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Profitable Until Deemed Illegal

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Re: Profitable Until Deemed Illegal

#91

Post by owkaye »

mattmaroon wrote: post #79
owkaye wrote: post #73

Earlier quoted context omitted.

"It will likely be called a raffle because buying the "tickets" costs money and you will very likely get nothing for it." It is NOT a raffle because a raffle winner is selected 100% by chance whereas at swoopo the winner is the person who bids the highest price -- and bidding the highest price is not based on chance.

Right, it's clearly not a raffle or a lottery. It's an auction. I don't think it would violate the sweepstakes laws of any state, though there are 6 I wouldn't push it in if I were running it.

Matt, you seem to know more about the legal framework than most other posters here. Which 6 states would you avoid? I have an important reason for asking since I'm working on a startup that uses a similar system -- very different in some respects, but certainly similar enough in others that your insights are valuable to me. You can email me privately if you prefer, my email is owkaye at gmail dot com.

Re: Profitable Until Deemed Illegal

#92

Post by cousin_it »

nazgulnarsil wrote: post #75
byrneseyeview wrote: post #65

I can't believe this company is offering a scenario where you pay an upfront cost to try to get something for less than it usually sells for. I haven't seen anybody get away with that since basically every retail outlet in America charged an upfront cost -- time and inconvenience -- for the chance to buy stuff at a discount, on Black Friday . Unprecedented. I have no idea why measuring certain things in dollars rathe…

I agree 100%. this is essentially a sucker tax. why does everyone spend so much time worrying about suckers? Oh right, because we all subsidize suckers with taxpayer dollars in socialism. poor people are good at wasting money, that's why they're poor. giving them the money of non-suckers fixes NOTHING.

That's a great argument that I haven't heard before. Thanks.

Re: Profitable Until Deemed Illegal

#93

Post by patio11 »

mattmaroon wrote: post #81
patio11 wrote: post #43

Earlier quoted context omitted.

Oh, I don't think they'll need a new law in most jurisdictions as soon as they find out about the "Auctions for money". "Wait, so let me get this straight, people routinely 'buy' $100 for $20 on your service, and you profit $300 from the transaction from selling the 'bidding rights' to 'non-winning bidders'?" "Yes." "Oh, thanks. What determines who wins?" "Final bid price." "But paying $20 for $100, why, anybody shou…

Games of skill with monetary prizes are legal in all states. How you define a game of skill vs. a game of chance varies, but with no random element here, I doubt this would be considered gambling in any. There are 6 where they may run into some sweepstakes laws though, I'm not sure. There are states where it is actually illegal to have a contest that is free to enter but awards a prize.

>> Games of skill with monetary prizes are legal in all states >>

That's just false. First law I checked (for my home state):

"A person commits [the offense of] gambling when he :

1) Plays a game of chance or skill for money or other thing of value, unless excepted in subsection (b) of this Section"

Re: Profitable Until Deemed Illegal

#94

Post by Tichy »

time_management wrote: post #4

Reminds me of the old party game, Dollar Auction. Bidding's in 10-cent increments, and the prize is $1. The twist is that the top two bidders pay their bids, but only #1 gets the prize. Bidding will go far past $1 because, even though it's a loss to pay $1.10 for $1, the 90-cent bidder would rather lose 10 cents than 90. I've heard of bidding going up into the $20 range.

I suppose most businesses face the same problem, at least if they are in a "winner takes all" market? You invest to outperform the competition, and if they win, you basically lose your investments.

Re: Profitable Until Deemed Illegal

#95

Post by jerf »

owkaye wrote: post #72
jerf wrote: post #67

Earlier quoted context omitted.

For the purposes of this message, I define "pay" as "money out of your pocket, including the money spent 'purchasing' 'bids'." In a real auction, if you are willing to pay twice the market price, you are almost (but not quite) guaranteed to win, and you will almost (but not quite) certainly be paying less than 2x market value. The only person who can beat you is someone willing to pay 2x+change. (When you lose, you d…

"One system is rational and what most would consider mostly fair. One is crazy and what most would consider a scam." The term "scam" requires that the person being scammed was not given the facts upfront. This is not a scam by any stretch of the imagination since the company posts the technical details plainly and clearly on their website. You may not like the way the business is structured, but it is certainly no sc…

Well, there's two aspects to that. One is that they tell you exactly how it works. The other is the marketing, where they all but promise you cheap goods.

