Check the law

January 20th, 2009 at 2:35 pm by David Farrar

The Press reported this morning:

The Redwood home could be yours for a little more than $100, despite its rating value of $594,000.

The most the lucky buyer will pay is $1100.

Real estate agent Brad Maxwell and wife Janice own the Redwood property through a family trust and are selling it through a new sales method they hope will catch on.

Would-be buyers will book a seat at an internet auction for $100 each, with the lowest unique bid between 1c and $1000 getting the house.

The Maxwells have ensured they will not lose out on the deal. They have calculated that selling between 5000 and 6000 seats will bring in what they want for their home, and only then will the online auction run.

The DIA pointed out, this was illegal in several ways:

However, Internal Affairs compliance manager Debbie Despard said today this was illegal .

Despard said under the Gambling Act 2003 the auction was illegal in several ways.

“There is a huge element of chance in this so-called auction in which people pay to participate,” Despard said.

“It is also online gambling, which the Act defines as ‘remote interactive gambling’.”

Gambling with prizes exceeding $500 can only be conducted by societies raising money for authorised charitable purposes, she added. But this sales scheme was being conducted by a private person for personal profit and could not be licensed.

“Participating in illegal gambling is a criminal offence,” said Despard.

Furthermore, any sale and purchase agreement stemming from the auction would be on shaky ground because the Gambling Act says contracts relating to illegal gambling are illegal for the purposes of the Illegal Contracts Act.

Internal Affairs had advised the Trade Me and Premier Realty that the proposed sales method was illegal and was also contacting the Real Estate Institute of New Zealand.

do a good job in educating people on the law. They’ve given me some helpful advice from time to time.

Having said that, our gaming laws are very restrictive and it would be great if the Government reviewed them with an eye towards permitting more gaming, so long as there is adequate transparency around the games.

I have problems with the TAB having a monopoly over sports betting, and the restrictions on online gaming which are more onerous than Australia.

But these are issues for the Government and ultimately Parliament.

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16 Responses to “Check the law”

  1. Rex Widerstrom (5,354 comments) says:

    the lowest unique bid between 1c and $1000 getting the house

    I got asked to participate in a “lowest unique bid” auction for fuel the other day. However, as there was no limitation on the number of people allowed to bid (or at least I could see no mention of any) I can’t see how the prize will ever be won… every number between 1c and the top price will end up being chosen by at least two bidders eventually.

    It seems to me it’s possible – depending on the level of demand, the period for which the auction is open, and whether or not the organiser sets a cap on participants – that it’s entirely possible no one would win such an auction.

    Or am I mathematically challenged again?

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  2. Rakaia George (313 comments) says:

    True, but in this case 5000 bidders and 100,000 possible bids so that shouldn’t be an issue.

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  3. Bullitt (140 comments) says:

    I thought the most interesting thing was the number of comments on Stuff by people who obviously either cant read or just have no idea. I didnt think lowest unique bid was a difficult concept to grasp.

    The only reason his house isnt selling is hes wanting to much for it anyway.

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  4. MT_Tinman (3,205 comments) says:

    Having thought about this on and off most of the day I can’t see how the word “auction” got into this.

    Simple game of chance.

    Pity it’s illegal though. Perhaps the rules could be changed to allow it if a cut-off date is fixed. Then everyone involved takes a chance.

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  5. Zippy Gonzales (485 comments) says:

    And the law on fundraising raffles has become even tighter in recent years. For example, you’re no longer allowed to offer any booze in the prizes. Aye, privatise the TAB. It’s no good government playing games keeper (IA) and poacher (TAB, Lotteries Commission). The government doesn’t own casinos for this very obvious conflict of interest, so why it’s OK in the dogs, nags, jocks and Hillary Timmins department?

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  6. Mgoldstein (1 comment) says:

    This post has finally convinced me to comment on DPF’s blog..

    I have huge problems with our gambling laws and how remote interactive gambling is dealt with in the gambling act.

    Whilst the state clings to their monopoly of online gambling via the TAB, they turn a blind eye to the advertising of foreign online gambling sites on TV3, the print media and through the internet. The monopoly, however, can only apply to operators running online gambling within NZ (like these ‘real estate agents’ above)..

    Meanwhile, thousands of kiwis play online poker, and bet on sports events, with foreign companies. Unsurprisingly, in the competitive market online, the price of gambling with these foreign operators is much cheaper than the TAB. So these kiwis pay no tax, and are not protected by any laws. The protectionist gambling act (designed to minimise impacts of problem gambling and other negative externalities etc) is a waste of time as it has not adequately adapted to the internet. Also, a potential tax grab – and new industry with associated employment for the government – is lost. This has already happened with kiwicasino.com.

