Legalized gambling with penny auctions

Slot Machine

Image by Rob Boudon via Flickr

I love slot machines. Actually, it’s the gambling I love. I pretty much hate slot machines. You put in money and you might win. There’s no guarantee. In fact, it’s more likely that you’ll lose. There’s no guarantee of winning with card games either, but at least you have information available to change the odds of winning.

Frequently, I see ads on this site through Google’s Adsense that advertise penny auction websites. In a common penny auction format, each bid increments an item’s bid price by one cent. Each bid costs a quarter. Each bid extends the timer and the last person to bid wins.

It’s tough to judge the reputability of these penny auction sites, since the barrier to entry is very low. Unlike Internet auction sites run by auctioneers, it’s unlikely that there is an auctioneer of any kind behind any of the many sites that use this model. In fact, there have been recent news stories regarding automated shill bidding by some popular penny auction sites.

I’m not the first auctioneer to make the association between penny auction sites to gambling. For an alternative, more in-depth analysis of penny auction sites, read Mike Brandly’s take on the subject.

This entry was posted in theory and tagged , , . Bookmark the permalink.

Aaron Traffas, CAI, ATS, CES

twitter.com/traffas | aarontraffas.com | aarontraffasband.com

Aaron Traffas, CAI, AMM, CES, is an auctioneer from Medicine Lodge, Kansas. He is currently community evangelist for Purple Wave in Manhattan, Kansas. Aaron serves as the current president of the Kansas Auctioneers Association and in the past has served on the National Auctioneers Association Education Institute Board of Trustees. He is a past instructor at CAI and co-wrote and instructed the ATS designation course from NAA. He currently instructs the Internet Auction Methods course offered by the NAA. An active contract bid caller, he has competed in multiple state auctioneer contests including placing twice within the top 5 in Kansas. During the summer, Aaron operates a farm in south central Kansas. Aaron is an active singer and songwriter and the Aaron Traffas Band's latest release, Enter: The Wind, can be found at iTunes, Amazon and Spotify.
  • To claim something is gambling without citing any evidence seems a bit careless. First, many penny auction websites offer a Bid-to-Buy option. This means every bid you place goes toward purchasing the item at retail price if you don’t win it for less. Unlike card games or slot machines, this option gives you a guarantee that you’ll break even or do better. Hardly sounds like gambling to me…

    Josh

  • I haven’t seen a “bid-to-buy option” and am unfamiliar with it. However, it’s not an auction if it has a fixed price. I also think that it’s not an auction when the purchase isn’t based on the total price paid by an individual and, instead, relies on the last action made by a particular person. The only thing I can come up with that is similar to that model is a slot machine.