Penny Auctions Not Deemed Gambling by the UK Gambling Commission

Just two months ago, the Georgia governor's Office of Consumer Protection entered a settlement with the now-defunct penny auction site, Wavee.com, in part because it did not have an auctioneer's license. This settlement required Wavee to cease operations, pay over $200,000 in consumer restitution, pay a $35,000 civil penalty, and pay $15,000 in administrative expenses.**

When PennyBurners was interviewed by ABC News about the case against Wavee, Nicholas Boccio stated that there is a problem with the Georgia law's definition of an auction. He said the bidding component of an auction is similar to a game in which each person pays for bids, or participation fees. "The Georgia laws are just too archaic to regulate penny auctions at their present state," he said.

Nicholas also disagrees with arguments that penny auction sites conduct illegal gambling. It appears that the UK Gambling Commission does not agree, either. They state that penny auction sites do not "amount to the provision of facilities for gambling under the Gambling Act 2005." So, for the time being, you are not required to have a license to run a penny auction site in the United Kingdom.

Penny auctions are not a form of gambling; they are a different form of a traditional auction. Though you do pay per bid in most penny auctions, the bids spent, and their value, are not being wagered, bet, staked, or pooled cumulatively for the purposes of winning the sum total therein. These are merely the price for playing the game. Legally, bids are defined as a participation fee. These are allowed, by law, as other games of "American Tradition" such as horse shoe tournaments, basketball games, or hole-in-one events all have prizes and entrance/participation fees, and were ruled not to be gambling by varying courts.

Penny auctions contain zero element of chance, in that the result of each auction depends entirely on the amount of bids a member is willing to place. Any bidder can win an auction by placing the most amount of bids. To read more, please click: Are Penny Auctions Gambling?

*Image used with credit to SkepticalAlreadyCheck
**ABC News: What to expect on penny auction sites

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