And the winner is ... nobody
Photo of Phoenix raffle house by Baltimore Sun photographer Amy Davis
The contest organized to raffle off a $1.6 million house in Baltimore County sounded good to some people -- enough to sell 12,000 tickets at $100 a pop. But organizers needed about 20,000 ticket sales to make it worthwhile, and they were hoping for 35,000.
So: no raffle.
Steve Scarborough told me that he got a refund for the two tickets he bought, but "they kept $5.96 per ticket."
"I suppose that could add up to a tidy profit for them even if they only sold half of the 35,000 tickets," he wrote in an email. "I may want to look into an opportunity like this."
Now, the charity organizing this event warned in advance that the raffle would be canceled if too few tickets were sold, and it said it would keep a 1 percent processing charge if that happened. But 1 percent of $100 is $1, not $5.96. I checked in with the builder of the house, who partnered with the nonprofit Universal Peacemakers Foundation, to find out what was what.
Alan Klatsky, president of Prestige Development Inc., said the extra money didn't go to the charity. It went to Wall Street.
“The credit card companies who processed the charges (remember there were several) have their own charge which is passed on," he said through a spokeswoman.
UPDATE -- I chatted with the charity that organized the raffle, and here's what it says:
Bob Brantley, president of the Universal Peacemakers Foundation in Upperco, said one of the online credit-card processors he used charged a refund fee. It's not a fee he was passing along -- the processor held the ticket money until the event was canceled, and then sent it back to the ticket buyers with a bite, he said. "We'll do our very best" to reimburse ticket buyers who prove that they didn't get their full $100 back, he said.
Because Universal Peacemakers didn’t exercise its option to keep $1 of each ticket sold as a processing fee, "we got no funds at all out of this," Brantley added. Instead, the raffle turned out to be a money-losing proposition for the small nonprofit -- though how much won't be clear until he sees how many people want their credit-card fee refunded.
"We'll cover it somehow," he said. "We don't want anyone to feel like they were mistreated."
(So far, most of the ticket buyers who contacted him about the fee have decided not to ask the nonprofit to pony up out of its general funds.)
The raffle, originally scheduled for last fall, was pushed off until February to give people more time to buy tickets. But that wasn't time enough.
"The economy's pretty rough," Brantley said. "That was a major factor."
Food Link, for example, canceled a 2008 raffle fundraiser for an Anne Arundel County house. Executive Director Cathy Holstrom told my colleague Lorraine Mirabella that "it's a lot more complicated than it sounds. We actually lost a lost of money."
So what happens to the 6,200-square-foot mansion in Phoenix with "a huge center hall, gourmet kitchen, walnut floors, 16-foot ceilings and a his and hers marble bath in the first-floor master suite"?
Klatsky is opting for the route many home sellers take: He's putting it on the market in the spring.
"A second model home is also planned for this summer as well," he said.
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Comments
I thought legally they would have to return the whole amount, even though they had expenses (like the credit card processing fee or advertising for the auction in the first place).
Knowing I'd lose money without getting a chance to win a house would make me hesitant to buy a raffle ticket like this in the future.
Posted by: Justine | March 9, 2010 8:36 AM
I've dealt with several credit card processors for my business and I vividly recall in all the terms of service that merchants were not allowed to charge any convenience or processing fees to the consumer for accepting the credit card.
How is it that they are passing along the processing charges to the raffle buyers?
Posted by: Danielle | March 9, 2010 8:36 AM
That's a really good question, Danielle. Can anyone think of a legitimate reason for passing on fees?
Posted by: Jamie Smith Hopkins | March 9, 2010 8:43 AM
Sounds like a lawsuit waiting to happen... class action at that.
Posted by: Frank Rizzo | March 9, 2010 9:55 AM
This is an e-mail I received from TicketLeap:
Per the event organizer's discretion, they chose to pass the refunding fees
off to their patrons. If you would like to contact them regarding this
matter, their information is below:
Brantley@brantleygroup.com
443-471-6668
Once again I do apologize for this inconvenience. Please feel free to
contact TicketLeap if you have any further questions or concerns.
All the Best,
Client Support Representative
TicketLeap.com
1700 Sansom Street, 6th Floor
Philadelphia, PA 19103
Posted by: Dutch | March 9, 2010 11:50 AM
Suckers!
Posted by: Sir Scott | March 9, 2010 3:22 PM
I bought tickets and did not receive a refund. Does anyone know how I can get refunded? The phone number on the back of the ticket has been disconnected.
Posted by: Cindy | March 9, 2010 3:35 PM
Cindy, you'll want to contact the nonprofit, Universal Peacemakers Foundation. Here's the website: www.universalpeacemakersfoundation.org
Posted by: Jamie Smith Hopkins | March 9, 2010 4:20 PM
Does anyone else see the irony of the situation? Ticket buyers: greed thinking they can get something for virtually nothing. Ticket sellers: greed thinking they can sell a house for more money than it's worth. Both sides lose and the only winner: the banks. Encapsulates the last few years of the housing market nicely.
Posted by: Josh Dowlut | March 9, 2010 4:55 PM
I think this is the reason that House Raffles are illegal in some states. For all the ones that go well there are at just as many if not more that turn sour.
Posted by: Tim Heston | March 9, 2010 7:11 PM
And according to your article in today's paper about the house raffle, they plan on building a second model home.
Why ???? Because they had such good luck selling and/or raffling off the first one ????
My captcha words are "lawsuits still"
How appropriate.
Posted by: Kathy | March 10, 2010 9:39 AM
Hope springs eternal!
Posted by: Jamie Smith Hopkins | March 10, 2010 9:53 AM
Perhaps they weren't able to off-load tickets because the house was, to put it bluntly, uggums. Other than a cult, who would be interested???
Posted by: ruth | March 10, 2010 3:52 PM
1.6 million for a house with that much siding on the front? gross.
Posted by: Mike | March 11, 2010 2:06 PM
I would have bought a ticket if I knew about it. Not sure if I could have afforded the taxes or BGE bill though :-)
Glad I did not now...I also never heard if this charity. There used to be something called "House with a Heart" that I used to buy tickets for, but those raffles always seemed to be successful. You could even buy tickets at Giant.
Posted by: Gina | March 12, 2010 4:59 PM
How many total tickets were sold? They could have sold tickets at $50 each, and maybe they would have sold 100,000 tickets.
Posted by: SJR732 | March 14, 2010 12:22 PM