Tue 13th January, 2009 There's been a bit of a hoohah recently about penny auction sites. A gambling expert at Nottingham Trent University (I'm guessing he's an expert through his study of gambling addicts, rather than a seasoned blackjack player) has asked the Gambling Commission to look into them, having possibly encountered desperate, penniless, hollow-eyed souls who can't stop bidding. A representative from one such site, madbid.com, refutes the notion that it's a gambling-like experience, claiming that "This is definitely a game of skill, and would not fall under any circumstances under the definition of gambling."

Well, I've just had a go. I didn't have to call on any of my incredibly deep resources of logic, common sense or manual dexterity. But I did blow £6.50 in about 15 seconds – and the only upside to the experience was giggling in disbelief at this incredibly cunning way of pandering to people's greed and raking in huge amounts of money.

Penny auctions are certainly amazing, but for all the wrong reasons. So I'm loath to recommend that you become a Madbidder, but the simplicity of the concept is stunning to behold. First you buy yourself the right to make some bids; 5 bids cost £6.50 (£1.30 a bid), although they're cheaper if you buy in bulk. An auction starts, say, on an iPod, for zero pence. A two-minute timer starts to tick down. "Wow," you think. "iPods are worth substantially more than zero pence. I'll bid on that." Click. You're down £1.30. The price goes up by a penny, and the timer resets back to 2 minutes. Whoever is the current bidder when the timer reaches zero, wins.

So, unlike an eBay auction, this isn't about getting in and sniping at the last second. It doesn't really matter when you click the button. All you have to do is click it, spend your £1.30, and hope that none of the other users of the site decide to outbid you in the next 2 minutes – which, of course, involves no skill. You could conceivably say that the skill element is knowing at what price level to bid – but the items up for auction rarely reach anything like their RRP, so estimating that is virtually impossible. Your success depends entirely on the number of people watching the auction and how vigilant they are in watching the timers count down. (And keeping track of them isn't difficult, as there's only around half a dozen auctions active at any one time.)

With the auction price going up a penny at a time, it's easy to estimate how much Madbid are earning. There's a Wii Fit up for auction right now, at £1.53. No-one could deny that that's a bargain. But Madbid have already raked in the fees for 153 bids – probably over £150 – and the RRP is only £99. A more startling example: the longest running auction is currently for "100 Madbids" (which would cost you £100 if you bought them on the site) Current price is £66.01; that represents around £6,000 mounting up in Madbids coffers – and if the auction ended right now, that would be another £66.01 they pocketed, with the person receiving nothing but the right to continue sitting there, watching timers count down and pitting their clicking finger against, well, not very much.

And whatever defenders of penny auctions might say, it is compulsive. If you've got bids in the bank, clicking on a bright green button isn't something that requires you to break any steely willpower. There's certainly no reminder that you're spending £1.30. And as quick as you like, all your bids are gone. But you still have that small chance of getting a Sony Home Cinema system for a tenner. So you buy some more bids, conveniently forgetting how much you've already spent.

So, yes. Penny auctions, there. God help you if you're either a) stupid, b) prone to compulsive behaviour, or c) both.