I've heard of lots of companies that have booths at conferences where they scan your badge for a """chance""" to win some prize. Then they look up each person's credentials, and if someone is high up in a company that they wish to establish communications with, they give that person a prize to get their foot in the door.
The story about the Tesla took place at Four Winds Casino New Buffalo, which is in Michigan, not Las Vegas. Legally speaking, it is a sovereign nation so I would not put much trust in "local authorities" to protect consumers. Further, although Nevada does have a gaming commission, there are still plenty of "scams" and questionable promotional tactics used by companies both inside and outside of the casinos. Time-share sales, for example, are big business in Las Vegas.
The real contests are generally run by a third party firm that has no interest in the winners. They are payed to pick someone at random and deliver the prize and paperwork.
If your already investing that much money, can't the company also cover the taxes, or do most states have laws forbidding that? It seems like bad publicity if your "winners" have to pay several thousand in sales tax to get their "prize car."
Income taxes are progressive, of course, and then there are a mess of deductions. But they could still make an estimate by just assuming the person is in the $37K to $92K bracket. So that's 25% [1].
> It seems like bad publicity if your "winners" have to pay several thousand in sales tax to get their "prize car."
I think they make the judgement that offering a prize that is 3/4ths as expensive would be less good publicity vs. the largely unknown bad publicity that is mostly oriented towards the government anyway.
[1] ... and yeah, there's 25% on that, and 25% on that, etc.; for tax rates < 1 it's convergent, if the tax_paid = rate * (original_value + tax_paid), just solve for tax_paid.
Think about them why? Gambling income is in a completely different category from a prize you won for free. There's no reason they have to be taxed the same.
The only difference is that as a professional, you're filing your taxes as a business. It's still "income"[1], it's just the entity filing is a business rather than a specific person.
Regardless, a prize you win is not taxed as a sale.
> There's no reason they have to be taxed the same.
To the extent they're treated inconsistently, people will use the discrepancy to game the system. Politicians do that deliberately, of course, since it's an opportunity for graft.
In gambling, you're putting money into the system, possibly applying skill, and getting money back out.
With free prizes, you're just being given things with nothing in return.
That's a big difference. And not one that you can effectively game. It's very clear whether you're inputting money or not.
It never covered income tax though; thats on you.
You can win a car but you have to be able to pay taxes and insurance for it, too.