While leading game developers look to crackdown on the practice of skins betting within the eSports community, there are many who believe it should be a legalized and regulated industry in its own right.
By Ben Blaschke
Skins betting has become somewhat of a dirty word in the world of eSports, with game developers increasingly looking to distance themselves from the underground betting practice.
The issue was thrust into the spotlight during the second half of 2016 after a class lawsuit brought by a group of Counter- Strike: Global Offensive (CS:GO) players against the game’s creator, Valve, made international headlines.
The lawsuit alleged that Valve “knowingly allowed, supported and/or sponsored illegal gambling” by allowing players to link their accounts to third-party skins trading sites via its Steam platform, where valuable skins – decorative items either won or purchased within the game itself – can be used as a virtual currency. Valve charged a 15% transaction fee on any skin that was traded.
Although the case was ultimately thrown out by the US District Court, the negative publicity it attracted prompted Valve to crackdown on skins trading with the company issuing cease and desist letters to 23 websites that used the company’s Steam platform to enable the betting of weapon “skins” in CS:GO.
But the crackdown has done little to quash the skins betting industry and, according to at least two experts Inside Asian Gaming spoke to, nor should it. “I think skins betting should definitely have a role in the eSports world,” explains veteran US gaming attorney and eSports investor Stephen A Crystal, who believes skins betting should be legalized and regulated rather than outlawed.
“Betting plays a very large role in traditional sports with many different types of bets that can be placed and there are the same in eSports. Many people want to place bets on games and events because they find it makes the games more interesting as they are personally invested in a team winning or losing.”
Australian-based eSports industry consultant Sean Callander agrees, noting that much of the controversy surrounding skins betting stems from a general lack of understanding,
“It’s a classic example of the gaming industry developing technology outpacing legislation,” he says. “My personal view is that skins fall far enough outside the concept of a ‘thing of value’ that it should be generally accepted as part of the fabric of the relevant games. To say it promotes gambling is a reasonably weak argument given the amount of advertising and promotion of traditional forms of gambling in society today.”
Of course, the exact value of these skins is at the heart of the debate. According to a recent Bloomberg report, the skins betting trade is already worth around US$7.4 billion annually – a figure that is sure to test the resolve of developers. “Valve has made a move to crackdown on it but it is unclear how hard they will enforce their new rules in the years to come,” adds Crystal.
The skins betting issue was further complicated last year when it was revealed that two YouTube personalities – Thomas “ProSyndicate” Cassell and Trevor “TmarTn” Martin – had actively promoted gambling activities on a site called CSGO Lotto without disclosing the fact that they owned it. There have also been a handful of incidents in which players were found to have thrown matches after being offered valuable skins to do so.
None of these cases paint skins betting in a positive light, but according to Crystal this only highlights the need for special legislation to be crafted in regard to skins betting rather than trying to stamp the practice out completely.
“There are both similarities and differences between skins betting and other forms of betting on eSports,” he explains. “With skins you can place bets on games in eSports and bet on your favorite team to try and win new skins and this is very similar to how it would work with cash.
“I feel the difference that is very important to remember though is on the major sites that operate fairly, you are not able to purchase or sell skins within the site. Yes, the skins have a monetary value, but that does not make it the same as betting money. Because of this I feel skins betting should be differentiated from cash and traditional betting.”
For Callander, it’s more about collaboration given the fast-moving pace of the betting world. “I think the size and continued growth of the industry means that all stakeholders – lawmakers, gambling operators and game developers – will have to work together to set the parameters of what are acceptable forms of gambling within the eSports arena,” he offers. “Smaller scale skins betting could be established as part of future marketplaces but, overall, it’s probably a space that should fall under the existing gambling umbrella. Companies like Betway and Unikrn have shown that this is possible.
“My belief is that horse racing, harness racing and greyhound racing will not exist in the future – maybe 20 to 25 years’ time. The new generation of sports fans and punters don’t appear to have the appetite for the obvious issues relating to the treatment of the animals in these sports.
“The growth of sports betting is the first step in what I believe will be a continued transition into the eSports arena. Forward thinking gambling operators will benefit massively and be assured a future in their own technologically developing industry.” Adds Crystal, “I feel betting as a whole fits in very well with the eSports ecosystem. eSports events and games are run in a very similar way to a traditional sport which has a very large betting scene.
“We are seeing massive growth in the market even after the crackdown from Valve on skins betting. There are projections of US$12.92 billion in bets being placed in 2020, so it shows the demand is really there.”