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Wrong or Right?

On a late-night television show, the host announced he was going to give out some prizes.

There were about 50 people in the audience.

The host claimed: "You have a 1 in 4 chance of winning."

Then said: "There are 4 prizes to give out."

And finally said: "You can win one."

What is wrong with this logic...yet, what is correct with it as well?