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Is It Even Legal To Auction Cash?

Started by PennyAuctionWatch , Dec 15 2010 12:24 AM
cash cash auction dollar gambling money penny auction raffle

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18 replies to this topic

#1

PennyAuctionWatch
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In my opinion, bidding for cash is like gambling at a casino and at least casinos are regulated.

In some states, like TX, raffles (those are reserved for 501c3's) for cash prizes aren't legal:

---------- Post added at 06:14 PM ---------- Previous post was at 06:13 PM ----------

For instance, Texas says:

"Texas law allows only certain charitable and nonprofit organizations to conduct raffles to support their charitable causes. Only the following entities which meet certain qualifications are permitted to hold raffles:
religious societies
volunteer emergency medical service providers
volunteer fire departments
qualified nonprofit organizations


In order to conduct a raffle legally, a nonprofit organization must have, among other criteria, an exemption from federal taxes under Section 501© of the Internal Revenue Code. A qualified nonprofit must also have been in existence for three years. The law permits only two raffles per calendar year, requires several disclosures printed on tickets, and limits the value of prizes purchased by the organization to $50,000, or $250,000 if the purchased prize is a residential dwelling.

It is also against the law to hold a raffle in which cash, or anything readily convertible to cash, is offered as a prize, or which is promoted statewide or through paid advertising, including television, radio or newspapers.

An unlawful raffle could be considered illegal gambling, which may carry criminal penalties. A county attorney, district attorney or the attorney general may also shut down an illegal raffle."

https://www.oag.stat...hp?id=58&type=1

---------- Post added at 06:17 PM ---------- Previous post was at 06:14 PM ----------

from AZCPA.com:

"Federal Laws. Federal law strictly limits non-profits from conducting multi-state
raffles. If the not-for-profit plans to use the U.S. mails for any part of the raffle –
e.g. for mailing entry cards or raffle tickets – there are federal laws and regulations
that bear consideration. Also, the FTC is empowered to regulate certain types of
sweepstakes and contests.

"

---------- Post added at 06:18 PM ---------- Previous post was at 06:17 PM ----------

A reader commented to our homepage on this awhile ago,

"I think penny auctions are a great business model, rather revolutionary.
I see nothing illegal about charging for bidding. Many face-to-face auctions charge some sort of entry fee or registration fee to bid.

However, when it comes to bidding for cash, I won’t gamble my luck there with the FTC. The problem with cash is that it comes really close to a lottery which we all know are illegal. You pay for a chance to win the grand cash prize."



---------- Post added at 06:22 PM ---------- Previous post was at 06:18 PM ----------

The bad news was that the definition of “lottery” includes a raffle or drawing of any sort in which
there are (a) a prize, cash or non-cash, (B) an element of chance, and © a required payment to purchase a
chance

-http://www.4c1lions.org/files/RaffleRules.pdf

---------- Post added at 06:24 PM ---------- Previous post was at 06:22 PM ----------

From Missouri State Law:

"Gambling, with only a few exceptions, is illegal in Missouri. Those exceptions are restricted and highly regulated.

There are many types of gambling. Promotions that award prizes may be called contests, sweepstakes, lotteries, raffles, drawings or games. It is important to know the law and to understand what elements make a promotion illegal.

Three elements make up an illegal promotion:

Prize is any benefit, cash or property awarded to a winner.
Chance means the winner is chosen by “luck” with little or no skill or ability involved.
Consideration is the exchange of something of value for the opportunity to participate in the game."

http://ago.mo.gov/pu...ns/gambling.htm

Edited by PennyAuctionWatch, 15 December 2010 - 12:31 AM.

I believe that the more penny auction bidders that come together and post their honest experiences, exposing the shady-scam penny auction sites, the less and less shady-scam sites will stop being the majority in the penny auction industry. Stand with me.

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#2

flostradamos
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yea its straight up illegal in missouri, so if your starting a PA site and live in kansas city, better take yo a%# a couple miles west to kansas LOL
My mom got in an argument at the car wash other lady said "get out of my face i don't know you" my mom said "google me b%tch" rofl she's 65 LOL

#3

PennyAuctionWatch
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:eek: There are casino boats though in Missouri.

I believe that the more penny auction bidders that come together and post their honest experiences, exposing the shady-scam penny auction sites, the less and less shady-scam sites will stop being the majority in the penny auction industry. Stand with me.

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#4

Chris @ Penny Purses
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Remember a penny auction is not a raffle. It is not a game of chance.
PennyPurses.com The ORIGINAL penny auction site for purses.

#5

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Yeah, I guess we'll just have to wait & see if regulation comes. I just think the cash part makes it more like gambling, not sure.

I believe that the more penny auction bidders that come together and post their honest experiences, exposing the shady-scam penny auction sites, the less and less shady-scam sites will stop being the majority in the penny auction industry. Stand with me.

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Follow us on Twitter!
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To the Scam Artists: Enough is Enough


#6

JKDBlake
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All of it is gambling, that's my opinion but perhaps not specifically banned in most states. I will have to think on this and get back to the Forum on it. I want to say penny auctions aren't gambling but the definition is broad enough to include penny auctions, however the regulations enforcing that definition seem to exclude penny auctions based on the reality that penny auctions didn't exist when the regs were written. I'll get back to everyone with more!

#7

NewPennyGuy
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Why can't you auction cash? If you can sell currencies on ebay, which is cash, why could you not sell it on a penny auction site? What's the difference?

#8

MidPennyBill
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They call it money laundering

#9

BabyFidgette
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Texas law is like Jersey's law. You have to apply for a license to do raffles. There are a lot of illegal ones bc most people don't realize. For example, in Jersey you can not have a raffle, calendar, tickets, etc that use the NJ state lottery numbers each night. I know a church here that still does the tickets that match the lottery numbers, but they say you win "points" but it's not points it's cash.

#10

BabyFidgette
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:eek: There are casino boats though in Missouri.

Don't the boats have to go a certain amount into the water, and then it's legal.

#11

MidPennyBill
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Everything I found in Missouri was private club casino's... You had to be a member to even get in, and they were crowded!

#12

chefzac
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Why can't you auction cash? If you can sell currencies on ebay, which is cash, why could you not sell it on a penny auction site? What's the difference?


On eBay people auction cash and currency for collectible purposes. Penny auctions auction cash for spending, I think that is the difference.

I think auctioning cash on PA is just giving people a reason to find fault and call it gambling. IMO cash should not be auctioned, I feel it blurs the lines of penny auctions and gambling.

#13

ZBID
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Gambling is a game of chance and the offered prize has no impact on if it is gambling or not.

Penny auctions are not a game of chance as bidders control when an auction ends and not the website.

The auction item does not matter as any auction item has a value rather it is cash or a iPad.

As long as you are not offering money in a game of chance then it is not gambling and is perfectly legal.

Reserve auctions with no timers would be considered a game of chance because they end if your lucky enough to place a bid at the right amount and the website sets that amount. So offering cash or any prize in a reserve auction with no timer would fall under gambling. They are like a lottery because you get lucky if you place a bid where the reserve is set and the auction ends if you get lucky in placing that bid. The bidder has no input as to when the auction ends. So it is a game of chance.

At least that is what our attorneys tell us.

#14

dwbiz05
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Sorry to bring up an old topic...

However, I'm wondering about your post ZBID.

Your statement that the user's controling when the auction ends is the key to being legal?

So, then if a website got rid of the timer reset function, they could not use the penny auction model? What about lowest, unique bid auctions then, how can those be legal?

Dave

#15

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Gambling is a game of chance and the offered prize has no impact on if it is gambling or not.

Penny auctions are not a game of chance as bidders control when an auction ends and not the website.

The auction item does not matter as any auction item has a value rather it is cash or a iPad.

As long as you are not offering money in a game of chance then it is not gambling and is perfectly legal.

Reserve auctions with no timers would be considered a game of chance because they end if your lucky enough to place a bid at the right amount and the website sets that amount. So offering cash or any prize in a reserve auction with no timer would fall under gambling. They are like a lottery because you get lucky if you place a bid where the reserve is set and the auction ends if you get lucky in placing that bid. The bidder has no input as to when the auction ends. So it is a game of chance.

