Many people are getting "Magical Moments" confused with the Year of a Million Dreams Sweepstakes. Magical moments are those things that can happen anytime, anyplace and are done just to make your visit have a little more pixie dust. For example, riding in the front of the monorail, being given a free ice cream or turkey leg as mentioned in a previous post. Being the Opening family at a park etc. these are random acts that are given out by the cast members at the location that they are being issued. These types of things for the most part, the cast is able to pick someone out (some of the free things, like Ice Cream and such is designated to certain peramiters like the ice cream order at 25 after every hour). When these special things are going on it is not the Dream Squad (with the exception of some of the attractions in Fantasyland where the Dream Squad assists).
For the actual Prize giveaway, the sweepstakes itself is has to follow state laws for sweepstakes and is being administered by an outside company. The Dream Squad is not picking who or when, it is dictated to them and they present the prizes as such. The only thing the actual Dream Squad is in charge of are the prizes that are listed on the "Official Sweepstakes Rules" (ie" Dream Ears, Dream Fastpass, lanyards/pins, the night in the castle, trips, etc.)
So basically you will find that for a Magical moment you are probably going to find them to be more of the "family with kids" type of things, but for the prizes in the sweepstakes it is as random as it comes... Here is a write up from a Dream Squad CM that was posted just after the sweepstakes started, it might help answer some of the questions.
"I am on the Inaugural Dream Squad team.
The Dream Squad has 2 main functions. These are as follows.
Dream Greeter
Prize Fulfillment
We perform these in the following costume.
Tan pants and blue button down shirts. We wear a white vest when we are in Prize Fulfillment mode.
Dream Greeter
Most of our time is spent in this role. We are assigned areas where we walk around talking to guests and cast making sure they are having a good time and attempt to settle or make better any guest or cast issues.
Prize Fulfillment
We perform this role once a twice a week and are scheduled for the whole day. This is the area that most of the discussions are about.
We have no choice in what, when or where we do this. In order to keep this sweepstakes legal, we have an outside agency supplying this information to us. We can't open the envelope containing this information until just before the prize is to be distributed. We then go to the location, await the exact time (with syncronized time pieces) and award the prize as stated.
When we prize fulfill we only know what the Low Tier Bulk prizes are. These are the Dream Fast Passes, Dream Ears, Dream Lanyards and such. The Mid Level and High Level prizes are not even known to us until we take the potential winner back to Guest Relations.
In order to keep things fair and legal, the prize fulfillment portion is even kept secret among ourselves. When we are in this mode, we dont tell each other or even our leadership where we are going, when we are going or what we are giving.
All 4 parks, water parks and even Downtown Disney are included as prize fulfilling areas. I cannot give the actual areas that we deliver the prizes, but I can say that all guest areas are potential places for awarding within the above areas."