On April 27th, my younger daughter and I participated in National Youth Service Day through the county 4-H. Over 100 youth participated, and at the party at the end of the day they had door prizes -- lots of door prizes. So many so that only a handful of kids (including my daughter) didn't win one. So I've experienced first hand that disappointment.
The other problem is that some of the prizes were high-dollar: two kids won a DVD player, and another won a TV. Now, the kids who won a $10 Dairy Queen gift certificate are disappointed with their prizes!
The fact of the matter is that at an event featuring 500 adults, they would attach no value to a gift that costs less than $1. The same adults' interest would be increased by a few door prizes purchased with the same budget.
The flip side is that with 500 kids, you'll usualy have a much better situtation if you buy the little gifts.
OK I know you will probably throw rotten tomatoes at me, however I have made an observation. I have been to enough events that have given away prizes via raffle drawings. Only a very minimal number receive a gift. The rest of the kids end up a little disappointed. I have also chaired events in which I purchased something inexpensive and every child received a gift. All the kids end up happy. I would rather go this route myself. Just a thought to ponder.