Question from Laura M.: For years I’ve been seeing commercials for Publishers Clearing House trying to get you to enter their sweepstakes.
Not all that long ago they used to say you could win $10 million dollars if you entered their sweepstakes and won.
But lately they’ve been saying you could win $5,000 per week for the rest of your life and someone you designate would get $5,000 per week for the rest of their life after you pass away.
I have two questions about this that I’ve been dying to ask:
1 – Are the Publisher’s Clearing House Sweepstakes legit?
2 – If so, where do they get all that money to pay the sweepstakes winners?
Rick’s answer: Those are great questions, Laura. I used to wonder about them as well.
The answer to your first question is yes, Publisher’s Clearing House does indeed pay out the cash they promise to their sweepstakes winners.
If they didn’t the company’s senior managers would likely end up behind bars and the company would go out of business.
They really do pay out those fantastic prizes they promise in the commercials.
Now I’ll answer your second question…
First, lets talk about the actual amounts of the prize money given away to the sweepstakes winners.
Believe it or not, it really isn’t all that much in the grand scheme of things.
Sure, $5,000 cash (before taxes) coming in each and every week would be a life changer for most people if they were lucky enough to win, but that’s a paltry sum for a company the size of Publisher’s Clearing House.
Consider the following…
Let’s say the next winner of the “Forever SuperPrize” lives long enough to collect $5,000 a week for 25 years.
That means he/she would end up collecting a total of $6.5 million:
$5,000 x 52 weeks x 25 years = $6,500,000
Now lets say the person the winner designates as the secondary beneficiary lives long enough to collect $5,000 a week for 7 years.
That means the secondary beneficiary would would end up collecting $1.82 million:
$5,000 X 52 weeks x 7 years = $1,820,000
(Remember, the second person won’t start receiving his/her money until after the original winner dies, meaning he/she will likely be relatively old by the time their turn to start collecting rolls around.)
If you add up the total amounts collected by both recipients, the grand total paid out by Publisher’s Clearing House for that particular sweepstakes drawing would be $8.32 million:
$6.5 million + $1.82 million = $8.32 million
That’s a lot of money to pay out for sure, but it’s chump change when you consider that Publisher’s Clearing House earns approximately $1 billion in revenue, each and every year!
To summarize, Publisher’s Clearing House takes in a billion bucks (that’s 1,000 million dollars!) every year but they get to spread out that measly (by their standards) $8.32 million payout over 32 years!
As you can see, they can easily afford to pay out the prize money they promise to their sweepstakes winners.
Note: They also pay out lots of smaller prizes to winners of their other contests, but those amounts are only drops in the bucket compared to the “Forever SuperPrize” payouts.
Now, lets talk about how Publisher’s Clearing House earns that $1 billion in yearly revenue…
Publisher’s Clearing House is a massive company that’s been in business for 66 years (they were founded in 1953).
Unlike most smaller and younger companies, they have multiple revenue streams coming in on a daily basis:
1 – Their flagship magazine subscriptions
2 – Product sales
3 – Fees charged for various services
4 – Advertising revenue from the 11 hugely popular websites they own.
5 – Revenue from the partner companies that also use the consumer data collected by Publisher’s Clearing House’s various business entities
Bottom line: Publisher’s Clearing House makes a LOT of money in a lot of ways. They can easily afford to pay out the money they promise to their prize winners.
In a nutshell, their sweepstakes payouts are effectively just another advertising expense.