The Counter-Strike Gambling Scandal, Explained

The past week has seen the world of online games rocked by a major gambling scandal. Two YouTubers with millions of subscribers, Trevor 'TmarTn' Martin and Tom 'ProSyndicate' Cassell, were revealed to be owners of a site they repeatedly promoted sans overt disclosure. The potential ramifications are not pretty.

Roll the Bones

This is not the first time Counter-Strike's secondary market has made the news. Last year, Valve banned seven pro Counter-Strike players for being involved in a match fixing scandal where one team took a dive so people could win a colossal Counter-Strike skin bet.

More recently, Bloomberg published a report in which they explored how Counter-Strike skin betting essentially allows teens to gamble (which is illegal) and estimated that the secondary market moved $US2.3 billion ($3 billion) in 2015 alone. It is, to borrow a term from the seminal early '90s Disney cartoon Bonkers, bonkers.

Currently, there are two separate lawsuits against Valve and this secondary Counter-Strike skin betting market, both of which allege that it's illegal. The crux of their argument is that Valve has knowingly allowed and, to an extent, facilitated the creation of an illegal, unregulated online gambling scene in which cosmetic weapon skins take the place of casino chips.

Despite all of this, Valve has never directly spoken about their stance on the skin betting scene. They sort of addressed it during the aforementioned esports scandal, and Steam briefly warned users that CSGO Lotto might be a scam site after the news broke about those two YouTubers. But they have yet to lay down the law in any significant way, even though this has been going on for years.

How did it come to this? Let's break it down.

Guns for Hire

Counter-Strike: Global Offensive, one of the world's most popular team-based multiplayer shooters and an eSport regularly viewed by millions of people, allows players to unlock cosmetic alterations for their weapons by way of in-game drops, opening in-game crates they have earned through play or promotions, or trading with other players. These are known as skins.

Skins, many of which were originally created by Counter-Strike players and approved by game creator Valve, come in all sorts of colours and patterns. Some are rarer than others. Thanks to Valve's Steam Community Market, skins have real-world value. People buy and sell these things for anything from pocket change to thousands of dollars in actual money.

Valve takes a 15 per cent cut of every transaction. By no means does it make up the bulk of their Scrooge McDuck-esque (except bigger) money mountain -- which mostly comes by way of selling video games on Steam, Valve's ubiquitous PC game store -- but it's a lucrative side business.

Gambling, Man

All that out of the way, we can now get to the meat of this filet mignon, lettuce and cheddar (all of which are metaphors for cash) sandwich. People gamble on Counter-Strike, but not through official Valve channels. Rather, they go to third-party sites like CSGO Lounge, CSGO Diamonds and now, most notoriously, CSGO Lotto.

Sites do not actually need Valve's permission to do this. Anyone can acquire what's known as a Steam Web API key, which lets users link their Steam accounts to an external website. Logging in is easy. Some sites theoretically require you to be older than 18, but it's not strictly enforced.

There are many types of skin betting sites. CSGO Lotto, the site under the most scrutiny right now due to the YouTuber disclosure scandal, has people put skins into a pool. After a few minutes, a winner is chosen (allegedly) at random. The winner receives every skin in the pool. That one's pretty simple. Other sites sometimes stack your odds based on the value of the skins you contributed to the pot. The higher the value, the better your chances. In any case, sites skim a bit off the top. CSGO Lotto, for instance, takes an eight per cent cut.

The CSGO skin betting scene also has a slot machine equivalent, as seen on sites like Skin Crates. You purchase credits for a few dollars, and then you get to open a "crates" containing skins of varying rarities. Knowing an ultra-rare gun or knife is right around the corner can be compulsive. I've seen people confess to spending hundreds and hundreds of dollars on sites like Skin Crates.

Other sites allow people to place bets (again, in skins) on the outcomes of pro Counter-Strike matches. CSGO Lounge is the big one there, with people able to bet hundreds of dollars in a single (CS) go. Winnings are then distributed by bot Steam accounts, which are decidedly against Valve's terms of service. But we'll get to that in a second.

Breakin' the Law?

The big question of the moment is: What happens when the Eye Of Sauron (And Sons, Law Offices) turns on Counter-Strike's gambling scene? The answer is... it's tough to say.

Many Counter-Strike betting sites include rules. CSGO Lounge, for example, says, "By placing a bet on CSGOLounge you are confirming that you are in abidance with your country's laws which allow you to participate in skin-betting. This is generally 18 years of age or older, but make sure to check." They add that they reserve the right to request documents should you prove suspicious.

But again, as Bloomberg uncovered, these rules aren't always strictly enforced, and some sites straight up allow teens to throw skins in the ol' pot. They can get away with it because the entire scene is unregulated. While Australia is trying to make some steps, the US government has yet to do anything about it, nor has Valve.

