While the drop game isn't illegal...I do believe it's very shady. I don't trust it one bit. One thing that really bothers me is that say I dropped a name I had a site on for YEARS...then it's caught...sold off in auction for $xx,xxx. Guess what cut I get..ZERO....
Actually, SnapNames gives the prior owner the right to "claim" their cut (10-20% of the auction - I don't know the exact percentage, because they only offered me $9.20 as my cut of the proceeds for one of my domains which was auctioned of).
Maybe Nelson can comment about the actual percentage.