Local tycoons who are keen for the city not to be left behind as other financial centres open-up, responded with a range of incentives. Daily draws for some of the smaller prizes—like iPhones—began in July, with the bigger prizes slated for August and September.
Alvin Chan, a 25-year-old marketing executive, has been entering as many Hong Kong contests as he can find. Initially reluctant to get vaccinated because of concerns about side effects, he got the jab after being convinced there was no other way for society to open up. While the prizes weren’t a deciding factor, he thinks the lotteries are helping. Most require entrants to be over 18, Hong Kong residents and have receive two shots of vaccine by the time the draw closes. Eligibility is normally only checked for the winners though.
“They’ve created a welcome and positive atmosphere,” Chan said. “Many people are encouraged to take a baby step and get vaccinated.”
So what happens if you actually win? Compared with regular lotteries, the odds of walking away with the top prize are actually pretty good.
Hong Kong’s Mark Six Lottery has odds of about a 1 in 14 million chance of winning the top prize. Odds of winning the U.S. Powerball jackpot are 1 in 292 million. But odds of winning the apartment could be 1 in 2.1 million, according to calculations based on Bloomberg’s vaccine tracker—and that’s only if all currently fully vaccinated Hong Kongers enter.
“Lotteries to nudge people towards a behavior they are ambivalent about (like getting vaccinated) can be quite effective,” said Matthew Browne, a psychology professor at CQ University in Australia. “I don’t think people tend think carefully about the odds of winning.”
If you are lucky and win, there are a few things to note.
In the U.S. most states tax lottery winnings at the same rate as ordinary income, so whether you are sitting in Florida or New York will make a big difference to your wallet.
“The tax treatment of Covid lottery winnings should mirror the tax treatment of other winnings from lotteries and raffles,” said Jody Vanarsdale, general manager of H&R Block Expat Tax Services. “You must include cash winnings and the fair market value of any other prizes or property won.”
By contrast, the Hong Kong Inland Revenue Department says it is waiving betting duty—a local tax on the proceeds of lotteries—from winners of cash prizes from the lucky draws. Indeed, it warns that being asked for such a tax could indicate you are being scammed.
Any such winnings also wouldn’t be caught by the local personal tax, which is focused on employment income said Agnes Cheung, head of tax at BDO Hong Kong.
It might not be a bad problem to have, but if you win a physical prize—like one of the gold bars for example—you’ll have to think about secure storage. (Hint: under your bed isn’t a great option.)
If you win a big prize and then sell it immediately, the proceeds could be considered subject to business tax, Cheung said. Overseas citizens may also find their home country wants a slice of the winnings.
“It can get complicated,” Cheung said.
--With assistance from Charlie Wells and Shamsiya Hussainpoor.
This article was provided by Bloomberg News.