I don't see the difference between this and playing the slots in Vegas. In both cases the house has the advantage; in both cases more is paid for the final prize than what it's worth; in both cases the winner likely gets a good deal on the prize and the losers lose their investment.
Profitable Until Deemed Illegal
31–40 of 135 posts
Re: Profitable Until Deemed Illegal
#32I've always been fascinated with the game theory, math, and psychology behind these schemes. There's a bunch of variations of the auction model that can guarantee or nearly guarantee a profit. One of the more popular auction models is to make the winner the person with the lowest unique bid, but it costs to place bids.
The lowest bid game is equivalent to simply giving it to the last person who bid isn't it?
Re: Profitable Until Deemed Illegal
#33What's despicable about offering a service people want to use? Isn't this just like offering poker games and other gambling, or selling beer (you pay for something that harms your health, and the only saving grace is that people enjoy it)?
Nothing is inherently despicable about the model. What is despicable is that it is advertised as an auction site, not a gambling game. Also, a lot of these sites (there are many like it) don't have very much transparency, and it would be easy for them to not award a prize at all while still collecting the bidding fees.
Re: Profitable Until Deemed Illegal
#34Earlier quoted context omitted.
If they reduce the charge per-bid enough, then it does become an auction site. (And if it's large enough by that point, they'll still be raking it in.) They could also invite others with goods to sell and share the per-bid fee. If both of those things happen in a timely fashion, then it will be difficult for the authorities to argue that it's not an auction site.
A lottery ticket for $0.01 is still a for-profit lottery, which comes under a truckload of independent oversight (for good reason).
If they are not charging for the bid (chance to win) but for the bandwidth when submitting a bid from the web page, then they get around this. They can demonstrate that by having another channel for bids, like email messages formatted Majordomo command-style.
Make this easily accessible, and it will be hard to argue that they are not an auction site. However, it can still be arcane (and slow) enough that the majority of the public still won't use it. Again, no one's gone broke underestimating the intelligence of the American public.
Re: Profitable Until Deemed Illegal
#35Re: Profitable Until Deemed Illegal
#36What they're doing is most probably not illegal. What they are doing is leveraging a lot of little things to make themselves good cash. Let's be very clear - they use auctions. This is not a lottery. At the end of the day, the high bidder "wins" and pays the amount of the high bid to win the auction. Then Swoopo adds the (.75 * number of bids placed) to that figure. It's not inconceivable that that sum is less than M…
Its not an auction if bidding costs money regardless if you win or not. Its more of a raffle.
But you are buying the right to bid. One could argue that it's a separate service altogether, like a costco membership that's graded on how much you buy.
Re: Profitable Until Deemed Illegal
#37Pardon my ignorance... Why does the author call this website illegal? I'm not sure what laws they are violating.
It will likely be called a raffle because buying the "tickets" costs money and you will very likely get nothing for it. In almost all states in the USA, raffles are illegal as part of the private lottery statutes. In practice, enforcement agents usually look the other way for small non-profit raffles like the kind held in church basements for pies and such. They are extremely unlikely to look the other way in this ca…
If they were smart they'd be selling "memberships".
Re: Profitable Until Deemed Illegal
#38"Entertainment Shopping" is their slogan. I wonder if that's going to be their legal defense. "You're paying for the entertainment..not the item"
Sounds like gambling...
Re: Profitable Until Deemed Illegal
#39It's a really well-written and well-researched article.... been a while since I've been this impressed by a Coding Horror article's fleshing out the details and stuff! :)
Very interesting read... and ingenious idea.
Re: Profitable Until Deemed Illegal
#40This is online gambling. Isn't that already legally problematic?