Is it a scam? Is an advertisement for a beer a scam when it promises you women will throw themselves at you if you drink their product? You can play the internet "difference minimization through copious verbiage" game all you like, but I still think there's a qualitative difference.

Re: Profitable Until Deemed Illegal

#97

Post by mattmaroon »

patio11 wrote: post #93
mattmaroon wrote: post #81

Earlier quoted context omitted.

Games of skill with monetary prizes are legal in all states. How you define a game of skill vs. a game of chance varies, but with no random element here, I doubt this would be considered gambling in any. There are 6 where they may run into some sweepstakes laws though, I'm not sure. There are states where it is actually illegal to have a contest that is free to enter but awards a prize.

>> Games of skill with monetary prizes are legal in all states >> That's just false. First law I checked (for my home state): "A person commits [the offense of] gambling when he : 1) Plays a game of chance or skill for money or other thing of value , unless excepted in subsection (b) of this Section"

Which state and what's in subsection b?

Re: Profitable Until Deemed Illegal

#98

Post by mattmaroon »

owkaye wrote: post #91
mattmaroon wrote: post #79

Earlier quoted context omitted.

Right, it's clearly not a raffle or a lottery. It's an auction. I don't think it would violate the sweepstakes laws of any state, though there are 6 I wouldn't push it in if I were running it.

Matt, you seem to know more about the legal framework than most other posters here. Which 6 states would you avoid? I have an important reason for asking since I'm working on a startup that uses a similar system -- very different in some respects, but certainly similar enough in others that your insights are valuable to me. You can email me privately if you prefer, my email is owkaye at gmail dot com.

Arizona, Iowa, Louisiana, Maryland, Montana, and Vermont all have very restrictive gaming/sweepstakes laws. You'll notice nobody who does fantasy sports or skill games for money (cbssportsline.com, worldwinner.com, etc.) allows customers from those states.

I'm really not sure if this auction system would qualify. I would really check with a lawyer versed in online gaming and sweepstakes if I were doing something like this. If you need, I can recommend the firm that almost every American who runs a casino or poker site uses.

Re: Profitable Until Deemed Illegal

#99

Post by mattmaroon »

fauigerzigerk wrote: post #87
mattmaroon wrote: post #77

Earlier quoted context omitted.

I don't see why it's despicable. The format of the auction seems to be clearly available to all participants. It's all consenting adults, who have all of the information needed to make their own informed decision as to whether or not to participate. If people want to gamble, why not let them? How is this any different than operating a casino? It's not wrong to provide a service that many people deem enjoyable just be…

I'm not sure it's despicable, but the difference to gambling is that gambling is sold as purely entertainment. The fun _is_ the product. Swoopo mentions entertainment as well, but they also make people believe that they are buying a product for a good price, which is clearly not the case. So as a (potential) customer I'm taking note that this company is using deceptive tactics, claiming one thing and structuring thei…

Some people are buying the product at a good price though.

Re: Profitable Until Deemed Illegal

#100

Post by mattmaroon »

asdflkj wrote: post #86
mattmaroon wrote: post #63

Earlier quoted context omitted.

There's nothing random involved in this, whereas there is with slot machines. Legally that makes a world of difference.

Someone who can see the slot machine's internals and understands how it works will be able to predict the outcome, so in that sense it's not "truly" random. The reason it's still legally random is that it's as good as random from the point of view of the player. Same applies here. No?

No. This auction system is no more random than chess. In chess, your opponent can just blunder and give you a win. Bobby Fisher once lost to a newspaper reporter. But just as in chess, this auction system determines a result based solely on the actions of the participant. There is no roll of a die, turn of a card, or reading of a number from an RNG. Legally you need something like that to be considered gambling.

You're right of course that slot machines aren't truly random in the sense that they use a pseudo random number generator. I don't think they have any hardware in them that reads thermal noise or anything like that. But that's sufficiently close to the roll of a die to qualify.

Philosophically I tend to agree with you since I believe the universe is deterministic, and nothing is truly random. But I'm pretty sure that legally this would not be gambling or sweepstakes in at least most states.

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