May 25, 2009
Late last year, I encountered what may be nearly perfect evil in business plan form: Swoopo. What is Swoopo? It's a class of penny auction, where bidders pay for the privilege of bidding:
[Penny auctions] offer new televisions, computers, game consoles, appliances, handbags, gold bars and more for starting prices of a penny to 15 cents, depending on the site.
To "win" a product, shoppers must first buy a bundle of 10 to 700 bids for 60 cents to $1 each. Shoppers use one each time they place a virtual bid on a product. Each bid raises the price of the item by a penny to 15 cents, depending on the site. Some have automatic bidding functions similar to eBay.
Doing the math and not getting carried away is important: The final price of a product that retails for $100 might be $29, but the total price paid could be much more, depending upon the number of bids used. If a shopper bids 10 times at $1 a bid, for instance, the total price paid would jump to $39. And, there is the real possibility of using all your bids without getting the product.
Auction winners generally get their item for about 65 percent off retail but could save as much as 98 percent if there are few bidders.
Since the sites make the bulk of their revenue from the purchase of bids, they profit most when they feature a product that elicits a bidding war.
One of Swoopo's investors recently contacted me via email, and I had to marvel at the size of the cojones you'd need to associate yourself with this kind of nastiness. Swoopo is evil beyond the likes of Saddam Hussein, The Balrog, OSB, Darth Vader, and Barbra Streisand -- combined.
He wanted to talk to me on the phone about positioning, and staunchly maintained that there was no element of chance in a Swoopo "auction". Once I stopped laughing, I told him these were my terms:
If you believe in Swoopo, then data speaks much louder than words.
Let's conduct an experiment.
Doesn't have to be you, personally. Take n dollars, and use those n dollars in whatever strategy it takes to win items (of MSRP $399 or higher) on Swoopo.
If Swoopo isn't a game of chance or lottery, a skilled player should be able to win at least one item in this experiment, yes?
I'd be happy to run this experiment and write about it on my blog. Just let me know what terms you think make sense.
I haven't heard from him since. (Now I'm curious if anyone is willing to take on this experiment, under the same terms.)
Because Swoopo is, at its heart, thinly veiled gambling. The companies backing Swoopo and other Penny Auction sites are hoping unsophisticated regulatory agencies will buy the "It's not a game of chance" argument if it's wrapped in a lot of technical intarweb mumbo-jumbo they can't fully comprehend.
But we're no government flacks. We're programmers, and many of us develop websites for a living. It's a bit tougher to pull the wool over our eyes. In Trying to Game Swoopo, Joshua Stein pulled out everything in his programmer's bag of tricks to win a Swoopo auction -- and, predictably, failed.
With all of this data available, I concluded that there is no way to reliably win an auction on swoopo.com without using their bidbutler service. There are delays on their network/servers in processing manual bids, whether intentional or just due to bad design, that cause manual bids placed with 1 or 2 seconds remaining not to be cast. users of their bidbutler service have an unfair advantage in that their bids are placed on the server side and are not subject to these delays.
Since it is not possible to reliably place manual bids, the only way to guarantee that an auction can be won (while still coming out ahead) is to use the site's bidbutler service with high ceilings on the number of bids and amount that one will let it bid up to. Those ceilings have to take into account the item's current price, and will be lower the longer an item is being bid on.
As Joshua's data shows, there is no way to win a Swoopo auction other than through sheer random chance -- that is, your client-side bid happens to wind its way through the umpteen internet routers between the server and your computer in time, ending up at the top of a queue with dozens or hundreds of other bids placed within a fraction of a second of each other. And what's worse, you may not have any chance at all, unless you place a server-side bet through their exploitatively expensive "bidbutler" service.
As I said in my original post, the only winning strategy at Swoopo, or any other penny auction site, is not to play. On Swoopo, there are nothing but millions of losers -- and by that I mean they are gambling and losing millions of real dollars to the house. Which would be OK, I guess, if it was properly regulated as gambling. Swoopo and all these other penny auction sites should be regulated and classified as the online gambling sites in sheep's clothing they really are.
Let's see what we can do to hasten this process along. Warn your friends and family. Complain to the Better Business Bureau and other regulatory agencies. 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.
