03.Is it gambling?
“The definition of gambling is betting something of value on an uncertain outcome that has elements of chance. You’re outlaying something valuable – money - hoping to win something valuable, like an iPad. If there’s an element of chance, then it fulfils the definition,” explains Professor Nerilee Hing, head of the Centre for Gambling Education and Research at Southern Cross University.
Dr Mark Griffiths, a professor of gambling studies at Nottingham Trent University in the UK, agrees, and believes there is a large element of chance involved in penny auctions.
“To me, [penny auctions] are all but gambling in name and they don’t seem to be regulated by any organisation or authority,” he wrote in an article for the World Online Gambling Law Report. He outlined several parallels between these websites and gambling, and believes regulators need to intervene.
“Theoretically a person can bid again and again (on either a single product or multiple products) with no certainty that they will ever win… it does not seem to depend on any discernible skill and it is more like a chance-based lottery. If there is no real skill and it is essentially a chance activity, how is this not a form of gambling?
“Any bidder who just misses out on winning an item on a penny auction website also experiences a near miss experience. [This] may lead to further bidding on other items as a way to relieve the frustration of not winning.”
“It’s chasing your losses,” says Hing. “People are continually chasing money they’ve already lost, which is very conducive to losing control over spending.”