100,000 tickets, they cost $5 to "play".
1/100,000 chance to win.

Assuming everyone plays, that means people send you $500,000.00. Everyone is a $1 winner at least so in the end you shell out $199,999.00. Net gain of $300,000.00 dollars.

The flaw in the plan is what if only 10,000 people play and one of them is the winner? Now you're only bringing in $50,000.00, and shelling out $109,999.00 A net loss of $59,000.00 dollars. Of course, if none of them are the winner, you're still ahead $40,000.00

But that's why they call it gambling.

It's only a scam if the guy setting it up has no intention to pay up. As long as he does, it's legit.

[v2prwsmb45yhuq3wj23vpjk]

He offers just $100,000 but gains $300,000 at the most if he is offering $100k on one ticket and the rest are $1. even then i doubt they will get enough people giving them $5 to come up with the $300k profit.

And the majority of the time the $100k winner won't turn theirs in, either.

Scratch-offs are predetermined, and you pay for them in order to find out if you've won. It is the lotto, just with a different prize distribution (20% return for 99.9999999% vs distributed returns for regular scratch off).

Not sure that it has a direct name (not every scam does), especially since a variant of it is legal, but I will see what I can find.

Well you aren't given a scratch-off and have to pay to find out, you buy it.

[Mormolyce]

It's a bit different from a lottery, though. You aren't picking something and then having something else picking something and seeing if they match, you are being given something that has already been picked with a handling fee to find out what you have won.

Isn't it just like those scratch n win things?

But there's a regulatory body that makes sure those kind of things are fair and square.

[v2prwsmb45yhuq3wj23vpjk]

Isn't it just like those scratch n win things?

But there's a regulatory body that makes sure those kind of things are fair and square.

Similar but technically different.

[Auxis]

It sounds like it could be a raffle?

[Tribunal]

Advance Fee fraud can deal with 'lotto winnings' or 'prize money' that the scammer claims you have to pay a finder's fee or taxes on up front. Usually on a much grander scale and also for lottery money that doesn't actually exist, however.

I get why you're saying this is scammy. It's a bad deal with terrible odds for the majority of the players. BUT so is the regular lottery. That is why it is not a money-making endeavour, but rather something that is supposed to be done for entertainment.

Hell, right now there are similar odds (1 in ~90,000) to win a prize at the $2,000 level in the Texas State Lotto. Your 'scam' game is making out better!

[v2prwsmb45yhuq3wj23vpjk]

It sounds like it could be a raffle?

Nope. Raffles are tickets with a # where a matching # is drawn randomly.