The world is a crazy place.
To those claiming this is based on chance, go back to school and take that probability course again.
Perhaps you should. Although the distinction you’re making is valid in a practical sense, it’s not theoretically correct. Probability is about information and is not dependent upon a physical definition of chance. Asserting that it is pushes it into some very murky territory where, using contemporary physics, you’d have to appeal to quantum mechanics and, at that point, nothing is deterministic.
Anyway, whether this is a lottery for legal purposes depends simply upon the legal language used in the relevant law and the precedents involved. It doesn’t depend upon an understanding of probability or physics or game theory or common, non-legal, language usage. We’re not going to decide the argument about whether this is a lottery without consulting some particular law which arguably applies in a particular jurisdiction.
A raffle+auction; talk about eating your cake and having it too!
Down here in New Zealand, we don’t have eBay. Instead, we have TradeMe:
and TradeMe does auto-extend auctions, by two minutes after the latest bid. Sniping still occurs, because bidding early is still a great way to encourage someone else to keep bidding until they’re in the lead. There’s still a flurry of activity in the last fifteen minutes or so, and I’d wager that sale prices are probably a little higher.
TradeMe also offers the seller the chance, after the auction has ended, to offer a fixed price to users who’d added the item to their watchlist. Quite often you’ll see auctions terminate with no bids, or not meet reserves, as vultures circle, waiting to swoop on a fixed-price bargain.
Not sure if eBay offers this – it’s been a while.
No, I do not think this is illegal in any legal sense. Similar companies have been operation this sort of services for some time now. In Finland we have had a similar auction site operating for at least one year now.
I have some other evil business plans which are also perfectly legal it seems. Here you go:
-pay-day loans, SMS-loans and similar schemes to provide easy short-term credit, for which you can charge 1000% interest annually.
-SMS-based knowledge competitions where you ask questions and the winner is, for example, the fastest person to answer them. Charge 3usd / SMS and select easy questions to get as many answers as possible. This is not a lottery (which would make it illegal in many countries, like here in Finland).
@Jack9: How is this any different than a live auction?
This is how auctions have been traditionally done, excepting the bidding fee.
Errrm, it’s different because of the bidding fee. The bit where everyone pays, not just the winner. The bit that makes it a gamble.
@keppla: If the swopoo-owners just spend the money on sex, drugs and rock’n’roll, i would even go so far to consider it pure good, because they prevent that the money the customers so desperatly want to loose goes to someone where it can do real harm, say, for example in politics.
I see a book deal coming: How to do good through scamming the stupid.
Proxy Bidding assumes that there is some magic number that one penny less and you’re willing to pay, but one penny more and you’re not.
This simply isn’t true for most real-life, personal, purchases.
The type of auction most people WANT is an interactive, traditional auction. (And optional proxy bidding is completely compatible with this, but a hard-and-fast ending time is not, because it encourages sniping.)
Wedge, you are describing a system that already exists, and are trying to convince people that it’s what they want, even though many are actively complaining about it. (I know this is a very natural instinct for us Computer Science types, but we’re supposed to fight it.)
I enjoy swoopo. I have won 8 times, that’s the limit in one month. The great thing is I didn’t spend much at all.Actually im ahead $3000.00.
As I mentioned, traditionally everyone pays in live auctions as well. Some entry fees are quite steep. This commoditizes the bidding as a dynamic fee IF you want to participate. I’ve gone to a couple auctions where I paid 25$ (small auctions) to end up not bidding on anything, I eventually went to other places and currently use Ebay/Craigslist/etc. I still don’t see how this is special. People want to pay it? I’m watching these auctions and I KNOW people this stupid can’t want some of this crap or be that frivolous with money. So what? I don’t click on the free Ipod banners either. YMMV
OK, I checked this out in its UK version and came across an auction for an iPhone which cost 40p (=c) to make a bid which raises the price by…1p. Yes, you read that right. See URL below.
http://www.swoopo.co.uk/auction/apple-iphone-3g-16gb-black-/130691.html
If all the bids are genuine, they’ve made 1,200 on a single iPhone auction that’s still at 28! If all the bids are genuine…
It’s a scandal almost on the scale of everyday banking, distinguished only by displaying its bankrupt morals right there on every page and still attracting customers.
Imagine this at a real auction house.
What am I bid for this lovely silver vase?
100
Thanks for the money, the price is now 2.50.
What more am I bid?
200
Thanks for your 200 sir. You might win the auction if you’re lucky.
The price is now 5.
Any more bidders?
300
Thank you so much sir! The 400 you’ve spent could get you this lovely silver vase for the bargain price of 7.50!
