You enter to character name at the offical website, one entry per account. And the type and stats of the item you wish to win, a number of winners have the item put into their inventory.
i think it'd probably be better if it was just a mass guildwars lottery, just gold, no items. You can buy tickets to be entered in a random drawing and the money from all the tickets determines how large the pot is.
Massive alliances could have an advantage of winning if they got their members to participate in the lottery. This would just make them richer. Unless you had restrictions on the number of votes per guild or alliance.