Posted by Jeff Atwood
Amen to that!
A lot of bloggers have seen the evil of these types of sites. It's just taking advantage of stupid people.
The BBB isn't a government regulatory agency. It's a private organization.
I never understood anyway why web auctions end at fixed time, unlike offline auctions which end when there is no higher bid. The bidbutler problem goes away if the auction ends after time X IF no new bids were placed for Y minutes. Or something like that. Of course it wouldn't be so profitable; it would just make more sense.
This is quite a timely post, as just this past week I thought I would take Swoopo for a spin to see what I thought.
I would agree whole-heartily with your post, except for the part about the bidbutler--Having used the bidbutler, I would have to disagree with the statement "exploitatively expensive." It does not cost anything extra, nor does it put any exploitive conditions on how you use it. (except of course with the already-mentioned manual bid delay fluke)
As for people being taken advantage of, I have seen a number of auctions where people have paid >$1500 for a $1200 macbook, because of the way they are bidding/the way it is setup.
It truly is a racket.
The first red flag for me comes up with any auction service that requires me to lose money and not get any return from the item. That's a gamble on its own, since no real auction site would force me to lose money just for trying.
Swoopo is more than just a scam, it's an insult to the internet in general. I'll definitely be telling friends and family about this.
Gambling can be fun if you know what you're in for, and you don't expect to win. It's about playing the game. I know for one that my parents could find a site like this, think it's a great way to make a bargain, and lose incredible amounts of money and not understanding WHY they just seem to keep missing a bid.
Fight the good fight Jeff!
Man, this is one of the oldest tricks. Here (Spain) on every fair, you can find several Gypsy stands that use this auction method, and I believe this has been this way for the last thirty years. They auction everything, people buy auction tickets, and loose. Scams 2.0 baby!
Why do you care, man? No one's a kid here, if someone wants to go and spend their money on that website they're going to do it regardlessly even if it were classified as a gambling website. Other than hurting their business itself you aren't going to achieve anything or convince anyone. So why bother with this? There are better ways to use your energy.
Unless of course, you have a personal beef with that site, which you do seem to have.
Oriented strand board is evil?
While I agree that it probably is gambling, I just have to say, who cares. Why do we need the government stepping in? As long as there are only adults bidding on the items, it's their own choice what they spend their money on.
Worth taking another swing at these sites.
So, besides, Swoopo, any other sites you would go on record against?
Vigilante justice! Hack everything!
The Swoopo business model is underhanded verging on dishonest. I doubt the average Swoopo user has any idea that he's stuffing money into what is essentially an online slot machine.
Regulatory agencies should spend a little less time harassing legitimate games of skill such as online poker, and a little more time harassing sites that offer what amounts to a Mafia-style numbers game, thinly disguised.
is it really that much of a scam? I see it as nothing worse then a Chinese auction (some call it tricky tray). You pay a fee to get n number of tickets, and can buy more if you want. Then you walk around putting as many tickets as you want, into cups in front of merchandise. In the end they pull random tickets from the cups to see who won. You can easily spend money and get nothing in return. I'm not trying to say that I approve of Swoopo, but a fool and his money is soon parted...
The difference between what you're describing and Swoopo, is that after the winner is picked (from people paying for that privilege, which can have no end if people keep on bidding) the winner has to still pay for the marked price of the item! Sure, it could be only 35% retail price, but each 15 cents of that cost someone 75 cents, so in effect they make 5x of the final bid cost, just from running the auction, 6x if the person buys the item!
Just let this sink in...Swoopo doesn't even need to have the item in stock. As long as it sells for more than 1/6th its retail price they can just buy the item from amazon, ship it to you, and make a profit.
And there is a huge opportunity for just plain fraud. What if they just had an insider automatically win every auction? No downside whatsoever, just pure profit from nothing.
It's a scam of the highest order and probably a moneyprinting scheme for the owners.
It is a scam, reason being that the collective cash of all the unsuccessful 'bidders' far and away exceeds the value of the items being sold. It's more akin to pyramid schemes, where one small group gets unjustifyingly rich at the expense of a large number of other groups.