But wait…I’ve just had a phone call. A phone bidder is bidding 10!!! Care to drop another 100 to up the price by 2.50? You decide 
This is about as evil as the win a free ipod crap!!
Most definitely.
This is exactly why idiots shouldn’t have money.
And exactly why they won’t have it long.
For my former state (FL), and probably many others this would be considered a lottery or raffle. Which is decidedly illegal. I’m not sure how it is in other countries but if you have to pay for consideration. Then it doesn’t matter how the prize is decided (Chance, final bid, or position of the sun). In fact, I don’t think they consider anything else except for the pay for consideration part to decide if it’s a lottery or not.
Where I can see them skirting around this is the fact that you have to buy your bids beforehand. I know some organizations got around gambling laws by making you pay flat entrance fee $20 or $50, in return you got tokens to play games, and at the end of the night you would exchange tokens for prizes.
Last-second sniping is never a problem on EBay if you understand how the site works. You enter your maximum bid on EBay, not your actual bid. EBay then updates teh bid price so whoever is willing to pay the most has the current top.
Example: You want a widget. The widget is currently set at a $10 bid. You’re willing to pay up to $100 for the widget. On most auction sites, you would bid $11, since that’s close to $10. On EBay, you’re actually better off bidding $100 in the beginning. Here’s why:
For that $10 bid, EBay will raise the price until someone is bidding the highest, without going over their maximum. So if there’s one other bidder, who set his current maximum at $20, the bid will go up to ~$25, and you will have the highest bid. Note that your initial maximum bid was still $100, but you currently have a $25 bid on the item.
So when those last minute ‘snipes’ occur, if you placed the maximum amount you’re willing to pay for the item as your initial bid, one of two scenarios occurs:
-
You win the item, without having to worry about trying to snipe someone, for less than your maximum bid, or
-
You lose the item, which is really OK, because the item cost more than you were willing to pay.
If people simply knew how EBay worked, they would never have to worry about being ‘sniped’ again.
@Jack9: On a practical level, an attendance fee is a fixed price with no opportunity, let alone enticement, to buy more. On a moral level, an attendance fee is to cover the use of the venue, and will accordingly be comparable to other events held in similar venues.
Swoopo’s bid fees are a clever way of getting themselves paid by people who lose an auction. I can’t see how you can hold these equal on either criteria?
The only people that consider eBay sniping a problem are those that actually want to be part of an auction. If, like me, all you want is get a good deal, then sniping is the only way to go, regardless of proxy bidding.
If I, a deal seeker, consider 100$ is a good price for a widget and an auction seeking individual bids 75$, they will realize that somebody else bid higher and they might, in a fit of irrational auction frenzy, keep bidding higher and higher until they bid 105$ and outbid me.
The result is I didn’t get the item, the auction seeker got his thrill but overpaid for the widget.
If on the other I bid 100$ at the very last second, the thrill seeker won’t have the time to outbid me. Result: I win but I’ve ruined the fun of auction seekers.
Thus, if you’re just looking for a good deal on eBay, the only rational course of action, WHICH TAKES INTO CONSIDERATION THE POSSIBLE IRRATIONAL ACTIONS OF OTHERS, is to snipe.
QED
@Crazy Ivan: Better still is to combine both approaches. Bid $11 early on so that a) you get notified on other bids and b) the seller is less likely (or not allowed, depending on the site) to cancel the auction.
Then leave your maximum bid as late as possible, so as not to encourage other bids. It’s counter-intuitive, but people seem to ignore items with a low bid price until late in the auction. Too-good-to-be-true thinking I’d guess, but who knows?
In times of economic crisis, this information of this site is most disheartening. Normally I would respond with something quite like Daniel Cassidy posted. However, it seems these days, even the idiots in this country are affecting the smart ones.
So instead of sounding off and saying our population will work itself out in terms of natural selection, I will say the idiots will be the ball and chain around the ankles of the people that keep this country (and themselves) afloat.
On a completely different note, they took an auction site (like ebay) and charged people to bid. How dumb do you have to be to realize you could bid for free on ebay?
::Looks down at idiot ball and chains and sighs while drowning::
I heard about Swoopo a few months back. I quickly Googled swoopo clone and found that nearly every result was somebody trying to hire a programmer to build them a clone.
So I built my own and now I’m grossing around $3 million a year (profit 30%). It’s nothing too big compared to Swoopo (because I’m lazy), but a pretty good deal for a 22 year old.
I don’t know if it’s evil. I would have agreed when I was younger but giving it more thought, I’ve concluded that I either bank off people’s stupidity, or spend my life in a cubical listening to a pointy headed boss who’s banking off people’s stupidity.
Please update the article with your views and facts on why this is illegal exactly, in the US or UK.