Skin gambling: the rash you can’t get rid of
A look at the state of play of the skin gambling industry
“Introducing the Arms Deal Update, which lets you experience all the illicit thrills of black market weapons trafficking without any of the hanging around in darkened warehouses getting knifed to death.” - Valve, 14 August, 2013
As it transpires, the CS:GO community’s been blessed with more than just the thrills of black market weapons trafficking.
Furore around skin gambling comes in peaks and troughs. A problem builds, then Valve does a half-arsed job of correcting it, attesting it’s not facilitating gambling. This piece will look at the rise of the quasi-regulator, given nascent digital currency regulation and provide a brief analysis of the current skin gambling state-of-play. It will also muse as to what lessons traditional operators can learn from these sites.
Harking back to the famous cease and desist orders, the Seattle-based developer issued 23 C&D orders in July 2016. By October of the same year, there were (at least) 19 operators in the skin betting space. Some were new ventures, but findings showed the following:
Three operators took ‘cease and desist’ to mean ‘expand the product’ and added player-versus-house esports betting (sportsbook)
Five sites shut down initially before relaunching with equally violative products
Three of the sites pivoted to using third-party virtual currencies obtainable through skin conversion
Back in 2016 interest peaked when H3H3 Productions revealed the TmartN and ProSyndicate scandal to the world. Failing to disclose owning a company you’re gambling with and ‘winning big’ is simply ludicrous (and manipulative). P2P skin betting exchanges were merely collateral from the influencer casino scandal as Valve played quasi-regulator -- albeit temporarily.
It’s important to remember that Valve makes a lovely cut from the trading system. If nobody expressed outrage about casino, chances are the sports betting products would be operating in blissful peace with Valve feigning ignorance.
Guess who’s back, back again
If the speed of publication of the UK’s Gambling Act Whitepaper is anything to go by (757 days from the close of Call for Evidence to publication), regulators updates of gambling regulation are glacial at best. In many countries, the global pandemic accelerated an omnichannel approach to gambling, showing channel-shift from land-based gambling to online.
This illustrates one thing: the industry can’t expect digital currencies to receive any water-tight regulation any time soon. The intertwining of crypto with skins has blurred the lines further and given more ways of turning skins into fiat currency (albeit there may be a few hoops to jump through).
The world’s most proactive gambling regulator lately has been…Twitch. The Amazon-owned streaming platform has turned quasi-regulator and curbed the broadcast of real-money slots play (Curacao-licensed, crypto-based) which would make any responsible gaming advocate turn in their grave. In early August, Twitch added that “promotion or sponsorship of skins gambling is prohibited under our policy” to its Community Guidelines, following a resurgence in case opening and casino broadcasts involving skins.
The action came after, you guessed it, an influencer (this time HOUNGOUNGANE) made a two-part video series, claiming 226 of the top 300 highest watch-timed CS:GO streamers on Twitch in 2023 have a skin gambling sponsorship.
Earlier in the year on May 10, Valve amended Steam Online Conduct to add:
Engage in commercial activity
Examples of such prohibited behavior include: posting advertisements; running contests; gambling; buying or selling Steam accounts; selling content, gift cards, or other items; and begging.
It was hardly broadcast to the masses, however, and Valve’s work to curb skin gambling is remains far from proactive.
Too big for your boots
If you’re operating a (shady at best) skin gambling operation out of your cupboard on a remote island, you’d assume it’s in your best interest to keep hush and keep going about your day in as uncontroversial a fashion as possible.
For those unaware, CSGO Empire is apparently the bastion of integrity, bragging that its Curacao license and geo-block on a few countries justifies them playing the gambling moral arbiter. A very public feud on social media, with several accusations of illegal money laundering thrown around and an accompanying disstrack with a catchy chorus of “F*ck You CSGO Roll” indeed grabbed public attention.
Valve giveth, and Valve taketh away
CSGO Empire released a list of traders from CSGO Roll, and many of these accounts were banned. A further ban wave also caught some of CSGO Empire’s high value traders, and it’s estimated that around $2 million of skins were removed from the ecosystem through a small ban wave.
What do Ralph Lauren & CSGO Roll have in common?
Belize-based, totally legitimate CSGO gambling site CSGORoll managed to convince the G2 partnership squad that shirt advertising inventory was something that should be afforded to them.
Up and coming star Ilya “m0NESY” Osipov featured in the launch video sauntering through a casino before settling down for a nice game of dice. He was 18 the day before the video launch, implying it was filmed when he was a minor. Smart. Cue rightful community outrage.
G2 has since removed the video, and any mention of CSGO Roll from its website and social media, although the latter still features G2’s team prominently on site. How did a team with a sponsor portfolio of Mastercard, Ralph Lauren, Pringles etc think slotting in a skin gambling site was a good idea?
Ollie is the writer of the Esprouts Substack, an eclectic mixture of honest takes, analysis and humour. You can support his work through a paid subscription.
He also has limited consultancy capacity, and can be reached through LinkedIn or via email.
Skin gambling: the state of play
A brief analysis on the state of play in skin betting provided 21 sites featuring skin deposits. The concurrent users (where public) ranged from as little as 66 (Skinbet) to 12,131 (Keydrop), although these numbers haven’t been verified.
Here’s a brief overview (fiat and crypto columns are for deposit methods, withdrawals often only permitted with skins):
Of the above that offer casino, the most ‘innocuous’ of companies are those that offer just ‘cases’. This often means ‘Case Battles’ in which users purchase a custom site-generated loot box, and open them in conjunction with other players. The person who unboxes the highest value, takes all.
Let’s remind ourselves of the broad-stroke definition of gambling:
Gambling requires three elements to be present:
Consideration (an amount wagered) (Case purchase)
Risk (chance) (Case contents)
Prize (Winner takes all)
But a gambling product it apparently does not constitute…
Other products include Jackpot (lottery-style), Roulette, Crash, Coinflip, Hi-Lo, Plinko and various other, more typical casino products.
CSGO Empire, a deeper dive
For the purpose of this piece, CSGO Empire was further analysed given it’s one of the most well known and largest operators in the skin gambling space.
A quick VPN flick to Poland and the trusty “Sign in through Steam” button on a UK-registered Steam account and voila - unfettered access to the roulette wheel. Despite CSGO Empire yapping about its licence, KYC exists so far as a geo-locator. There’s not even anywhere to input an address, never mind a date of birth.
For the purposes of this piece, 387 spins over a period of approximately 4 hours were analysed. The exchange rate for 100 CSGO Empire virtual coins is €59.09 (after adding back transaction fee). .
In 387 spins, 33.2 million Empire coins were wagered, equating to €563,625 in real-money value. An average of €1,460 was wagered per spin, with the smallest being €496 and the largest being €5,200. The most authorised Steam accounts wagering at any one point was 85, with 52 the lowest and an average of 68. There was also a discrepancy between how many wagers the site said it had taken and the amount of authorised Steam ID’s we obtained.
What can regulated online casino operators learn?
Game-related digital currency gambling in absence of regulation is a scourge on the industry, whether CSGO, Dota, Roblox or FIFA. However, there’s a few takeaways from the above that could prove useful for those looking to capture the ‘millennial’ and ‘next-generation gambler’ in a regulated environment.
As casino cross-sell is a vital part of a sportsbook operation, there are clear observations that can be made:
The type of game being played by the audience (forget Ancient Egypt traditional slot reels)
The gambling volume
Don’t just treat a gaming and esports audience as “any other customer” for acquisition and retention purposes.
Go on, do it properly.
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