There is no way you can call this any kind of auction. It's gambling through and through and it should be labelled as such and policed as such. You shouldn't have to buy bids in an auction any more than you should be able to buy votes in an election. They're about as corrupt as each other. Can someone explain how 10 people can bid on a $20 item, 9 people bid $10 and 1 person wins the auction by bidding $11. The owner of the item gives away $20 and recieves $101. Have I got that right? If so it comes under the 'freedom to print money' title.
I think you missed a very important point in a Swoopo auction. "If a bid gets placed in the final moments, we extend the auction by up to 20 seconds".
This does skew your analysis.
Your statement "...your client-side bid ... ending up at the top of a queue with dozens or hundreds of other bids placed within a fraction of a second of each other." especially neglects this point.
A client-side bid will win if it managed to be the only request within the subsequent (upto) 20 secs.
Otherwise, great article as usual.
Thanks for the post. I clicked through an ad to the swoopo site just the other day. I reached the same conclusion that it was a scam. Here's a thought for others out there. Every time you see an add for the swoopo site, go ahead and click it. I assume a lot of the ad revenue they pay is based on click throughs. We can cause their ad revenue to go through the roof! Just don't bid on anything!!!
> While I agree that it probably is gambling, I just have to say, who cares. Why do we need the government stepping in?
For the same reason those payday loan joints need to be regulated:
capitalism gone wild: 3,685% interest rates. Sort of like the 3,685% house profit that swoopo rakes in.
Gambling corporations have become adept at exploiting such human inclinations to the point of addiction, encouraging people to part with money they and their families often can’t afford to lose. It is a legitimate use of law to regulate organisations who exploit the weakness of other people for monetary gain. Banning gambling altogether would be going too far, but putting limits on the number of outlets and the size of the winnings is sensible, given human nature as we know it.
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....
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.
G: no, you misunderstood how it works. The 9 people who didn't win don't have to pay $10. They "only" pay a few cents to make the bid.
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!
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 :)
"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.
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.
Great posting. The best post for a long time.
I guess the real problem is not if this is a gambling system or not. The problem is some people are just unable to think for themselves and that's why they need the government to take care of it with regulations.
Anyone doing the math can see Swoopo is making a killing on stupidity, hell I wish I thought of this idea. What is worse is they are based out of the UK, which would make me more cautious of a rigged BidButler service or virtual bidders.
There's no point banning gambling, people will find ways to do it anyway. A fool and his money are easily parted, and that will always be the case. Even if you ban traditional gambling facilities doesn't the stockmarket provide the ability for gambling?
Interesting, I never saw it from that perspective and I have been in the situation of having to write an automated bidding agent for one of these sites. My employer thinks a penny auction site is a good idea but he likes to scam people left and right so it seems like a perfect fit. But most of the placed bids are not real so even if you calculate a total of $12000 for a MacBook, the auction site will make considerably less.
I don't get the evil part, but then again I don't think gambling in all of its forms is evil. I went to swoopo and there's a large 'how it works' button that I clicked on. I then read what I felt was a very clear description similar to what Jeff described. You clearly risk 75 cents for a small chance to win the opportunity to purchase an item. Sorry, but I don't think this is evil.
When I was a kid in boy scouts I sold raffle tickets. People bought them knowing they might get nothing, because that's what a raffle is. This site has essentially taken the raffle idea, and exchanged 'free prize' with 'pay the amount that you bid'.
It's certainly not a noble concept, but calling it evil seems a bit overboard.
"This site has essentially taken the raffle idea, and exchanged 'free prize' with 'pay the amount that you bid'."
Except raffles are normally done for charity, and people buy tickets as a fun way of making a donation, rather than expecting to make a profit. And you usually only buy a few tickets, not keep buying on the basis that whoever spends the most will get the prize.
Every lottery has mio. of losers. Every gambling has mio of losers.
I personally never bid on auctions, also not on eBay. I use eBay as a shopping portal. There are so many shops selling items as "new" on eBay for a fixed price and I always find what I'm looking for. Bidding on auctions is too much gambling for my taste.
Here in the Netherlands we recently have had exactly the same. There's a guy who has a penny "auction" website, exactly as you describe. The government is investigation if what he is doing is legal or not, and he was on TV being asked about his website. Ofcourse he insisted that it is an auction and not gambling.
Oh, I see pvc already wrote about this.
