European Gaming Lawyer magazine EGL_Spring2017_opt | Page 17
and lotteries. Similar to the more traditional
forms of gambling, players transfer their
skins to the particular website offering skin
gambling products in order to play these
kind of games. In the eventuality that the
player wins, the winnings given by the
website are in the form of additional skins,
which the player may then ‘withdraw’ back
to the Steam account.
There is no arguing that the market for
skin gambling is significant. During 2016,
it was estimated that $7.4bn worth of skins
would be wagered worldwide across a wide
spectrum of gambling products. 1 However,
these estimates are based on studies which
do not take into consideration recent events
within the gaming industry.
Recent Events
In the US, the Washington State Gambling
Commission (WSGC) was one of the first
regulators to address skin gambling by taking
legal action against Valve Corporation,
alleging that Valve violated gambling laws by
facilitating the use of skins for gambling via
its Steam platform. The WSGC is requesting
the Court to order Valve to take all necessary
actions to stop third party websites from
making use of skins for gambling purposes
through its platform. On their part, Valve
Corporation argue that it is not engaged in
the promotion of gambling and that it does
not in any way facilitate gambling, arguing
also that the operation of Steam and CS:GO
is lawful under Washington law. Valve
Corporation contends that as per its policy,
it sent cease and desist letters to gambling
operators, conceding however that operators
made use of bots in order to disguise
gambling transactions. Proceedings are
still under way.
In the UK, the UK Gambling
Commission (UKGC) instituted
proceedings against Craig Douglas and
Dylan Rigby, owners of the website
‘FUTgalaxy’ which is based on the best-
seller electronic game ‘FIFA’ developed by
EA Sports. FUTgalaxy provides players
with the opportunity to make use of the
coins earned in FIFA (FUT Coins), which
can then be exchanged on the website for
the in-game currency FG credits to bet on
events. FG credits can also be purchased in
real currency. Players earn FUT Coins in
FIFA by competing in and winning matches
and completing tasks in the game’s Ultimate
Team mode. These FUT coins earned in
FIFA can then be converted to FG credits
through FUTgalaxy in order to place bets
on real events, after which players can
convert the winnings back to FUT Coins.
The court heard how Douglas promoted the
site to more than 1 million subscribers of
his YouTube channel, including minors and
specifically, how one 14-year-old boy lost
around GBP586 in a day. Rigby was fined
by GBP174,000, whilst Douglas was fined
GBP91,000.
In March of this year, the UKGC issued
a position paper on virtual currencies,
eSports and social casino gaming. 2 The
UKGC, dedicating a whole section to
gambling with in-game items and virtual
currencies, explains how it is also the video
game industry which acknowledges that
even though in-game items, such as skins,
were provided in a “closed-loop fashion”,
“users of their game networks are occasionally
exploiting their open nature to offer players
opportunities to buy and sell in-game items”. 3
The UKGC went on to clarify that this
ability to convert skins into cash, and the
ability to trade such skins for other items
of value means that these skins attain a real
world value and become “articles of money
or money’s worth”. 4 (The UKGC went on to
conclude that a licence is required in the
same manner as the use of casino chips
as a method of payment for gambling
requires a license.
The Isle of Man has addressed the
situation by taking measures earlier this
year to allow its licensees to offer betting
using virtual currencies, including skins,
thereby placing such operators within a
regulated framework. Earlier this year, the
Norwegian Gaming Authority published
a note by virtue of which skin gambling
was legally placed within the definition of
‘gambling’ after reports of minors in Norway
having spent considerable sums of money
on such games. The Authority concluded
that a gaming site which allowed betting
and winnings in skins was effectively an
online casino, and that operators, apart from
the state monopoly Norsk Tipping, faced
sanctions if skin gambling were to be offered
in Norway.
1 C Grove, Narus Advisors, ‘Understanding Skin Gambling’, July 2016.
2 UK Gambling Commission, ‘Virtual Currencies, eSports and Social Casino Gaming – Position Paper’, available at , accessed 22 March 2017.
3 ibid.
4 (no. 2).
European Gaming Lawyer | Spring Issue | 2017 | 1