Penny Auctions Akin to Gambling

by jessica.lam | December 21, 2008 at 11:47 am

2125 views | 10 Recommendations | 9 comments

The history of the penny auction comes from the era of the Great Depression. However it has changed much with the use of the internet, and as a result the penny auction has flourished and piqued the interest of academics. BBC reported on the concern about penny auction sites selling bundles of bids for high price auction items.

Online "penny auction" sites are similar to lotteries and should be regulated in the same way, according to a gambling expert.

The sites auction new items, often for a fraction of their retail price, and bidders pay up to £1.50 for each bid.

Professor Mark Griffiths of Nottingham Trent University believes the Gambling Commission "should look into this".

"I think bidding on penny auction sites is akin to a gambling-like experience," Professor Griffiths said.

However, Juha Koski from online auction site Madbid.com disagrees:

"We have two experts who have given us their opinion on this.

"This is definitely a game of skill and would not form under any circumstances under the definition of gambling."

A blog recently wrote about this issue and looked into what makes an auction a real auction.

Should they be using the term auction? Should they be claiming these games are skillful? I've several concerns. They are more akin to bingo in my view.

So when is a penny auction really a penny auction? Well I would suggest the auctions we've been promoting lately are penny auctions. We've encouraged sellers on traditional auction sites - the ones that operate like eBay, eBid and MilBid - to list items starting with just a penny starting bid. There is no need for anyone other than the eventual winner of these auctions to pay anything at all and then the winner only pays the winning bid amount in exchange for the item on offer.

It's perhaps a shame that the sellers willing to offer real tangible goods in proper auctions starting at just a penny are becoming embroiled in this critical media coverage of the alternative "game" masquerading as auctions. Personally I will not allow my wallet to be milked and risk the chance that some unscrupulous webmasters will be deliberately stringing out these bidding games to maximise the revenue they receive. Show me a real item and I will make a bid. If I win great, if I lose I have no costs to cover. Has the penny dropped?

To check out the BBC interview, click here.

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jessica.lam

at 12:01 on December 21st, 2008

Some auction sites that they mention are: madbid.com and bidboogie.com

illuminate

at 13:43 on December 21st, 2008

Hmm, never heard much about said "auctions" before. May look into it.

Paschen

at 19:28 on December 21st, 2008

I think they may have a good point, it is like gambling to some extend.

John A (not verified)

at 18:23 on January 3rd, 2009

It´s nothing like gambling.

You simply pay a small fee to be able to participate in the auctions.
Instead of charging users a "monthly fee" they charge them based on how actively they use the service. So for each bid you place you are charged a little fee.

Running a site like that costs money so it´s obvious they need to generate revenue from somewhere. They all have limits, only allowing ADULTS to participate, so if you don´t want to participate, then DON´T!

The UK gambling commission actually took a look at these sites and concluded that they are not similar to gambling and that they are infact real auctions with a funny twist.

Now, I´m off to win a new TV for 6£!

ben james (not verified)

at 08:22 on January 8th, 2009

I my self won Ipod touch 8 G from www.yellmann.com with 3 pennies.

but I lost while bidding for other stuff

Penny Power (not verified)

at 11:31 on January 30th, 2009

Penny Auctions are great and are not gambling. The bidder has more power over the auction than a person that is gambling or playing the lottery does. In fact, the best penny participants are quite skilled at what they do. It only takes a little effort and attention to previous penny auctions to help you win an auction yourself. Try one, you may like it. One more thing, most penny auctions limit the number of auctions a person can win or participate in each month. Unlike gambling that feeds off of a players addiction. This rule also gives other less skilled participants a chance to learn methods and utilize skills needed to win the auction.

Jason Higgs (not verified)

at 19:00 on March 2nd, 2009

Zoozle.com is a simple and honest penny auction site.. i won a netbook for only a 12 bids. It is a game of skill, luck and persistence.. not too much like gambling, more like poker if anything.

James Lobo (not verified)

at 16:49 on March 8th, 2009

Instead of going into the qualification of the professor I don't believe in what he said. Penny auction hasn't been long enough for him to make a statement like that. I will think it is superficial and biased.

Most things in life can be addictive even food and one doesn't need a commission to baby sit its adult.

I agree with many of the statements made here that Penny auctions is another way of grabbing a bargain while having fun. But having said that beware of auctions sites which are not reliable.

1. Check Alexa.com rating and find how big the site is - compare it with www.swoopo.co.uk or www.madbid.com and their Alexa ranks

2. See how many auctions are running - generally rule of thumb you need lot of people to run few auctions. If you see 7-10 or even more auctions running and very low Alexa rank (over 100,000) , means something is fishy.

3. Check if these companies give phone numbers, registered addresses etc, even better if they are registered with certain UK bodies.

4. How well a site is done, if looks bad its quickly done and is after quick money. Copied look and field from incumbent sites like Swoopo

5. Use common sense, if it seems too good it is not real (no free lunch) ... Penny auction is a game of strategy, so you will find people hating sites and loving these sites.

I use only Swoopo and MadBid and for rest of the sites best of luck who want to use them.

Btw, check out this site if you want to learn more on Penny auction http://pennyauction.blogspot.com/

ciao,

James Lobo