The key point here is that it is gambling in disguise. The operators of such websites try to mislead people into thinking that it is actually an auction, while in reality it's gambling.
@Wojtek: Adults should be allowed to do "bad" things such as gambling, but that's not the point here. The point is that people are being misled, and they don't know they are gambling.
So, what's this evil thing called an OSB?
ALso what i realized is, what if some clever user learns to make DOS attacks on swoopo's server to make sure all legit bids in the last 2-3 secs timeout and his/hers bids make to the last one!
Infact, i wonder if it's already being done on the site?
It should be quite simple for a dedicated hacker to do that i'm sure, only it won't be able to prevent the butler bidder. (and that give MORE undue advantage to the butlerbidder).
I wonder if swoopo's got any DOS prevention mechanisms for DOS or DDOS.
Once you've gone after payday loans (after the ridiculous exercise of extrapolating to annual interest rates), you should hit the hotels next!
While it is shameful that these people can get away with this, I have to ask whatever happened to "Let the buyer beware"? I think that we as a country try to protect everyone from themselves way too often. Some people should lose their money and learn themselves a valuable lesson. We are creating a nation of imbeciles who are incapable of caring for themselves. Even if the Government decided to regulate this industry, these sites will only move their servers to another country where it is not regulated. Government action is unnecessary, we have to stop trying to slow evolution. Let people make their own mistakes.
I see a "Wargames" reference :D
I see a "Wargames" reference
Ayn Rand said 'if you protect people from their folly you fill the world with fools'
Like we need more fools.
Don't know why you don't just have done and give your website the 'hammer and sickle' branding you seem to want.
I'd like to just post this example of Swoopo's evil brilliance. I visited there this morning to check it out, and watched one of their 300 bid vouchers sell.
The ending price, for this item worth $225 (and only then $225 of savings from Swoopo, they pay nothing for this item), was $39.68. That means that people paid, to Swoopo, $2,976.
Worst of all, however, the winner was a BidButler 'winner'. They set some ridiculous ceiling, and left. Here's what Swoopo proudly displayed:
Worth up to: $225.00
Placed bids (515): $386.25
FreeBids (38): $0.00
Final price: $39.68
At least they had the courage to admit, openly, that this person saved nothing--quite the opposite! In attempting to get just 300 bids, they spent 553 bids--losing 253, overall. More to the point, in cash, trying to buy this $225 item...they /lost/ $200.93 on the deal.
Swoopo: Where even the winners are losers.
I hate big government, but sometime regulations are necessary. Take the current housing collapse here in the United States. The one main reason it happened is because Bill Clinton (and the Congress/Senate) remove the regulations that would have stopped Fannie/Freddie and other lenders from making all the bad loans that they did (to people who could not afford them). Now we are paying the price and have had to pay over a trillion dollars to bailout all those "fools" that we allowed to be parted with their money.
If we do not regulate these type of sites, then the way things are going we all will be paying to bail-out all these people who used these site spending money they did not have. Nowadays no one wants to take the consequence of there actions. Not regulating these sites (defining them as gambling sites, and regulated as such), will come back to bite us. Then we will be bailing out all the fools that used these kinds of sites (Because they were to stupid to know they were gambling). In the long run if that happens not only will the person who used these sites be the victim, but we all will pay for there foolish decisions.
Good article Jeff, it is good to see a non-technical article every now and then.
It's certainly not the same as a raffle, since in swoopo you're pretty much guaranteed that bids launched early in the auction have effectively zero chance of winning. It's only when the bid price reaches some weird sort of optimum that your bid has any actual chance of winning the auction.
Damn you, letters OSB! And damn you, Order of Saint Benedict, too!
'How it works' gives no indication of the anecdotal evidence described by the article jeff linked to: that bid butler almost always wins.
But the opposing question in this... is 'gaming' the system fair?
what about those script kiddies trying to win the coveted B.O.C. on woot? is that fair?
what about sniping on ebay? is that fair?
if everyone used bid butler, then normal market conditions would prevail... ie: those too squeamish to continue drop out (hmm kinda like poker) allowing the final price to 'settle'.
meh.... looks like gambling, sounds like gambling, smells like gambling.
