Core Concepts
The rise in esports’ popularity, the consequent growth of skin betting, and 2016’s skin
gambling scandals, each focused an intense spotlight on Valve, skins, and the esports
wagering ecosystem. Such scrutiny illustrated several concepts underpinning the
skin betting industry.
Valve Prints The Currency Used To Bet On Skins
—And Also Owns It
Skin Wagering Grew Faster Than It Could Be Effectively
Regulated Because Of Its Unparalleled Convenience
Lounge’s inability to offer legal, regulated skin betting is attributable
foremost to the construct of Valve’s skins ecosystem. Even if skin
gambling were legal under a nominal state or federal regulatory
framework, Valve would still own not only all skins, but the
marketplace by which players acquire, access and manage them.
Lounge’s hopes of offering licensed skin betting were, therefore,
contingent upon the consent of the owner of the virtual currency
used to conduct said betting. Any sites offering skin wagering,
which Valve said violated Steam’s terms and conditions, have zero
latitude to even amend skins-based products, let alone offer them.
Imagine if recreational basketball players won special currency
for their efforts in a never-ending stream of pickup games, and
whenever they went to the sidelines, televisions played NBA
games and rows of bookies sat eager to accept only the very
currency the players had just won on the court as payment for
bets. If those players wanted to bet on pro basketball, surely they
would do so instantaneously on the sidelines with the bookies
rather than getting in their car and and driving to a casino.
Indeed, skin betting’s popularity was fueled by its unrivaled
convenience—namely the speed, simplicity and accessibility of
wagering blended seamlessly with skin acquisition during CS:GO
gameplay. Valve merged in a single screen experience both
the virtual world in which a currency is acquired and managed,
and the real world in which that currency is wagered.
A Lack Of General Esports Wagering Regulations
Belies A Greater Lack Of Skin Wagering Regulations
Skill-based, P2P games such as real-money gaming competitions
are generally permitted in at least 36 states. Despite that, only
two states in the US are believed to have a regulatory
framework actively governing esports players betting cash
on their own performance. No US states have developed a
regulatory framework governing players betting virtual items,
such as skins, on the outcomes of either their own matches or
professional esports matches. The same appears to be true in
most other countries.
Valve Benefitted Indirectly From Skin Wagering, But
Kept The Industry At Arm’s Length
Valve is aware skin betting drives increased fan engagement in
professional CS:GO events, but has done little to address its
legality or develop player protections. The closest the company
came to addressing skin gambling head on before the July 2016
C&D action was in a February 2015 warning in light of the
suspension of 26 players involved in a match-fixing scandal
the previous year. “Professional players, teams, and anyone
involved in the production of CS:GO events, should under no
circumstances gamble on CS:GO matches, associate with high
volume CS:GO gamblers, or deliver information to others that
might influence their CS:GO bets,” Valve said, noting it would
generally assume pro players had inside information.
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