Elon Musk’s $1 million-a-day giveaway to U.S. voters was allowed to proceed after a Pennsylvania state judge refused to halt the sweepstake. Musk had been awarding the money to individuals in several key swing states who signed a petition to support the First and Second Amendments.
On Monday evening, Judge Angelo Foglietta of the Philadelphia County Court of Common Pleas denied a request from Philadelphia’s district attorney Larry Krasner, to issue an emergency injunction against Musk. Krasner had sought an immediate end to the giveaways arguing it broke the Keystone State’s lottery and consumer-protection laws, The New York Times reported.
However, Musk’s legal team countered that the giveaways weren’t a lottery, and instead were a promotion—as the winners were not chosen “randomly,” despite how the tech entrepreneur described the program, including on X, where it was described as “a daily chance” as to who could win the money.
“The primary legal issue revolves around the characterization of the daily $1 million giveaway. Elon Musk has been quoted saying, ‘We’re going to be awarding a million dollars randomly to people who have signed the petition every day from now until the election,’ suggesting that anyone signing the petition has a daily chance of winning $1 million,'” explained Craig Barkacs, professor of business law and ethics in the MBA programs at the Knauss School of Business at the University of San Diego.
That could be read to the public that everyone has an equal chance of winning.
“However, recent testimony from Chris Young, the director and treasurer of America PAC, reveals that ‘winning’ recipients are pre-vetted to ensure their values align with the group,” Barkacs added.
Election Promotion
Instead of a lottery, the petition and giveaway was just a confusing way to promote a candidate—in this case former President Donald Trump—in advance of the presidential election.
“Musk is a staunch supporter of Donald Trump, and the $1 million giveaway is targeted at voters in swing states, ending on Election Day,” suggested Barkacs. “The intent appears to be to garner support for Trump, regardless of its wisdom or effectiveness.”
It could still lead to prolonged legal scrutiny under state or federal laws, a prospect that does not seem to concern Musk, Barkacs added.
“Nonetheless, one must question the rationale behind this approach,” he added. “It seems to invite more trouble than it’s worth and is unlikely to significantly impact the election. While it has garnered publicity, it is uncertain whether the excitement it generates outweighs the resentment it may provoke. Ultimately, this does not seem like a prudent use of $1 million a day until the election.”
Musk Tried This Already
It should also be remembered that Musk had tried such expensive promotions previously, including one that involved the original X.com.
“When Peter Thiel’s digital payment startup Confinity—a mashup of ‘confidence’ and ‘infinite’—merged with its major competitor, Elon Musk’s X.com, they named the combined company PayPal,” said Rob Lalka, professor at Tulane University’s Freeman School of Business and author of The Venture Alchemists: How Big Tech Turned Profits Into Power.
The two soon-to-be-billionaires undertook “growth hacking,” which Lalka suggested was “an early master class in customer acquisition.”
The newly merged PayPal offered every new user $5 just for signing up, then provided $5 to $20 in referral bonuses for getting friends to join.
“They burned through millions, but the company scaled exponentially as a result,” Lalka noted. “At one point, PayPal was expanding so rapidly that its user base grew by 10 percent each day.”
Thus when America PAC offered $47 to $100 to registered voters in certain swing states, and ran the $1 million-a-day sweepstakes, it was just another form of growth hacking.
“As we just learned, winners weren’t chosen randomly but were instead hand-picked as paid spokespeople,” said Lalka. “Philadelphia’s District Attorney, who has sued Musk’s PAC for illegal activities, has called it ‘political marketing masquerading as a lottery.’ But this tactic wasn’t dreamt up overnight. The ‘growth hacking ‘ that fueled PayPal’s explosive growth decades ago seems to have been repurposed this year as a headline-grabbing political strategy.”
It should be remembered too that Musk already paid $44 billion for Twitter, which he then rebranded as the new X.com, so by comparison this is a small change for the world’s richest man.
“To put that in perspective, Elon Musk’s net worth today is over $270 billion, so each $1 million check is less than 0.0004 percent of his wealth,” added Lalka. “For Musk, that’s comparable to about 71 cents for the median American household.”