Jeff, I think you misunderstand how capitalism is supposed to work. Don't take our current economy as a model of capitalism... it's pretty broken at this point. As long as Swoopo (or any other service) discloses it's full terms up front, it's up to the CUSTOMER to figure out if they want to put their money in. If it's gambling, so be it. I don't like Swoopo any more than you do, but there is no need to get the government involved. Vote with your wallet: don't use the service. The same goes for payday loans; if they disclose the interest rate, it should be up to the customer to decide if they want the loan. Government regulation just discourages innovative business practices like Swoopo -- like it or not, it's an effective business.
Meh, swoopo and its ilk will go the way of the shell games at carnivals. Eventually "everyone" will know that they're just a scam, except the few fools who think they can beat them.
And what harm. As a previous poster, said, fools and their money are easily parted. Mark my words: swoopo will be long gone before any regulation is forced upon it. I mean, if these guys are making the amount of money you say they are (and it seems they are) then I give it another 12 months, tops, before they retire and buy a tropical island.
And in fairness, as has been pointed out, they DO make it very clear what you are getting into. So there are no excuses.
If I may make on suggestion before I go; if you're going to make a crusade against systems designed to innovatively f**k people out of their hard earned money, why not take up arms against something a bit more relevant, like, oh I don't know, 90% of ERP software out there :)
Ryan M, you misunderstand his point. Jeff knows there's no fraud involved. He considers that "taking advantage of stupid people" is "evil", and that "evil" things must be punished with government.
Of course, it ignores the fact that the transactions are honest and voluntary and the fact that allowing government to define "evil" is the fastest way to death.
Hotels doesn't really need any public display as they aren't gambling services, but just overpaid services in general.
I agree that it's a gambling site, but like others say, there is nothing inherently wrong with gambling, it's the people who run it and the people who do it that are the issue. Considering it's pretty much a closed loop system with very little affect on the average non-gambler, there isn't much of a reason to regulate.
I don't believe people have the right to be protected from themselves just as much as I don't believe you have a right not to punch yourself in the face. Of course you do, you're an idiot for it, and if the families of said people aren't smart enough to leave these addicts, then they are perpetuating the system themselves, especially (in the US) considering the HUGE amount of resources dedicated to helping said families.
So no, no regulation needed here, these guys may be scum of the earth, but nobody can reliably regulate this quite grey area of morality.
People continually feed off each other's greed and selfishness. It's a horrible planet that we don't step in to stop it, but some bright light came up with the expression "caveat emptor" and we've been stuck ever since. Maybe we should reconsider labeling this idea as being good?
The real question I have is this:
what regulations are implied by being called gambling?
what are the benefits of those regulations?
I hope it's not 'exclusivity' which seems to be the only outward seen 'benefit' of gambling regulation.
I would really like to know...
@game of skill: So, exactly how long have you been employed by swoopo?
I think Swoopo IS gambling.
It causes gambling addiction because the auction doesn't have a clearly defined finish date. In ebay you can bet as long as you have time to do it, but once the finish date has been reached, that's it, you can't keep betting.
The problem is that a Swoopo user can't easily realize that she's gambling. Swoopo is not been honest on this.
So, Swoopo should be treated as a Gambling site. That way, whoever wants to get in the game will know that it's not about skills.
These applications create a negative impression toward those of us who are developing games and activities that don't promote gambling.
I am not a proponent of regulation, because it often leads to restrictions on all of us.
The best thing we can do is to spread the word and demonstrate that there are many great alternatives to gambling our money away.
Thank you for opening this discussion and raising the voice of warning.
I always felt this way about sites like Priceline.com, where you 'name your own price': the site just matches your request with offers they know of (such as airlines' published rates), then gives you the cheapest one they have that is below your request, if any. So essentially you are guaranteed to overpay, by some unknown amount, every single time.
In this case there's no money loss if you don't get the price you requested - however, the commercials make it seem as though your request is actually presented to the hotel/airline/car rental place, which is misleading.
I don't know that I'm in favor of regulating Swoopo (as I noted earlier, there are far more blatant forms of gambling that are perfectly legal when conducted under the auspices of high finance), but the government regulates "evil" in various ways all the time. All regulation stems from a moral framework of some type.
