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The success of Ebay has brought many competitors. Some of them pretend to be auctions, but are actually just a lottery.

A few months ago, a friend asked me to check out BidLow2Buy.com and ask me if it was legit. I immediately knew it had to be some sort of scam. And when I say scam, I don’t mean they’re actually scamming anyone. They don’t lie about how the system works. It’s just not an auction.

It works like this: you buy a number of “bids” for a price. The cheapest bundle of bids is 500 for $199. With these purchased bids, you can bid on items. So with the term “bid” being thrown around, it sounds like an auction. You “bid” by choosing a price. But the idea is to pick a low price. The lowest price wins.

Wow, that’s easy! So pick 1 penny (if zero isn’t allowed). But…everyone will pick a penny? So who wins? Oh, not the penny pickers. Nope, it needs to be the lowest unique bid. Unique meaning only 1 person has picked it.

That’s not bidding. That’s gambling. You have a chance, or multiple chances, of having the lowest unique bid. You could say that Ebay only gives you a chance of winning..but it’s not random. You could always win the auction in ebay by being irrational and bidding some ridiculously high price that no one with any sense would bid. In this, you don’t have any idea what to bid. They’re “nice” enough to tell you where the current lowest unique bid is within a range of about $2, but unless you’re the only one bidding, that only encourages more non-unique bids, as there are 200 possible bids within a two dollar range. Since for each person it is worth it to spend something like $25 if you are bidding on a $1000 item if you win, it only takes a few people to fill up 200 slots (with many, many duplicates).

But that’s gambling, that’s not bidding. It’s not a random chance, it’s obviously influenced by people, but since there is no knowledge that can be gained so one has the ability to predict, it is random for each person.

There is knowledge to be had to predict one of the two conditions, but not both simultaneously. I can get the lowest pick by picking 0.01, but it’s not unique. I can get a unique one by picking 100,000,000 for a toothbrush, but it’s not the lowest.

But this isn’t the only Ebay “competitor” that is gambling and not an auction. Jeff Atwood over at Coding Horror has found a different one with a similar idea.

Most that I’ve seen involve pre-purchasing “bids.” So it doesn’t matter who wins the auction or how much one pays, the website always makes a killing…until people stop gambling.