    Another case of legislative reform being squarly in the ‘too hard basket’.
    Rant.

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  7. Chaucey (43 comments) says:

    Either this couple are extremely naive (not just on gambling law – but think of the tax issues!) or they came up with a cunning plan to get heaps of free publicity.
    They may have gone in to this knowing that their “auction” would not be allowed to proceed. And now they’ve made national news twice for next to no cost. A lot of people would have checked out the photos of the house because of those articles, and maybe they’ll get a serious offer on the home.
    I think the tactic is a bit manipulative really…..

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  8. Tauhei Notts (1,724 comments) says:

    One of the biggest punts that New Zealanders make is when getting a home loan.
    If they go fixed they are gambling that interest rates will fall ever so slightly, remain the same or rise.
    If they go floating they are gambling that interest rates will drop.
    Trying to explain that to religious freaks who claim they never ever gamble has been difficult.
    Now that interest rates have dropped some on long term fixed want to exit their contract and go floating. They are the ones wailing about the early exit fees, which in times of falling interest rates are punitive.
    I have as much sympathy for them as they had for me when I wailed about Lord Turffontein’s performance in the Telegraph Handicap.

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  9. wikiriwhis business (4,019 comments) says:

    well, There’s international lotto coming up. I suspect there will be a lot of interest on the day.

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  10. Short Shriveled and Slightly to the Left (786 comments) says:

    I thought this comment on Stuff.co.nz wrapped up my now lack of respect for Stuff commentators

    “Anyone fancy a half price house?

    If you buy 3001 seats at the 6000 seat auction and select the 3001 lowest bids the most you have to pay is $300.09 and you are guaranteed to win! Anyone else in the auction is just helping subsidize your house.

    No luck, no chances and 2999 people helping you out with your mortgage.

    WHAT A DEAL!

    #91 Posted by Matt — 16:31 PM | Tuesday , 20 January 2009″

    btzzzzz…………..that would cost over 3 million cos you need 30009 entries
    but thanks for playing

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  11. Short Shriveled and Slightly to the Left (786 comments) says:

    “I have as much sympathy for them as they had for me when I wailed about Lord Turffontein’s performance in the Telegraph Handicap.”
    you backed Turfontein form barrier 17 over a distance to short for him on ground to dry???
    you dont deserve sympathy

    I layed him in comp at racecafe.co.nz
    but im still being beaten my many punters :-(

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  12. Phil (127 comments) says:

    Short Shriveled and Slightly to the Left: I think you need to re-assess your maths on that one, before you look like a total turd. Actually, too late.

    3001 seats x $100 per seat = $300,100.

    Thanks for being an example of everything that’s wrong with our education system.

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  13. ross (1,437 comments) says:

    Notice how the DIA is saying how the proposal is illegal. I would’ve thought that DIA could be more helpful by suggesting how the scheme could be made legal. What if each potential buyer was asked to do something which required some skill – would that be OK? What if the sellers agreed to a sale price below the registered valuation- would that be OK? Some helpful advice is what’s required, not comments that anyone involved are a bunch of criminals.

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  14. Short Shriveled and Slightly to the Left (786 comments) says:

    Phil
    Matts suggestion was
    “If you buy 3001 seats at the 6000 seat auction and select the 3001 lowest bids the most you have to pay is $300.09 and you are guaranteed to win! Anyone else in the auction is just helping subsidize your house.”
    to take the bids $0.01 to $300.09 would require 30009 tickets rather than the 3001 Matt has suggested
    What matt meant to say was take $0.01 to $30.01 and hope that only 3000 other tickets are sold
    if they get to 9000 tickets then you would be up against 6000 entries
    still an excellent chance you will hit a value by yourself sure, but still a gamble at $300,100
    what if someone else does the exact same thing?
    then you’re both down $300,100
    what education system spat you out?

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  15. lyndon (325 comments) says:

    So this would be illegal in NZ?

    That’s not the same system; there is really an auction going on rather than a lottery – or perhaps a freaky sweepstake – for the house.

    [Edit: Actually, considering you're probably trying to be last in when the time expires, maybe it is a gamble]

    However when you consider the amount of money they’re making on the items that actually shift – and some of those are just selling bids – while it’s entirely in the open it is kind of scammy.

    [Game theorists live for this stuff]

    As for this guy, I’d be interested to know if he’d get his 5000-6000 punters. I wouldn’t touch it.

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