The best example is, I think, the enhanced penalties which are universally apply to killing someone on purpose vs. killing them accidentally.
The government is imposing additional regulation in spite of the fact that the utilitarian outcomes are the same. Of course, it's recursive, because utilitarianism is itself a moral framework.
So your argument becomes an argument against all laws, everywhere; including the laws defending private property (against theft or expropriation), contract rights (civil law), currency (against counterfeiting), and laws to restrict the government actions itself. All of those laws have their moral foundation in utilitarianism.
I'm with Carra. What OSB?
From Wikipedia, the free encyclopedia
OSB may stand for:
* Order of Saint Benedict – a monastic order
* Orthodox Study Bible - an Eastern Orthodox study Bible in English, including the Septuagint
* Oregon State Bar
* Oriented Strand Board – an engineered wood product
* Old Saybrook (Amtrak station), Connecticut, United States; Amtrak station code OSB
* Oracle Secure Backup
* a defunct television station in South Korea
* Orthodox Speakers Bureau
* Oracle Service Bus - Part of the Oracle SOA Suite of technologies.
* accr. - Original Signature By
I have a guess, but some of the others would be amusing answers.
this reminds me of barnes and noble when they use brokers worldwide to deliver your stuff!!! some times it arrives sometimes it doesn't :).
are all auctions like this? how come a bid is non refundable? is there some place i can get ego points by saying "look i bid" do you get out bid by famous people? "i was out bid by bill gates man, i had no chance"
these guys should look for a way to give back to bidders. can't they charge only those bids that were successful? like my favourate B&N who charge you $29 regardless the size ofr value of what you ship express.
i love B$N and use them regularly to buy books. despite the subtle way of getting you to pay that $29 for ups, they are not bad folk. these swoopo chaps are just plain evil!! unless jeff has misrepresented here, THERE JUST IS NO UP SIDE TO SWOOPO. win or lose you are screwed
Hey! Barbra Streisand stole my orange!
Why this bandwagon?
Why not AIG, Federal bailouts, sleazy financial institutions, disappearing 401Ks, Federal Reserve printing presses, Senate Bill 909?
If people are addicted to gambling I feel it's their fault and their duty to reach out to help themselves. If they don't want to change they won't. Same goes for swoopo. This stupid site would die out if people would just realize it's a screw.
I have accepted that "you can't fix stupid" and if people are going to run amok throwing their money away - that's our reality. In my mind, people need to step up and start learning a lot more these days and ultimately hold themselves accountable for their actions.
Wait my variable rate went UP again? NO WAI
I just checked out an auction for a TV. They say that tv recently went for $262.65.. That means 26265 bids at $.75 each.. They 'auctioned' that TV with MSRP $1,199.90 and made $19,698.75
Am I getting this right?
Darrel: re your example of the user who placed 553 to "win" 300.
The worst part of this, and the part that I think makes swoopo so brilliantly evil, is that every time the "winner" decided to bid, it was ENTIRELY RATIONAL.
By the time they've placed 300 bids on the auction, they're faced with two possibilities: either walk away and lose the 300 bids they've placed, or continue on and place *just one more* bid for a chance at winning a full 300! Every time you bid, all your previous bids are a sunk cost and can't be factored into your cost/benefit analysis.
http://en.wikipedia.org/wiki/Dollar_auction is quite relevant.
Jeff - it baffles me when people say theft and deceit are "capitalism gone wild".
The issue is one of false advertising. We already have laws against this. Just like Bernie Madoff's little scheme was discovered way before any action was taken, we need to be enforcing the laws we already have, not creating new ones. It is gambling and should be labeled as such.
We seem to always have an endless supply of suckers, that haven't learned yet. And yes, people still fall for the old shell game.
Maximillian - "It's just taking advantage of stupid people."
I don't see the problem with this. However, this kind of scam is borderline - when you sit down at a casino table, you know you have a good chance of losing everything you sat down with (if you don't, then you have a gambling problem) - but with Swoopo it is not so obvious. I would bet that many reasonably intelligent people get caught up in this scam.
LoL, The Balrog! That's my new defacto evil comparison. (And it is, pretty evil.)
I'm having a hard time classifying this. Unlike others, I can't quite see how this is "gambling". Sure, the concept of only one winner might be a giveaway, but regular auctions only have one winner too.
