Gifting a Payment for a Raffle and Ignoring a Warning

A lot of vendors say that they didn't know it was against Paypal's Terms of Service/User Agreement to have payments gifted to them or to hold raffles. Most correct the issue when they find out. Some don't. This vendor, Sock Monkey City, was warned that she is in violation and says that she will quit holding raffles AFTER this one. Umm, hello! THIS raffle is in violation! She also talks about looking for a blog spot to hold raffles. It won't help if you are still collecting payments through Paypal! Raffles must be pre-approved and gifting payments is not allowed.

UPDATE:
She has apparently emailed Paypal to try to gain pre-approval for gambling status. If she posts a screen shot of an approval email from Paypal, I will update this.

UPDATE 1/23/13 9:10am:
Sock Monkey City posted that she has refunded the current participants and will not be proceeding any further until she hears back again from Paypal because they are reviewing her account.

UPDATE 1/23/13 5:45pm:
Sock Monkey City completely removed the note at some point today concerning the raffle.