Without doubt Penny Auctions have increased in popularity worldwide over the last three years.
We examine whether they are popular because of the concept and impressive items on offer or whether they
simply are addictive.
Not a week goes by lately where yet another new Penny Auction site informs us that they have
just started trading. Whereas previously we had a raft of online auctions starting up now
we have Penny Auctions. For many of the owners the possible lure of quick money through
operating the sites is the hook that pulls ever more in.
Let's start with the basics though - what is a Penny Auction?
A Penny Auction site is where a bidder pays a fee to place small incremental bids against
various items. When the auction closes, the last bidder to have placed a bid wins the item
and also pays the final bid price, this is invariably lower than the retail price of the item.
There are various differences and features dependent on the Penny Auction Site
but the above is basically how it works.
Unlike eBay, where you can bid for free, users have to pay and bidders who are unsucessful win nothing
for their paid bids. It is this that leads some commentators to state that a paid bid is equivalent to
a wager hence it's gambling. However the Gambling Commission in the UK disagrees and said it was not convinced
that penny auctions amounted to gambling.
Juha Koski from online Penny Auction site Madbid.com unsuprisingly agrees
with the Gambling Commission.
"We have two experts who have given us their opinion on this. This is definitely a game of skill and
would not fall under any circumstances under the definition of gambling."
Chris Bauman, Swoopo.com Senior Manager says its service is not a game of chance.
"You're competing against other users, so there's an actual head-to-head competition - it's not chance."
He went on to add that the reason Swoopo users like the site is because it requires skill and strategy.
Ted Dziuba writing for The Register stated that Swoopo "doesn't amount to a hustle, it's simply a slick business plan,"
and that while it might be close to gambling, "the non-determinism comes directly from the actions of other users, not
the randomness of a dice roll or a deck of cards."
Dr Mark Griffiths, professor of gambling studies at Nottingham Trent University claims that the fact
that people aren't bidding with 'real money' entices them to bid more than they can afford:
'The first thing that a casino does is to change your money into chips or a smart card. As people don't
see it as money it lowers the value of the money. It’s what we psychologists call a "suspension of judgement".'
Either way it is clear that their popularity is not about to wane anytime soon so the above may
all be academic. What is also clear is that if you intend to use Penny Auction sites then you must
follow a few basic rules:
- Set yourself a limit and stick to it.
- Don't play with money that you cannot afford to lose.
- Play on established Penny Auction Sites.
- Keep your eye on the timer countdown.
- Try and keep a tally of the cost when bidding.
[ Review Penny Auction Sites List ]
Posted: Thurs June 17 15:52 GMT
