Valve’s Crackdown On Skin Gambling
On July 19, Valve sent a cease and desist letter to 23 skin
wagering sites that used Steam to conduct activities it said
violated the API’s terms of service. While Lounge was the first site
mentioned in the letter, Valve’s action was likely spurred on by a
series of scandals involving four different skin gambling sites
during the summer of 2016.
Two of those sites’ owners were found to have wagered and
won on their own sites using house money, without disclosing
their ownership position. A third paid a sponsored player more
than $100,000 to promote the site wh ile it admittedly rigged the
outcomes of his rolls to severely increase his chances of winning.
A fourth site’s owners were directly linked to a professional
CS:GO franchise, which Valve ostensibly prohibits. By Aug. 1,
Valve had not only named all four sites in C&D actions, but all the
sites had shut down, as well.
Ownership scrutiny would not escape Lounge either. On Aug. 15,
The Esports Observer reported that the parent company of esports
organization and ELEAGUE Season 1 champion Virtus.Pro also
owned 90 percent of Lounge. Whether resultantly or not, Lounge
shut down all skin betting the following day.
Despite these scandals potentially eroding consumer trust, skin
betting volumes on Lounge specifically rose during the Summer
of 2016. Moreoever, the scandals if anything appeared to drive
interest in CS:GO as a sport. Owing in part to the climaxes of
ELEAGUE and ESL One Cologne, CS:GO became the most watched
esport in the month of July 2016 on Twitch, with 31.8 million
hours streamed.
Terminology:
Skin Betting v. Skin Gambling v. Skin Wagering
In this report we use the term skin betting to mean
sportsbook-style wagering on the outcomes of esports
events, skin gambling to mean wagering on the
outcome of casino-style games like roulette or blackjack,
and skin wagering to refer to both forms together.
Four Critical Skin Gambling Scandals
YouTube account HonorTheCall juxtaposed
video of caster ‘TmarTn’ gambling and winning
on CSGOLotto (a site he said he “found” online)
with documents confirming TmarTn actually
owned the site. By virtue of TmarTn’s position,
he could have had advance knowledge of lottery outcomes,
potentially providing him with a significant advantage over other
players. The site stopped taking skin bets on Jul. 8 and quietly
went offline later that month.
Sponsored player ‘m0E,’ who advertised for
CSGODiamonds by streaming his gambling on
the site to his followers, exposed his own
wrongdoing when he revealed a conscious
effort by both him and the site to leverage
proprietary data and supply him with winning rolls. This
allowed him to beat the house-backed game and create the
impression others easily could, too. He was paid $91,000 (and
more in affiliate fees) for his work. He kept the money.
Nearly 60 pages of Skype logs, obtained and
published by journalist Richard Lewis, showed
conversations between CSGOShuffle’s supposed
owner and its paid developer. The conversation
appeared to illustrate dozens of successful
requests by the owner, caster ‘PhantomL0rd,’ who gambled
personally on the site without disclosing his ownership, to
obtain the outcome of jackpots and thereby improve his
personal odds of winning.
Skype logs published by numerous outlets
purported to show that an owner of pro esports
organization FaZe Clan also owned CSGOWild.
The site left the US market at the end of June,
but two days after being named in Valve’s first
C&D, it said it would shut down in just 48 hours. The process was
beset by confusion, scammers posing as Wild mods, and user
complaints that skin balances couldn’t be withdrawn.
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