With the aforementioned couple of lawsuits in play, however, things could be changing. I say "could", because, well, the lawsuits are far from water-tight. PC Gamer broke down where they, well, break down in a pretty damning article. The biggest allegation in these suits -- that Valve directly facilitates the skin betting scene -- is at best difficult to prove and at worst downright false. The Steam Web API is freely available to anyone and thus does not constitute approval from Valve. Meanwhile, Valve expressly forbids bot accounts, a major tool of the skin betting trade, in Steam's subscriber agreement.

In a Reddit AMA on the subject of skin betting, US legal professional Jeff Ifrah said, "Holding Valve responsible for every single thing that a player or gambler might do with a skin once it is out of Valve's hands of course sounds harsh." He added that Valve could've done more to stop this, but that's not the argument these suits are making. Fellow professional Bryce Blum added, "I've yet to speak to an attorney that reviewed the complaint and thought the case was likely to get past a motion to dismiss."

If these cases fail, however, that doesn't mean other, more strongly formulated ones won't take their place. The Counter-Strike skin betting scene enables some seriously sketchy behaviour, as exemplified by the recent disclosure fiasco.

A Matter of Public Record

Last week, a couple of YouTube outlets reported that they'd uncovered evidence linking two extremely prominent YouTubers, Trevor 'TmarTn' Martin and Tom 'ProSyndicate' Cassell, to CSGO Lotto, a site they both frequently promoted in their videos sans disclosure.

Turns out, not only are Martin and Cassell financially tied to the site; they founded it, as evidenced by its incorporation details. Both have claimed it's always been "a matter of public record", but unless you count obscure incorporation papers you'd have to know about in order to dig up, they're clearly full of shit. They have since been added to a lawsuit targeting Counter-Strike's gambling scene.

As if the apparent illegality of large-scale promotion sans disclosure wasn't bad enough, Counter-Strike players began to (rightly) question how trustworthy skin betting sites really are. They pointed to the idea that sites could theoretically rig betting pools for YouTubers behind the scenes, allowing YouTubers to go on camera and be like, "Guys, you're not gonna believe how much I won on this site. You've gotta check it out!" One YouTuber with nearly 500k subscribers called PsiSyndicate emerged from the woodwork to claim he'd made one such backdoor deal with a site called Steam Lotto.

This incident, combined with things like the potential for underage betting and esports scandals, leaves Counter-Strike's gambling scene in a tricky spot. It simply can't remain unregulated or otherwise left completely to its own devices. It's too easy for opportunistic dickheads to misuse and abuse. People can easily be taken advantage of with no recourse, and all the while, billions of dollars are on the line. US states are beginning to crack down on online sports gambling sites like DraftKings and FanDuel, but Counter-Strike is, comparatively, still a Wild West frontier overrun by bandits. The slim gold vein of good that can come from that has been thoroughly tapped. It's time for a change.


Comments

    Side betting sites aside, CSGO (and TF2, and others of course) are essentially de facto slot machines anyhow.

    People drop hundreds or thousands of dollars paying for keys to open crates that might (but probably won't) contain some sweet collectable gears, but mostly contain nothing but vendor trash that could have been purchased on the Steam market for pennies.

    Regardless of their legality or otherwise, key/chest systems have become ubiquitous in these games because they work in making big money for the devs. These devs are conning people into spending far more money than they originally planned to spend on the chance that just one more chest, and another, and another, could be the one in which a big score ends up dropping.

    This is one reason why there’s almost always flash up text associated with sweet gear dropping - "X just got a rare X", creating the clear impression that rare drops are much more common than they in fact are (if the gear wasn't so rare its value on the resale market would be much lower).

    The whole crate/key gambling system is completely shonky and, at best, desensitises kids to gambling. But really, what pushes these systems well and truly over the line into genuine, casino-style gambling is when one's 'winnings' can readily be exchanged for cash and cash equivalents.

      The closest real world equivalent to the crate system I can think of is opening packs of trading cards, or booster packs for collectable card games such as Magic. In both cases, there is a secondary market for the individual items found in the pack, with some being valued higher and others lower.

      If you were going to regulate the crate system found in online games, should those regulations also cover real world card booster packs?

        Trading cards have their own issues, but physical booster packs are at least A) not given away free but unopenable without paying for a 'key' (a classic baiting tactic), B) not instantly convertable to cash (Steam wallet) in an online marketplace in which the game company is getting a margin on each transaction, C) not incidental to the main reason you got involved (in this case, to play a FPS not a CCG).

        At least when you buy trading cards you are making an explicit decision to get involved in that activity rather than doing something else unrelated, and then finding yourself constantly baited by 'free' (but unopenable) chest drops encouraging you to play a gambling side game at the same time.

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