Penny Auctions: They're Gambling

Just look at how many honest programmers there are.

If I was into Evil, I’d definately build a site like this. All that money for nothing!

Must fight the urge…

:wink:

People are too stupid to use their money wisely.

Therefore, allowing people to use their money is evil.

Jeff, I don’t believe in no win scenarios. But the sheer amount of effort required to tilt the scale to our favor here…seems staggering.

Hmm… i thought this looked familiar… running out of content, Jeff?
http://www.codinghorror.com/blog/archives/001196.html?KeepThis=true&TB_iframe=true&height=460&width=800

Hypothetical - Runner A and Runner B agree to run a 100 yard dash. Each runner puts down $25 and then runs the race. The winner, Runner B (because he is faster), gets the $50 prize. Both understood the game before they played and only Runner B was the winner. Just because you understand how the game works before you play, doesn’t mean you are entitled to win. Sounds like Swoopo - the rules are published clearly on the Swoopo website so that all players can understand how it is played before the outset and you may win if you are skillful. But just because you understand the game, doesn’t mean you will win. It sounds like Jeff thinks everyone should win in a game where there can only be one winner.

Alex mate, the whole reason he posted this was because one of Swoopo’s investors was responding to him re. that post.

did you actually read it?

@game of skill: That’s not quite the same thing… in your race, it’s a zero-sum game. All money collected goes to the winner. In swoopo, the house has a massive rake. That’s the real issue… it’s not that everyone should be a winner, as you suggest. It’s really that in swoopo, everyone is in fact a loser.

@chris f - You are right. Yes Swoopo makes money. That’s their business. Swoopo makes money for organizing the game. I assume you don’t have a problem with eBay making money for organizing their auctions too. Swoopo’s business looks very clear and straightforward. You say “everyone is in fact a loser” but that is not accurate because someone wins every auction. Yes, Swoopo makes money and, yes, there are losers. But there is a winner in each and every auction. If a game is too easy to win, it is not fun and every game is not for everyone. But calling it “evil” because you can’t win is where I have issue.

Swoopo’s evil can be proved by contradiction.

First, we make an assumption that it is not evil - meaning that it is a regular auction site where you have to pay only if you win an auction. With real auction sites, you don’t have to “pay to play”; you place bids and if you win, then you have to pay the bidding price and maybe even the premium, all of which is clearly stated in “terms and conditions”.

With swoopo, you have to pay before you even play. Therefore, swoopo is not an auction site. QED.

If you have pay to play, you are entering a game in which odds are not in your favor, not by default anyway. Auctions are not games based on odds (other than odds of being present at an auction).

Another giveaway is the name: “swoopo”. C’mon. If someone called swoopo is selling you tokens to play its “auctions”, what are the chances…

@security horror - good point. However, there are many types of “auctions” and one is called “all-pay auction” which is what Swoopo appears to be. Just because it is not the same as other types of non-pay auctions, doesn’t mean it is not a “real auction.” Here is the Wikipedia link http://en.wikipedia.org/wiki/All-pay_auction

Having to “pay before you even play” does not mean that “Swoopo is not an auction site.”

I think this is interesting and new. I haven’t won at Swoopo but I do find it amazing that people are so riled up about something just because it is different than what they are used to.

@game of skill – oh, I don’t think swoopo should be illegal, but I think you’re oversimplifying the definition of “winner” here. While it’s possible that some items do get won at bargain-basement prices with few bids, those aren’t going to be the desirable, high-profile items. The fact is that on average, a person willing to do what it takes to “win” an auction is going to pay more than he would have at another source for the same item. In that case, he’s not really a winner at all.

But I personally think the site should be completely legal, since they’re up-front about their fees and methods. I still think it’s evil, but not all evil should be illegal. Mostly I’m just jealous that I’m not smart enough to have thought of a good gimmick like this.

“If a bid gets placed in the final moments, we extend the auction by up to 20 seconds”.

And who do you think THAT benefits? Hey! Let’s extend the auction, take more bids, AND get more money for the item! Sheesh!

@game of skill – I think you missed the truly relevant wikipedia link: http://en.wikipedia.org/wiki/Bidding_fee_scheme

i would like bring out another point over here,
Suppose let all the users bidding on Swoopo are real persons then its okay, but what if the swoopo is automated such a way that it has some virtual bidders who place the bid(just to make sure swoopo doesn’t get any loss), to make sure the end user is bidding until the swoopo gets something, then it would be more evil i guess.

i dont think its really hard to implement some virtual bidders in swoopo site :slight_smile:

“And if you feel as strongly as I do about this, please write your congressmen/women and urge them to regulate these exploitative penny auctions.”

I’ve got a better idea. People need to let people learn a few lessons. Regulation will always, always, run behind any kind of scam, and it’s childish to sort of ‘run to teacher’ and expect people to learn anything.

We’re already probably past the point of no return on people needing the state to change their diapers, but your advice does no short-term or long-term good. It makes you feel good about yourself, period. If you think there’s going to be some laser-precise legislation that deals with Swoopo and doesn’t impinge on legitimate activity, you’re just naive.

I’m not exactly sure what amount you think is a proper amount of law and code that needs to be produced in order for life to be ‘just’. But I guarantee, as with code, when the complexity increases so do the errors-- and the errors often fall on people like me who couldn’t care less about either Puritanical views on gambling, or spending my time shepherding fools through life.

I’ve never understood the people behind sites like this, why not just go rob a bank or something. Who cares if it’s “legal” or not, it’s equally evil.

In holland a company offering a similar scheme was just ordered by the minister of justice to shut down on pain of a being sued because they are a gambling site (according to the minister)

the site said they werent planning to comply with this request so i’m curious if we get some kind of lawsuit about this. state vs goudkoortsveiling.nl

I just found swoopo today, and came to pretty much the same conclusions that you did. Running the numbers on a couple of completed auctions show that the site gets anywhere from 10 to 50 times the cost of the item sold (with some friction from merchant account or paypal fees). Even wilder – some of the ‘auctions’ were for bid packages!!!

Those folks are printing money. My Lions club occasionally does something very similar for small fund-raising efforts, which we refer to as a “Chinese Auction”. Of course, everyone that chips in on a “Chinese Auction” knows that the primary objective is to raise money for the club, and few care about the actual item being “auctioned”.

Naturally, it occurred to me that this would be a really lucrative way to sell stuff myself, and I did a bit more research. (ok, so I have an evil streak…)

So, was not really a surprise to find that there are several competitors running the same game (some with slightly different wrinkles). I also found dozens of requests on various freelance programming sites for “swoopo clone”.

Clever idea, but I’m not even tempted to buy bids. It’s pure gambling.

www.chl-tx.com

What is this OSB and why is it so evil?

And, yeah, Swoopo is pretty evil. Their auctions only have to get to a fration of the MSRP for them to cover their costs.

Jeff,

Welcome to the high finance of the 20th Century, brought down to earth:

http://www.cmegroup.com/trading/economic-events/economic-events/nonfarm-payroll_contract_specifications.html

Call your broker, you can get a contract from the CME based on the number of jobs gained or lost over the month of May.