The Secret Behind TV Game Show Prizes
TV Game Shows started back in the 1930s and are still very popular today.
There are so many different types of game shows like Family Feud, Wheel of Fortune, The Price is Right, and Survivor. Needless to say, there are too many to count.
Game structure
These games can vary widely in the game structure. Some games have teams that play against each other, others where everyone works together. Some are single-player games, you vs the game, others you play against another player. Some games span over the course of multiple episodes.
The goal of a game show is to create a fun and entertaining game for its audience. They do this through two means. Interesting rules and exciting prizes.
The game needs to be simple enough for people to understand but complex enough so people stay interested and unexpected things can happen. You also need a good prize for the contestants to win. If the prize to win isn’t that great you’ll have a tough time finding contestants as well as an audience. You need something to play for.
Prizes
Regardless of how the game is played, there is one thing consistent with all game shows. There is a reward if you win.
These rewards do vary as well depending on the game. But they are broken down into two categories for the most part. Monetary and Nonmonetary prizes.
Monetary
Winning a monetary prize is great as you know the exact value of the prize. Another plus since it is a monetary prize you can spend the money on whatever you want.
Since you won some monetary value, you must report this income to the IRS. This means you must pay taxes on your winnings.
You can’t spend everything you won, some of it must go to the government.
It’s not all bad though as since you won money you already have the cash to pay the taxes for it.
This is the big problem with Nonmonetary prizes
Nonmonetary prizes
Many game shows have prizes like a brand new car or a nice all paid for vacation. Something that’s not cash. It’s a physical object or experience that is the prize.
These can be really nice prizes to win. The Amazing Race is notorious for gifting vacations to people who finish each leg of the race in first place. These can be some really incredible vacations all over the world.
But just like the monetary prizes you also have to pay taxes for any vacations, cars, or nonmonetary prizes you win. The amount you pay in taxes is based on the value of the prize you won.
This means that if you just won a $50,000 car and you must report the IRS that as income with the value of $50,000 and must pay taxes on it.
Not many have the extra cash on hand to pay thousands of dollars in taxes for the new car they just won. It becomes a huge problem if you don’t pay the taxes for the value of the prize you won.
So what do you do?
Sell the prize
One solution to this problem is to sell the prize you won to pay for the taxes. This can work for a car or other physical objects you win.
Although you might get a lot less money for the prize than the game show claims the value of the prize to be. This can be because the game show likes to increase the value of the prize to make the game more exciting. But also because items like cars depreciate in value extremely quickly.
Some monetary prizes you can’t sell, like a vacation.
Forfeit the Prize
This leads to one solution and that is to simply forfeit the prize. If the taxes on the prize you won are too expensive you can just decline the prize and not have to pay any taxes.
This happens more often than you may think with game shows. They pick prizes to give away that are luxurious and expensive and something that you can’t sell. This will lead to the winner more than likely having to forfeit the prize since they are unable to afford the taxes on it.
This allows the game show to keep running episodes of giving expensive prizes to the winners yet they actually don’t ever give these prizes out since everyone who wins declines the prize.
Now not everyone declines the prizes they win, but there can be some tactics that game shows use to ensure a greater chance of a contestant who wins to forfeit the prize.
Applying to the game show
So how can a game show ensure that its contestants decline the prize more often than not?
You want someone who doesn’t have/make a lot of money. But it is a bit tricky for a game show to get this kind of information.
It is very suspicious for them to ask you on your application about your income status.
But what’s not suspicious is asking for your address. The cool thing, or scary depending on how you look at it, is that you can predict income based on your zip code.
There is a strong correlation between zip code and income. This does not mean that where you live determines your income. Instead, people with similar incomes tend to live next to each other.
By using the zip code you can then pick people from poorer zip codes to be on your game show.
Inviting poorer contestants and using nonmonetary prizes, game shows can decrease the cost of production without having to cut down on quality or manpower.
So next time you apply for a game show be sure you can afford the taxes on the prizes you might win otherwise you might be forced to forfeit your prize.