A Pennsylvania state judge on Monday allowed Elon Musk's $1-million US-a-day giveaway to swing-state voters to proceed, after a surprising day of testimony in which the billionaire's aide acknowledged his political group selected the contest's winners.

With one day to go before the tightly contested U.S. presidential election between Vice-President Kamala Harris and former president Donald Trump, lawyers for Musk's pro-Trump America PAC sought to persuade Judge Angelo Foglietta that the contest was not an "illegal lottery," as Philadelphia's top prosecutor alleged.

Harris is leading the Democratic ticket as her party's pick for president, while Trump is running as the Republican nominee for the third consecutive election.

Lawyers for America PAC and its director, Chris Young, said the group doled out the funds based on who would be the best spokespeople for its pro-Trump agenda, despite the billionaire's assertion that winners would be chosen randomly.

Tesla CEO Musk has already given away $16 million US to registered swing-state voters who qualified for the giveaway by signing his political petition. His group, America PAC, announced a winner from Arizona on Monday and said the final winner, from Michigan, will be announced on election day on Tuesday.

America PAC launched the contest on Oct. 19. It is open to registered voters in seven key battleground states — Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania and Wisconsin — who sign a petition pledging to support free speech and gun rights.

DA alleged contest is an illegal lottery

Philadelphia District Attorney Larry Krasner, a Democrat, on Oct. 28 sued to block the contest in Pennsylvania, alleging the payouts amounted to an illegal lottery with hazily defined rules. Krasner said in court he would also seek financial penalties.

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Pennsylvania's Democratic Gov. Josh Shapiro is among those calling for an investigation of Elon Musk, after the billionaire promised at a pro-Trump rally this weekend to give away $1 million each day until the U.S. election on Nov. 5.

Foglietta denied Krasner's bid in a brief written order and said he would lay out his reasoning later.

Musk's lawyer Andy Taylor accused Krasner's office of trying to stifle the rights of Pennsylvanians by preventing them from signing the petition.

"They're trying to restrain citizens of Pennsylvania from signing a free speech and right to bear arms petition," Taylor said during a closing argument.

Musk became an outspoken Trump supporter this year and has promoted the former president on his X social media platform. He has so far given nearly $120 million US to America PAC to promote its voter mobilization and registration efforts, according to federal disclosures.

Pennsylvania's 19 electoral votes will be critical in determining which candidate wins the 270 votes required to be declared the winner.

Lawyers argue giveaway not illegal

In trying to persuade Foglietta that the giveaway was not an illegal lottery, Musk's lawyers said it was not a prize, but rather compensation for those chosen to serve as spokespeople for America PAC's pro-Trump agenda.

Young, America PAC's director, testified that he selected winners out of a pool of candidates who appeared in videos for the group and allowed it to use their images after reviewing their social media and meeting them outside event venues.

John Summers, a lawyer for Krasner's office, said the admissions that the giveaway was not random made it not just an illegal lottery but also a fraud.

"If their story is true," Summers said in his closing argument, "it's one of the greatest scams of the last 50 years."

Musk's remarks shown to court

Summers showed the court a clip of Musk at an Oct. 19 Trump rally, saying America PAC would randomly award $1 million US to people who sign the petition. In the video, Musk said "all we ask" is that the winners serve as America PAC spokespeople.

Young said he was surprised to hear Musk describe the giveaway as random at the rally. He also acknowledged that the winners signed non-disclosure agreements preventing them from speaking about the terms of the contracts.

The giveaway falls in a grey area of election law, and legal experts are divided on whether Musk could be violating federal laws against paying people to register to vote.

The U.S. Department of Justice has warned America PAC that the giveaway could violate federal law, according to media reports, but federal prosecutors have not taken any public action.

The Trump campaign is broadly reliant on outside groups for canvassing voters, meaning the super PAC founded by Musk, the world's richest man, plays an outsized role in what is expected to be a razor-thin election.