How many times did they do that? Everybody who "loses" at Swoopo gets a crash course in the scam, and never falls for it again.
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.
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.")
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.
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 ...
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.