I guess I don't understand the "scam" label. I haven't completely analyzed Swoopo's marketing, but I think the majority of people that play realize they are trying to get something big for something little. And it's a game. If they don't win, sometimes they come back. Sometimes they don't. It's not everyones cup of tea to put money on a game they think they can win. Just like its not everyones cup of tea to put their money and time on a startup thinking they can make a decent income.
I also don't get why people collect Precious Moments. Or play Cityville/Farmville. Or play most of the games on Xbox/Playstation. They pay good money and time for these distractions. And they come out with "nothing". But they have fun.
There's a lot of people who spend a crap load of time on StackExchange sites. And there's game mechanics roping them into collecting badges and points. But they enjoy it. Do the people answering get much out of it? Virtual points? :) Some virtual pats on the back for an answer well done?
But people enjoy it. Just because I wouldn't spend my money on Cityville or all my time commenting all day on some site, doesn't make them scams.
Sites that try very hard to make their product appear as auctions, but are in reality gambling qualify as scam in my book.
Now I enjoy gambling as much as the next guy, but I want to know that I am gambling and what my chances/odds are and I want that information to be in plain sight.
I'm not sure I understand your point: what prevented you from watching the numerous auctions they had going at any one time to see how it worked? What also prevented you from revisiting the hundreds of closed auctions they made available for review to see what final selling prices were? Or reading their help/FAQ's, all provided in the open? Seems like this was all in plain site. Also you use the term "gambling" - can you cite where the law explicitly states this auction model is gambling or even why the mechanics of it make it "gambling?"
The point is truth in advertising. If a bottle says that it's 100% fruit juice, it had better be 100% fruit juice. Sure, I could look at the ingredients, but should companies be allowed to outright lie to sell their products?
It seems that the "gambling" claim is well supported. (see Wikipedia -- e.g. from MSN Money: "Chris Bauman [[director of Swoopo in the US]] told one blogger: 'Winning takes two things: money and patience. Every person has a strategy.' Indeed, he undoubtedly does. The problem is that, as with the gambling systems peddled by countless books, none of those strategies will actually work. Just remember that no matter how many times you bid, your chance of winning does not increase.")
How was swoopo "outright lying" about their product? Did you ever actually visit or use Swoopo? They explained the rules clearly on the site and with a dozen or more auctions running on the front page of the site, I think this qualifies as showing how it works right on the front of the bottle.
I think you're also misunderstanding what qualifies as gambling, at least in the U.S. (international law I'm not as familiar with) Look no further than bigdeal.com, a site that operates exactly like Swoopo and is based in the U.S. It is venture backed with a few million dollars. I suspect before making that investment there was some due diligence in this auction mechanism and it was found to be legal. People in this thread are throwing around "gambling" and "scam" but I'd still challenge anyone to cite any portion of the law which specifically makes a penny auction "gambling."
Do people lose money if they don't win, yes. Does that piss people off? Of course. But that still doesn't mean it's gambling or a scam.
If it's not for you, don't play it. Simple as that.
"Gambling is the wagering of money or something of material value on an event with an uncertain outcome with the primary intent of winning additional money and/or material goods." - Wikipedia
Sounds like an apt description of Swoopo if, according to the MSN Money quote above, any "strategy" is equally ineffective. Recall that "the law" and what governments choose to enforce of it are not the final say on word definitions ...
Despite Swoopo's self-description as an "auction" site, it is in fact a gambling site. Moreover, when you're at a casino you typically know your odds; with Swoopo, you don't.
I'm happy with the argument that gambling is okay, but Swoopo should have called a spade a spade, been regulated as a gambling site, and published the odds.
Every time I looked at the site (although this was last year, maybe it tanked) the item bids were very high, making the cost of a £500 laptop £2500 profit for them.
In retrospect it's easy to say that if they had spent 15 minutes in the library learning about lead gen and lifetime customer value they probably could have saved a few years of their lives. But it wasn't clear it wasn't going to work ahead of time. Seems like they made the mistake of starting out by asking themselves what it would take to build a great business, instead of asking themselves what it would take to test their assumptions.
Casinos won't go bankrupt because they are a monopoly protected by the state ( although the state(s) does not have allegiance any one them and is increasingly in the process of granting many more licenses to shore up deficits, Casinos still have a very, very high barrier to entry ). See my comment downthread. And yes, they are equally predatory. And lotteries, well, yeah ... owned by the state, not going anywhere because there is zero competition.
