Legal Question in Business Law in California

I have a very specific question that perhaps can only be answered by a gaming lawyer.

I have a business model similar to the entertainment auction website www.swoopo.com.

Not to give my idea away, it's similar in the format where customers purchase bid packs and bid on items on the site, and with each bid the price of the item changes. Would this be considered a form of gambling? Because in the end, only one person would win the item for auction, while many people will have used their "bid packs" to alter the price of the product. The closest definition for the site I can think of would be called a penny auction. At the moment, as far as I know there are no real laws against this type of business, there are countless sites out there just like swoopo.com and all seem to be operating regularly, many of them based in the united states.


Asked on 3/07/11, 6:54 am

1 Answer from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

California's laws against gambling are pretty broad, and DAs will prosecute anything that remotely resembles a game of chance or lottery. There is also the possibility that the Legislature would amend the Penal Code to outlaw (criminalize) this "business model."

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Answered on 3/08/11, 11:11 am


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