The problem with this that makes me question whether or not it's gambling is this. In "gambling" everyone has the same odds to win. One person who makes a wager wins (even if that's the house). In this case, 99.99999% of the people who make a "wager" have 0 percent chance to win, because someone will be bidding after them. Only the person who bids last has the chance to win, and that's a 100% chance, otherwise it's a 0% chance.
It would be like a slot machine where you don't have any chance of winning unless you are the last person to pull the lever. It just isn't gambling, but i'm not sure what it is.
Think of it like this. Suppose Ebay extended their non-paying auction everytime someone bid on it in the last 10 seconds. This would be the same thing. But yet, Ebay wouldn't be making any more or less money (ok, they might make more if they're taking a percentage of the final sale price), so would that suddenly make Ebay gambling, just because they had no fixed end time for the auction?
The way I see it, the quesiton of gambling here is not about swoopo charging for bids, but rather on having an unknown end. Charging for bids just makes them make more profit.
What makes Swoopo so brilliantly evil is that it *isn't* a scam. (Unless they're using shill bidders, and there's no evidence of that). They're completely upfront about how it works, and as noted above even show the total price the winners end up paying. They're counting on people being too stupid and/or greedy to realize that the odds are horrible, and apparently that's a valid assumption.
'but the government regulates "evil" in various ways all the time.'
That makes it correct!
A few more thoughts.
It's not really a pyramid scheme either. Pyramid schemes promise everyone to be a winner, but it's not mathematically possible (even if everyone does it correctly and nobody "cheats") for that to happen.
It's not really a Ponzi scheme either, which is mathmatically similar to a pyramid scheme.
In fact, I can't seem to figure out how it's fraudulent either, unless there's colusion involved with the operators, because the rules are fully explained and anyone can understand them. Nobody is under the impression that they WILL win any given auction, unlike ponzi or pyramid schemes that guarantee payments.
I can't quite seem to figure out how to classify this, but it's definitely not gambling because in gambling, everyone has a chance to win, and with this.. that's simply not the case.
I mean, if it's gambling.. what is the wager? It should be definable, with a probability of winning (unless the wager is fixed, which would be illegal).
Poker players are fond of claiming that Poker isn't gambling, because mathmatically, if they play their hands correctly, they have 0% chance of losing over the long run. They make this conclusion based on the expected value of a hand being positive, and even if any given hand loses over the long run they will be winnners (assuming they play correctly every hand). The same is true of the house in virtually any casino game. The house has an advantage that will make them always a winner. So it's not gambling to them.
Is it really gambling then if someone has a 0% chance of winning?
Re: how to be a skilled player and win an item:
The best way to win a dollar auction is to come out of the gate bidding a dollar. Swoopo is not quite a dollar auction (Swoopo is nicer to its bidders) but the same strategy should apply. The best strategy is to immediately bid the MSRP of the item, which makes it a certain loss for anyone else to bid against you.
I don't even know if Swoopo allows this, and I don't know if it qualifies as a "winning strategy", but it is the best you can do. (if there was a way to beat swoopo, they'd be gone by now.)
Re: most of the comments:
I like any real-life system that exposes folks to game theory. Swoopo's a good one. Is it a scam? I don't know, because no one here has defined what a "scam" is. To me, it's only a scam if you lie about something. As far as I know they haven't. Swoopo happily explains the system to you; the fact that you'll lose money is just an emergent property of the system.
Why should you care if fools and their money are parted? It isn't that regulations are protecting the fools, they are protecting you. Perhaps you haven't noticed but prior to about, oh, the middle of last year quite a few people in the U.S. got mortgages for houses they couldn't afford. When housing prices fell it caused a chain reaction throughout the economy that, it's probably fair to say, is hurting everyone in the U.S. and other people around the world. Even those responsible people who only got a mortgage they could afford are taking a hit.
If the U.S. government had regulated Credit Default Swaps, bundling of mortgages, etc. in a manner similar to the way other financing is handled, we might not be in this situation.
Swoopo is similar (though I don't expect it to destroy the world economy, or could it. . .), sure you may be smart enough to realize that it's gambling, but at least Swoopo ought to admit that its "auctions" are a form of gambling, it is not the same as EBay.
