Our 2¢ About Online Penny Auctions

Today, online gaming can take many forms, such as poker, casino, bingo, sports betting, and video games. Recently, attempts have been made to characterize the activity known as ‘‘online penny auctions’’ or ‘‘entertainment shopping’’ as a form of online gambling; however, legally speaking, what distinguishes online penny auctions from activities that would be considered online gambling hinges on what type the game falls in—i.e., whether it is a game of chance, skill, or mixed chance and skill.

In the United Kingdom, the Gambling Commission has publicly stated that online penny auctions do not require a license issued by the Commission in order to operate.1 In the United States, the only courtrooms that online penny auctions have seen have been civil courtrooms as a result of many opportunistic ‘‘Litigation Trolls’’ wishing to take advantage of the generous remedies available under various State Consumer Protection Acts, in an attempt to obtain monetary benefits on behalf of those participating in online penny auctions.

However, in Canada, neither the federal nor any provincial government has yet taken a position as to whether online penny auctions are legal, and moreover, no Canadian criminal court has ever addressed this issue either.

So the question remains: are online penny auctions legal in Canada?

In Canada, anyone who keeps a ‘‘common gaming house’’ can be ‘‘found guilty of an indictable offence and liable to imprisonment for a term not exceeding two years.’’

BY MORDEN C. LAZARUS AND CORY R. LEVI

 
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