There's people streaming a video game, and then there's people streaming themselves opening virtual items for a video game. It's a big deal in the world of Counter-Strike right now, because it raises one very important question. Should streamers who are just using a game as a vehicle for gambling not be moved into a separate section of Twitch or YouTube?
But the chief executive of Unikrn, whose company partnered with Tabcorp almost a year ago to extend the esports betting market available to Australians, says the issue is bigger. The proliferation of Twitch streamers advertising gambling to kids is getting them hooked, and it needs to be regulated.
In a post on his personal website and the Unikrn official blog, Rahul Sood warns against streamers who advertise the gambling of virtual items, such as weapon skins for games like Counter-Strike: Global Offensive. According to the CEO, not only could the streamers "might be breaking the law", they're creating an environment that encourages children to become involved with gambling.
"When my 13-year old son and his friends talk about skin betting it made me seriously uncomfortable. It’s wrong that a 13-year old kid can do this. That alone should be banned and regulated," Sood argues.
"The fact is that illegal betting is happening at a rampant rate, and it’s dangerous. Until all sports betting is legalized, there will be sites that spawn up and prey on young people everywhere."
Chris Grove, a senior consultant at Eilers and Krejcik Gaming, also announced that the global market for skin betting has grown substantially over the last 12 months. As part of an update to an Eilers Research report into gambling in esports, the market for skin betting in 2016 has grown to just under US$5 billion worldwide.
Our updated analysis at Eilers Research puts total handle for skin betting in 2016 at ~$5bn. https://t.co/isiMC9PqtS
— Chris Grove (@OPReport) April 19, 2016
Total handle refers to the amount of money people have bet, not lost. The report, published in August last year and provided to Kotaku Australia, estimated that 2.3 million users would bet on esports last year, with that figure growing to at least 17.4 million active players by 2020.
"That's a big number, and it comes with some caveats," Grove explained. "Our projection is based on extensive data collection from a variety of sites, conversations with people in the industry, and modeling based on our experience with other online gambling products."
He added that the figure was a projection, one that assumes the rampant growth in skin betting will continue. "What we see in the data is a clear indication that people who play video games have an interest — potentially an intense one — in wagering using items from the games they play. That's a relatively new phenomenon, at least at this scale, and I think it carries implications for both the video game industry and the broader commercial gambling industry."
The 17.4 million figure was the firm's most conservative estimate. But even if that proved to be the case, Eilers still expected US$12.7 billion would be wagered on video games in 2020, making just under US$1 billion in industry revenue.
It's a massive market and one that, according to Sood, lacks the necessary regulation or protections to stop children from becoming involved. In a response over email, he confirmed to me that children betting on video games was "something that I have personally seen and know is happening".
"The fact is that illegal betting is happening at a rampant rate, and it’s dangerous. Until all sports betting is legalised, there will be sites that spawn up and prey on young people everywhere."