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The penny auction sites I'm talking about are like Swoopo and Bid Cactus.

The idea behind these sites:

  • Buyers pays for bids in advance (say $0.75 apiece)
  • Bids start really low
  • Each bid only raises the price by a small amount ($0.15 or even $0.01)
  • Each bid adds another 20 (or 30) seconds to the end time of the auction -- each bid keeps the auction going
  • There is an end date for the auction but it's so far into the future that if it were reached, the final bid price would exceed the retail price for the item, so in essence it's never reached

So, in my mind, what this really boils down to is an arbitrary end-time for the auction based on who runs out of money first, or who throws in the towel first. Unless you want to pay more than retail (and who does?) the end time of the auction, and hence whether you actually win the auction or not, is a matter of chance.

But at the same time, they're not games of chance, for some reason. Otherwise, it would be prettu heavily regulated, right?

So why not? Is it not really a game of chance, or just that people haven't realized that it's essentially a game of chance, but it's not treated as such?

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I get emails about bid cactus regularly from Inbox dollars. Never knew what it was. Now I'm intrigued. I hope I remember to ask about this when one of our gaming attorneys is in town. – Frugallawyer Jan 17 at 18:15
Don't be intrigued by bidcactus! Like any good college student, I tried this with my roommate. We bought 50 bids each for about $35 total. We figured if we bid against each other, other bidders would be scared away and not want to waste their own. And it worked! We won a $50 gift card to B&N. But then with about 20 bids each, we tried it again..and it did not work. So we cut our losses. Very nerve-racking and we swore never to try it again! – Daniel Feb 18 at 19:52

1 Answer

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I wasted $15 over the holidays at For10Cents.com, which looks like a sister site to Swoopo and Bid Cactus. I think these sites fit the definition of gambling, which is "the wagering of money or something of material value on an event with an uncertain outcome with the primary intent of winning additional money and/or material goods. Typically, the outcome of the wager is evident within a short period."

They may have found a loophole since you don't win money, you win the right to buy a product at a deeply discounted price, but I would be curious to see what Frugallawyer's gaming attorneys have to say about these websites.

At first I thought it seemed like a good idea but it's not like buying a lottery ticket where 1 ticket could be the big winner. The bid keeps ratcheting up until somebody wins the auction and I didn't know when the auction started or when it ended. I paid for $15 worth of credits and set up Autobid and basically my money disappeared.

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