My read of it is yes, you probably do need to file it (might be able to get out of it based on how much the ticket is being sold for, but I'm assuming it's a relatively small amount--less than $25 or so). But I have no first hand experience with this form. I would suggest you call the IRS at 866-455-7438, run them through the facts, and get their answer. Document what they say and who says it!
We run a raffle during the night of our auction to give away a free years tuition. Depending on the grade the winner could get a $9,500 tuition paid for although they don't see the cash. We pay a discounted cost to the school of 50%. Since the fairmarket value is so high do we need to generate the W2-G and report to the IRS? It gets confusing and I know there is something about a 300 times the bet. :confused: