Dubli Scam ? – Can Either Of The DubLi Auctions Be Considered Gambling under US Gambling Law
For a transaction between two parties or two entities to be considered gambling, there must be 3 separate and distinct elements present: 1) Chance, 2) Consideration and 3) Prize. I will cover all three elements as the pertain to the Dubli Online Auctions
1) - CONSIDERATION:
In contract law consideration, when referred to in general terms, may mean anything of value. This could include anything from money to giving up the right to a future obligation or even a future act. However, in American Gambling Law, consideration refers strictly to money. The money must be put at risk in the transaction, and the player gets nothing in return for his or her money, other than, the opportunity to win a prize, determined only by chance. In addition, he or she must also stand to lose the money permanently for no gain, services or goods in return.
The Standard Auction Model: In any traditional auction the element of “consideration” does not exist in the gambling sense. At the end of the auction the highest bidder gains the right to purchase the item or items being auctioned. Once the winning bidder pays for the item, the matter is resolved; assuming he or she can actually make the payment. The same is also true an “ordinary” reverse auction. There are numerous examples of Fortune 1000 companies’ utilizing the “ordinary” reverse auction with their vendors. Companies such as IBM, for example, have used reverse auctions in the past.
The DubLi Auction Models: DubLi operates two auctions in their North American Market; the Express Auction and the Unique Bid Auction. In the express auction a consumer, in order to see the current price of a item, must expend one dubli credit, or 80. Here the consumer is not actually purchasing a chance to buy; they are merely paying for the right to view the current price of an item. Dubli does however, guarantee the consumer that the initial start price of that particular item is the lowest price they can find anywhere online. In addition, all of the items in the auctions are brand new brand name and fully warranted by the manufacturer.
Each time a consumer clicks on the “Show Price” button, the price of the item drops 25. Therefore, the price of the item continues to go down until someone decides they like the price and they click on the “Buy Now” button. In the Unique Bid Auction, the participant must expend an 80 cent credit in order to place a bid. In both auctions, the participant is spending an 80 cent credit to either check a price or to place a bid, and once that credit has been spent there is no refund possible. So in that sense, the element of consideration is present in the DubLi online auctions, both in the Express and the Unique Bid.
2) - CHANCE:
In US Gambling Law, the element of chance means that a given event is resolved by a random occurrence which is not under the control of any of the participants. For example, if an individual purchases a lottery ticket, skill will have nothing to do with outcome. The participant either picks the winning number or they don’t. In other words, it is merely by chance that the participant either picks the winning number or they don’t.
In addition, for the element of chance to be present, it makes a difference if the person placing a bet is a participant in the event. For example, if two men are playing a game of chess, and they both agree the looser of the match has to pay the winner $30 that is not considered gambling. If however, two onlookers place a bet of $30 on the outcome of the chess game; that is considered gambling because the outcome of the match is not under the control of either of the onlookers.
In the case of DubLi, the element of chance does not rise to the level required to be considered gambling. In the case of the DubLi Express Auction the resolution of the event is not dependent on some random occurrence. Rather the resolution is strictly dependent on the conduct of the participant. The price of a given item is decreased only by the actions of the participants. If for some reason no one clicks on Show Price, then the price never drops and there is no resolution to the auction.
The “Unique Bid” Auction is very much in the same. A participant’s success in placing a winning “unique bid” has nothing to do with anything other than the efforts of the active participants in the auction. More than one participant may place an identical bid, but this is not caused by any random event.
The element of chance, as defined in American gambling law, is minimal if not nonexistent. Although the outcome of a given reverse auction is not under the control of any one participant, the combined actions of all of the participants is the only input that can affect the final result. Therefore by definition, there is no random dispositive influence acting outside the control of the participants.
3) - Prize:
Again, in US Gambling Law, the definition of “prize” means essentially anything of value. Because the purpose of participation is to obtain valuable items such as iMacs or even brand new luxury cars at substantially reduced prices is the whole point of participating in Dubli’s reverse online auctions, the element of price is obviously present.
