Looks like the system is guaranteed to make money on at least some items... for example:

http://www.swoopo.com/auction.html?cm_re=Homepage-_-Grid-_-1...

See the "15" image next to the countdown? Mouseover that, and it tells you that the 10 second countdown for this item will not trigger until the bid has gotten up to $64.70. Doesn't take a genius to figure out that the house will win this one (if not all of them).