Can anyone run a lottery?

About 10 year’s ago, I received and re-circulated an emailed joke about a scam that ran as follows:  (Disclaimer:  I am not that organized so have not retrieved this story from my archives. I ‘googled’ it and got this version):

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A city boy moved to the country and bought a donkey from an old farmer for $100. The farmer agreed to deliver the mule the next day.
The next day, the farmer drove up and said, "Sorry son, but I have some bad news. The donkey died."
"Well then, just give me my money back."
"Can't do that. I went and spent it already."
"Okay then. Just unload the donkey."
"What Ya gonna do with him?"
"I'm going to raffle him off."
"You can't raffle off a dead donkey!"
"Sure I can. Watch me. I just won't tell anybody he's dead."
A month later the farmer met up with the city boy and asked, "Whatever happened with that dead donkey?"
"I raffled him off. I sold 500 hundred tickets at two dollars apiece and made a profit of $898."
"Didn't anyone complain?"
"Just the guy who won. So I gave him his two dollars back."
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I was reminded about this joke when I read a story on the Canadian Broadcasting Corporation website www.cbc.ca .  But this time the couple who are doing something similar are apparently backed by sound legal advice.  The main difference though is that they are doing this with full disclosure. Their story briefly is as under:

The couple are running a creative contest hoping that it will help them to sell their home in Ontario province at the market appraised price;

They are asking people to write a story or essay on how winning the couple's home would benefit them Contestants also pay a $100 entry fee for consideration of their essay, and the couple will judge the entries and pick a winner after the contest closes on Aug. 31, 2013.

The couple assures the idea is perfectly legal. I think mainly because they are not hiding anything in what they are doing.  It is similar to buying a lottery ticket for $100 with the prize being a $300,000 house. Of course the essay part makes it look like a game of skill rather than pure chance.

All entries are being accepted by a third party, who will log them numerically, remove all identifying characteristics and friends and family aren't eligible.

They have covered themselves pretty well in the disclosures:

• They are  hoping for 3,000 essays, which equates to $300,000 — which is the value of the home;
• If they get less than 3,000 essays,  the whole thing will be called off and the entry fee will be returned to all contestants  minus a processing fee of a money order and a stamp -- so they may lose approximately $7;
• If they get more than 3,000 entries, anything over the appraised value of their home will go to a charity they run that supports families in Haiti.

Isn’t that creative?