At least that is what our attorneys tell us.



That is not true. Gambling, according to uslegal.com is defined as: A person engages in gambling if he stakes or risks something of value upon the outcome of a contest of chance or a future contingent event not under his control or influence, upon an agreement or understanding that he or someone else will receive something of value in the event of a certain outcome.

When we bid (b/c we prepay) we are entering a "contest" let's say. We are not guaranteed anything in the end. Just like when you put your money in a slot machine. Penny auctions are a type of gambling. It's only a matter of time where each state will come in and laws will be changed...especially with all the fraud that is out there.

#16

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More definitions:

* Gambling
is the wagering of money or something of material value (referred to as "the stakes") on an event with an uncertain outcome with the primary intent of winning additional money and/or material goods. (Wikipedia)

* to bet on an uncertain outcome (Merriam Webster)

*Any betting or wagering, for self or others, whether for money or not, no matter how slight or insignificant, where the outcome is uncertain or depends upon chance or 'skill' constitutes gambling. (Gambler's anonymous)

#17

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Hey Amanda, did Gambler's Anonymous ever get back to you about whether they thought PAs were gambling? I know that they would say yes. They consider any game of chance that involves spending money or material items gambling. Boardwalk wheels, raffles, lottery, racetracks, tricky tray auctions (aka Chinese auctions), fantasy football (pay to play with a "pot" for the winner).

#18

moneypenny
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Yes, every casino boat is a moored river boat. They are allowed to have these casinos due to the rivers they are on are designated as an intercoastal waterway. I don't know if an intercoastal waterway is also known as international waters. It does have some sort of international/open to all water traffic laws it operates under.

#19

moneypenny
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That definition of "chance" and anyones ability to win without skill is what designates legal from illegal from what I've read and found. It is the thing that poker players argue. I being a poker player, think that poker is not a game of chance but of skill and chance combined. But the chance part of the definition is how the Bush admin was able to pass the online poker legislation making it illegal in the US. Bogus I think. But then again online means too many ways the house can guarantee you lose.
However, it really surprises me that it was not allowed and regulated. Because if there is one single thing that I am certain of 100%, it is that our gov't here in the US is operating here with very limited reasons for anything they do. Although the reasons will be sold as "helping someone or something" as in the "public welfare" or "necessary military defense spending"(which is needed within reason) or one of countless numbers of these "needs", the entire game boils down to one denominator, how to take from you and give it to them. They only want the money you worked for and they do nothing for. Unless you consider regulating, fining, feeing, and taxing everything and every industry and person and property and their income is reasonable and proper and that income taxes are legal(I do not care to hear that it is an excise upon the goods created from a persons labor. Fact is the tax is directly removed from the pay you earned from your labor.), that makes it Un-Constitutional in my common sense mind. Sorry to go on but these things should be talked about even though no one wants to because they are scared of the tyrant state. The IRS steals your stuff, the banks have stolen all the money stolen from the people by the IRS and now the banks are stealing homes and having lending fraud and so much more glossed over and covered up with the help of these who are supposed to be representing the people and working for you and me. They do not. And we all know it. It is so bad it is common knowledge that what is going on in any level of gov't is rife with fraud, abuses, and every illegal kind of financial crime there is. The country is about finished as far as credibility is concerned. Meaning our dollars are worthless and less each passing day. I hope this will cause you to investigate further into this. There is too much happening today and too many reliable sources to discount it as conspiracies. Today in this country the need to say something about this is great. I will borrow the words of a man who was murdered because he sought to bring value back to the currency in this country. His fight against the banking institutions that began to give the dollar a value based upon silver were repealed as a first order of business for the newly sworn in Lyndon B. Johnson. The first thing done after John F. Kennedy was murdered was the repeal of that act. So I say in his words..."Ask not what your country can do for you, ask what can you do for your country."
She is crying and no one is listening. The greatest country ever created has been stolen from under our noses and we all still think we live free. Learn about the gov't. Dig deep. Oh yeah, and enjoy the penny auctions while you can. Cause they will be regulated before long and that will shut them down. At least the majority of them.





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