I won't even go into the disturbing lack of compassion exhibited by many posters for their fellow human beings. I would think they would be grateful that they are perfect, have never done anything stupid, and will never need help or guidance from another human being, rather than denigrating those who are less than perfect.
"The worst part of this, and the part that I think makes swoopo so brilliantly evil, is that every time the "winner" decided to bid, it was ENTIRELY RATIONAL."
"http://en.wikipedia.org/wiki/Dollar_auction is quite relevant."
I don't get how the dollar auction is rational. At the start someone bids 1 cent expecting to make a 99 cent profit. But this is only rational if you are the only bidder. A rational strategy would have to take into account that someone else was going to bid against you. Rationally you have to assume that another bidder will also be bidding upto the point it isn't profitable, so you are not going to be able to make a profit.
Of course the obvious rational strategy would be for everyone to agree that just one person bid one cent and then share the dollar - though it's then going to be more like the Prisoner's Dilema.
"The best way to win a dollar auction is to come out of the gate bidding a dollar."
Then you haven't won anything.
@rich, who has beautifully drawn me off topic:
"When housing prices fell it caused a chain reaction throughout the economy that, it's probably fair to say, is hurting everyone in the U.S. and other people around the world."
The only people hurt by the economic slump are people who are voluntarily participating in the economy. Yes, that's almost everyone, but that doesn't change the nature of the game: the U.S. created the economy, which is necessarily a communal endeavor between millions of people you don't know; most of us use it for its benefits -- not all of us understand the risk, which is why some of us also play Swoopo.
Humans got along fine without a credit-backed economy for quite some time, and it's still possible to do so today. So you can participate in the US economy, reap its rewards and run its risks, or you can stay out of the game and not get hurt when it goes bad. Me, I decided to own dollars but not to own any Swoopo bids, but the evaulation process was about the same in both cases.
When government steps in to regulate what consenting adults do in private, it inevitably causes more problems than it solves. E.g., consider the cost prosecuting the drug war (which has hardly stemmed the proliferation of drugs) has imposed upon tax payers.
I'm not advocating gambling or drugs. Just saying that government, when properly scoped, is concerned with promoting individual liberty. This means that government only steps in when the exercise of my 'liberty' starts to impose itself upon your rights. Anything more and even duly elected representatives of the people become tyrants more dangerous and costly than that which they set out to oppose.
Here's my concession, to the degree in which a business like Swoopo deceives a paying customer, they should be held liable for breach of contract/fraud. To the degree paying customers enter into foolish transactions with open eyes, they need to be allowed to learn from their own mistakes--otherwise they never will.
I'd like to note to the people who don't care that it's the stupid people who really get taken by these sites: Statistically, there are far more stupid people than the rest of us, and they're not adverse to lying/cheating/stealing/killing when they're too broke to buy food. This is why we need government intervention.
You *can't* big a specific dollar amount - that's what makes this so confusing/clever/evil.
You simply "place a bid" (which costs you $0.75), the price "goes up" a fixed amount ($0.15 normally, or only $0.01 for a special "penny auction")
So people see the "bid price" stay (relatively) low, which entices them to bid, but in fact, it is costing (someone, or many someones) $5 (in bid costs) to raise the "price" of an item by only $1.00.
Oops, that was supposed to say "You *can't* BID a specific dollar amount"
The truth here is that the "auction price" is actually irrelevant, because its the *money you are spending to bid" that is so easy to lose track of, and spend more than you intend.
Offtopic : What happened to "Orange"?
Adults smoke. That's bad and should be made illegal.
Adults drink alcohol. That's bad and should be made illegal.
Adults have sex. That's bad and should be made illegal.Yeah that's bad because we have orphanages and this means that sex -> children -> orphanages.
Adults gamble. Wow, that's real bad. 10 whips per gambled dollar.
... what else ...
Adults go on Internet. Obviously to watch porn, what else? Cut off these stinky ADSL. Modems still allowed.
There are more but I need to find a whip (I gambled 25 cents last time I was in Las Vegas) and a pair of cissors.
Ah - sado-maso stuff is not allowed either. So no whip nor cissors.
As others have noted, the keyword here is ADULTS. The IQ may vary.