In conclusion, because the element of chance, as defined in American gambling law, is not present in the Dubli auctions, these online auctions cannot be considered either games of chance or lotteries and therefore do not rise to the level of gambling.
1) - CONSIDERATION:
In contract law consideration, when referred to in general terms, may mean anything of value. This could include anything from money to giving up the right to a future obligation or even a future act. However, in American Gambling Law, consideration refers strictly to money. The money must be put at risk in the transaction, and the player gets nothing in return for his or her money, other than, the opportunity to win a prize, determined only by chance. In addition, he or she must also stand to lose the money permanently for no gain, services or goods in return.
The Standard Auction Model: In any traditional auction the element of “consideration” does not exist in the gambling sense. At the end of the auction the highest bidder gains the right to purchase the item or items being auctioned. Once the winning bidder pays for the item, the matter is resolved; assuming he or she can actually make the payment. The same is also true an “ordinary” reverse auction. There are numerous examples of Fortune 1000 companies’ utilizing the “ordinary” reverse auction with their vendors. Companies such as IBM, for example, have used reverse auctions in the past.
The DubLi Auction Models: DubLi operates two auctions in their North American Market; the Express Auction and the Unique Bid Auction. In the express auction a consumer, in order to see the current price of a item, must expend one dubli credit, or 80. Here the consumer is not actually purchasing a chance to buy; they are merely paying for the right to view the current price of an item. Dubli does however, guarantee the consumer that the initial start price of that particular item is the lowest price they can find anywhere online. In addition, all of the items in the auctions are brand new brand name and fully warranted by the manufacturer.
Each time a consumer clicks on the “Show Price” button, the price of the item drops 25. Therefore, the price of the item continues to go down until someone decides they like the price and they click on the “Buy Now” button. In the Unique Bid Auction, the participant must expend an 80 cent credit in order to place a bid. In both auctions, the participant is spending an 80 cent credit to either check a price or to place a bid, and once that credit has been spent there is no refund possible. So in that sense, the element of consideration is present in the DubLi online auctions, both in the Express and the Unique Bid.
2) - CHANCE:
In US Gambling Law, the element of chance means that a given event is resolved by a random occurrence which is not under the control of any of the participants. For example, if an individual purchases a lottery ticket, skill will have nothing to do with outcome. The participant either picks the winning number or they don’t. In other words, it is merely by chance that the participant either picks the winning number or they don’t.
In addition, for the element of chance to be present, it makes a difference if the person placing a bet is a participant in the event. For example, if two men are playing a game of chess, and they both agree the looser of the match has to pay the winner $30 that is not considered gambling. If however, two onlookers place a bet of $30 on the outcome of the chess game; that is considered gambling because the outcome of the match is not under the control of either of the onlookers.
In the case of DubLi, the element of chance does not rise to the level required to be considered gambling. In the case of the DubLi Express Auction the resolution of the event is not dependent on some random occurrence. Rather the resolution is strictly dependent on the conduct of the participant. The price of a given item is decreased only by the actions of the participants. If for some reason no one clicks on Show Price, then the price never drops and there is no resolution to the auction.
The “Unique Bid” Auction is very much in the same. A participant’s success in placing a winning “unique bid” has nothing to do with anything other than the efforts of the active participants in the auction. More than one participant may place an identical bid, but this is not caused by any random event.
The element of chance, as defined in American gambling law, is minimal if not nonexistent. Although the outcome of a given reverse auction is not under the control of any one participant, the combined actions of all of the participants is the only input that can affect the final result. Therefore by definition, there is no random dispositive influence acting outside the control of the participants.
3) - Prize:
Again, in US Gambling Law, the definition of “prize” means essentially anything of value. Because the purpose of participation is to obtain valuable items such as iMacs or even brand new luxury cars at substantially reduced prices is the whole point of participating in Dubli’s reverse online auctions, the element of price is obviously present.
In conclusion, because the element of chance, as defined in American gambling law, is not present in the Dubli auctions, these online auctions cannot be considered either games of chance or lotteries and therefore do not rise to the level of gambling.
