Not all of it was for a cost.
I don't think raffles are flat out banned in Colorado, even ones that charge for a ticket. I expect they obtained a license from the state.
Originally though the People drawing was Pay $10 to get a ticket to them for chance to win 1 chair. Losers get nothing. A straight up illegal lottery. I bet they probably even justified it themselves as we sell 255 tickets we're actually going to match the other sale, and if we sell more than 255, we're profitting! What a great idea.
It was only week later they changed it up and gave everyone's money back and re-released it with those rules as a no-purchase-necessary legal sweepstakes, but not before having to give the money back to those that paid in some $10 bills.
Because they initially had it so blatantly as an illegal lottery, I actually think they have no concept what's legal and not, so I would bet they didn't pursue a raffle license at all. Since the "list" sale offer still is up in it's illegal form, I guarantee they have no license.
As you pointed out, legally, you not only need to all the proceeds to charity or restricted orgs to hold a raffle; but you're also supposed to get a license and submit to other limits and prerequisites (usually frequency). Not everyone can get a raffle license, it's got a lot of prereqs plus a lot of paperwork and bookkeeping. Look how long that Legal doc is and all you have to do.
But I believe in practice, what I've observed in most areas, as long as 100% of your proceeds are funding a charity, I don't think the regulators enforce the law for the paperwork and licenses. It's like the brown paper bag rule for outdoor drinking at a tailgate or having a home poker game for money. It's technically still illegal. They look the other way since the spirit is there to 100% support a charity. Especially for infrequent events like once a year, unless someone complains.
When you're starting to keep any portion of the money, that's the line where you're breaking the spirit of the law, and you're pushing your luck on the enforcement leniency. Making it public and putting it in on the website is then flaunting the law.
What if you just kept 5% to "cover costs". Well how about slippery sloping this to keeping 25%, 50%, 95%, 99%? I think any kept money at all crosses the line.
So, even the $50 to join the "list" is technically illegal. If it all went to charity without a license they will likely not enforce . Without the money going to charity, it should draw the eye of the regulators. The losers of the list get nothing for their $50, but the winners get everything and that's gambling.