I have always felt like the process of choosing a lottery winner might be shady because in most cases it is never implicitly showed how the winner is picked.
Freebitco.in is no exception here, and I would rather play any direct game (dice, roulette, blackjack etc.) instead of trying to hit the jackpot of some lottery.
That's patently untrue, it's a provably fair lottery. They publish the server seed and the MD5 hash of the user list before the lottery and then use a future bitcoin block hash as the client seed. They put that all out in advance on their Twitter feed so you can prove the results yourself.
I think the fact that the first prize this week stands at over BTC2.2 shows that the bitcoin crowd doesn't share your view and the lottery is very successful.