Sean Carr runs the esports consultancy Esports Logic and has been working with Dafabet as the bookmaker’s esports liason.
Here he provided SBC News with his take on the recent skins betting drama and the general state of play in esports betting…
Over the past 18 months esports has expanded exponentially; with significant risings in prize funds, TV broadcasters securing esports content for their channels, as well as major traditional sports brands founding their own teams in the world of esports.
In the wake of this rapid growth, almost every leading bookmaker now hosts a section specialised for esports betting within their website.
Following this, brands such as Dafabet and Betway have interacted within the industry through team sponsorships – the former becoming the main sponsorship of one of the world’s biggest esports organizations (Fnatic), and the latter working with event organizers and content creators in order to gain a foothold in the market.
The Black Market
Currently Black-Market skin betting websites hold the lion’s share of the esports betting market. Eilers & Krejcik Gaming and Narus Advisors estimated that $2.3 billion (£1.9bn) in skins were used to bet on esports in 2015, and projected that $7.4 billion (£6.2bn) would be spent on skin gambling in 2016. This is said to be twelve times the amount sportsbooks such as Ladbrokes and bet365 could expect.
It is within this section of the esports gambling industry that many controversial stories have arisen, namely around Trevor ‘TmarTn’ Martin and Tom ‘ProSyndicate’ Cassell. Together, the two Youtubers own the skin gambling website CSGOLotto – a betting service where people place their own skins as wagers on a coin flip/roulette style game – and marketed this website on their respective Youtube channels (both owning multiple channels with upwards of 2 million followers to each channel).
However, they failed to disclose this information to their combined audience of well over 10 million subscribers. In doing this, the pair knowingly pushed a gambling service they both owned onto their impressionable audience – allowing them to make money directly from the losses of their fanbase. Both Martin and Cassel uploaded multiple videos showing viewers how easy it is to win big, with one such video titled “HOW TO WIN $13,000 IN 5 MINUTES”.
Since the news was discovered that Martin and Cassel owned CSGOLotto, the two have stated outright that no laws had been broken by them, as they had disclosed the videos were sponsored by CSGOLotto in the description.
H3h3 productions took it upon himself to investigate the serious allegations and issues made against the pair, and have since discovered that this was in fact not the case; instead Martin had made a ‘feeler’ video where he introduced his viewers to the site CSGOLotto without disclosing his actual affiliation with the company, which he is a co-owner of. In the video he states that the skin betting website got into contact with him on twitter, and potentially offered him a sponsorship where they would give him skins to bet. For a full analysis of the issue I have linked h3h3’s original video here.
The issue of skin gambling has torn a hole within the world of CS:GO, with Valve being forced to make the following statement regarding the controversy:
“A gambling business is not allowed by our API nor our user agreements. We are going to start sending notices to these sites requesting they cease operations through Steam, and further pursue the matter as necessary.”
Valve affirm that their API agreement prohibits the use of a gambling website, however it is this very API which has enabled the gambling websites to function.
Duncan ‘Thorin’ Shields, respected journalist and analyst within the CS scene, has since shared his thoughts on Valves statement – which I am inclined to agree with:
“I don’t even understand what the announcement is, at no point in time do they explain what they mean by gambling. They don’t say if its skin betting on matches, or abstract token betting like diamonds etc.”
The lack of clarity in Valve’s statement made little difference to most skin gambling websites, who have since began warning users that they will be shutting down their gambling services:
CSGODouble – “CSGODouble has decided to close operations. Effective immediately we will no longer be accepting deposits. Those with existing balances are encouraged to withdraw at their earliest convenience.”
CSGO Wild – “Our team has been working on a secret project for the past few months. All we can say is stay tuned. #GoWild.”
CSGOLounge which is the flagship and in my opinion the largest operator, have made no comment and it appears to be business as usual on their website. Although Valve have since released a statement of intent. Which in turn has asked for CSGOLounge among others to cease their operations.
One company left off of Valve’s list is Fanobet, whose website allow users to deposit via skins or cash. The company holds a Curacao gaming license, making it one of, if not the only skin gambling website to operate under any license. Would this mean that Valve will allow their API to be used by licensed and regulated websites?
The lack of regulation in the skin gambling market has directly led to the scenes current predicament. Attendees at the Esports Betting Summit in London in May were discussing this issue – with regulators arguing for the case that the skin betting market is within the sphere of gambling regulation. Further points were discussed, related to the volume of bets, and their possible decline if these operators had to uphold regulation and licensing laws. For instance, would these websites receive the same volume of customers if it were made illegal for US citizens to use them?
It should be noted that there is now an opportunity for established operators to capture a larger share of the esports betting market. However prospective companies will need to cater to this type of customer if they want to emulate the success and growth of the skin gambling market. While educating the community on the betting market as current scandals would leave many fans disillusioned with gambling as a whole.
Anna Soilleux-Mills, a Senior Associate at Oslang LLB, addressed a very similar issue in an article she wrote all the way back in June 2011 (Original article):
“[Gambling] is defined in the Act as “playing a game of chance for a prize”. Importantly, a prize for the purposes of the Act means “money or money’s worth”. To maintain a clear distinction between social gaming and gambling, social gaming sites therefore need to ensure that:
(a) their social games do not contain an element of chance; and
(b) players do not play for prizes of “money or money’s worth.”
While her article was in relation to the ‘social gaming’ provider Zynga poker, the distinction she draws between social gaming and gambling is very clear. Furthermore she explains that companies like Zynga must not allow users to cash out or exchange their virtual currency outside the virtual world.
It is clear to see that skin betting websites have been well within the sphere of gambling regulation since their inception. They have always contained an element of chance, the skins used have always had a monetary value attached to them, and lastly there are many online marketplaces where users can trade their skins for cash – including a marketplace within the game that allows you to trade and sell skins, showing that from their implementation they were intended to have monetary value.
Had it not been for the vigilance of the CS:GO community, scandals may have been more prevalent, and potentially more damaging. That is not to say that these websites are inherently deficient – individually some websites may have upheld the highest forms of the aforementioned standards.
With the implicit use of cash via tradable skins, the explicit use of gambling elements via chance, and no tangible legal boundaries expressed for these skin betting business’ to conduct themselves within. Can anyone truly be surprised at the impropriety of the websites, when the owners and operators running them from behind the scenes were only accountable to themselves from a moral standpoint?
The topic of skins betting and protecting esports integrity will be discussed at Betting on Sports conference (September 15-16) by ESIC Commissioner Ian Smith, Unibet’s Eric Konings and esports lawyer Anna Baumann.