Penny Auction Sites - Legit or Scams?

So, I've been seeing more and more Penny Auction sites pop up recently. Just upon initial inspection, I would never personally signup to one of these sites. I go by the philosophy, if it seems to good to be true, then it probably is.  Well, upon further inspection, it looks like you can definitely get a good value on the items that these sites sell, however, it doesn't come without a price.

How do these penny auction sites work?

They sell bid packs.  For US customers, you can buy a 100 bid pack for $65 USD.  With the bid pack, you get to bid 100 times within their site.  So, let's say an ipad is selling for $80 currently.  The bids are placed in increments of 2 cents, so the next bid would have to be $80.02, then $80.04 and so on.  By the time the product actually sells, the site could make about thousand or two thousand bucks on a single ipad, whereas the winner pays something to the tune of $90-$100 or something like that.  Pretty sick.  In actuality, the buyer could bid on the product 200+ times before winning, which would make the item actually cost $130 + $90 = $220.  My guess it that in the end it'll actually cost more than the product itself to bid on the item.

BidRivals.com is the one site that I've been looking at.  I down know how long they've been active, but they seem pretty legit to me.  You can even get 10 free bids by using the coupon code: 10FREEBIDS. I think they give you 1 free bid upon registration, then if you purchase a bid pack, they'll tack on 10 total free bids on there.  Here's a banner from their site:

Look at all of this COOL STUFF that you can "buy"!  Ipods, ipads, PS3s, iphones, xbox 360s, etc.  They advertise the products as buying them for nubs.  I don't know, there's gotta be some sort of method to the madness, so that you can get one of these items for cheap.