Some critics and happy customers alike say penny auctions are gambling. After all, you spend money with the hope of being the winning bidder at the end of the auction.



But the websites reject the gambling label. The main reason, they argue, is that there's no element of chance, as there would be when you play a state lottery, for example. They also say that you control how often you bid and when to stop.



"Since the outcome of every auction depends on how many bids a bidder is prepared to place, our auctions contain no element of chance," reads the FAQ questions at BidRivals." It is possible for a bidder to win any auction provided that the bidder is prepared to place enough bids."



Of course, you're taking a chance that no one else will bid more than you will, something that's impossible to know or predict. While the same could be said for eBay or any traditional auction, the difference is that when you bid on those other auctions you don't pay to bid so it costs you nothing but time if you lose.



"When you are risking money for a chance to do something, I'd say it is a gamble," said Amanda Lee, a penny-auction veteran from Minnesota who created the website PennyAuctionWatch.com to expose what she says are abuses in the industry. "You are risking money and time for a chance to win."



Another reason that some sites say online auctions aren't gambling is that you're not necessarily out the money you've bid if you lose. Those sites give you the option of buying most items at a retail price they set, minus all or part of the amount you've bid. For example, if you had bid 100 times on a QuiBids auction for that 55-inch Samsung flat-screen TV and lost, you could buy it for $1,999, minus the $60 cost of those 100 bids.



The site considers buy-now so integral to its business that it's trying position itself as an "entertainment retail auction" site where you can buy items at competitive prices after first taking a chance at getting an amazing deal.



But it's not that simple. In the TV example, if you lose the auction, you might not have the $1,763.52 more you would need to buy the TV at QuiBids' full price, plus $29.99 shipping. Beyond that, the buy-now price might not be a good deal. The same TV was selling through a retailer on Amazon for $1,179 (with free shipping), a difference of more than $650.



We found that buy-now prices on penny-auction sites are typically higher than those on Amazon and other retailers. One such price, for a camera bag on QuiBids, was nearly 15 percent higher than the MSRP: $199 compared with $170. The site says its prices are becoming more competitive as it grows and is able to deal directly with manufacturers and distributors.



And not every site allows you to apply 100 percent of losing bids to the cost of buying the product. ArrowOutlet lets you use only 10 cents of every losing 50-cent bid to buy an item. Other sites, such as Beezid, don't allow you to buy the item at all, so if you lose, your bid money is gone.



Whether it's technically gambling or not, Lee says, it's easy to get hooked. She remembers spending 12 hours one Christmas Eve bidding. "I didn't get any sleep, and I regretted it after that. If you have an addictive personality, you can get carried away."



It can be hard to resist the bidding wars that often occur during the last seconds on the clock, especially if you're already in for a large amount.



And there are other reasons that people feel compelled to bid longer than they should. Lee once kept bidding as the price of a $50 gift card approached $200. She was employing a common strategy on penny auction sites: Trying to establish a reputation as someone who won't quit and who is therefore not worth bidding against. (Some bidders use screen names such as "BidtilIwin.") In the end, she lost anyway. Given how ridiculously high the price went, she now suspects that she was bidding against shills or a program the site had set up to increase the number of bids.

