Virtual items, or skins, are big business these days. People buy, trade and gamble this stuff like candy: not in small amounts, but to the tune of billions of dollars per year.
But while the business of skin trading and gambling has become enormous, the protections and regulation around it has yet to catch up. So there's a lot of room for untoward behaviour. And that's what two YouTubers have found themselves in the community's crosshairs for: promoting a Counter-Strike: Global Offensive skin gambling website, without fully disclosing their ownership in the business.
Everything centres around two Youtubers: Thomas "ProSyndicate" Cassell and Trevor "TmarTn" Martin. If the names ring a bell, here's a quick breakdown of why they matter: Cassell was the first person to reach a million subscribers on Twitch, while Martin has more than 5 million subscribers across his TmarTn and TmarTn2 YouTube channels.
Late last week, a small YouTube channel by the name of HonorTheCall uploaded a video showing a range of business entries naming Cassell and Martin as having co-ownership of the skin gambling website, CSGOLotto.com. The site had previously featured in Cassell and Martin's YouTube videos as somewhere they could go to bet, but it was never expressly outlined that they were had any equity in the company, or that they were members of the board.
Here's a screenshot of the description from one of Martin's videos showing how the site had been advertised.
"Best place to bet skins" isn't the same as "here's a link to a gambling website that I own". HonorTheCall below goes through a number of filings showing Martin and Cassell as principals and directors of CSGOLotto below, or you can click on these StateLog and InterCredit Report listings.
Things didn't really blow up until it caught the attention of the h3h3Productions channel, which has more than 1.5 million subscribers. They jumped on board the scandal, and put the same questions to Cassell and Martin: how could they promote a gambling website that they partly owned, without expressly disclosing that fact?
Cassell and Martin refuted claims that they were not upfront about their ownership of the company. A number of Cassell's videos have the line "this video is sponsored by CSGO Lotto", and Cassell stressed as much on Twitter.
I do however stand very firmly behind the fact that @CSGOLotto has never & will never scam/steal from players.
— Mr. Syndicate (@ProSyndicate) July 4, 2016
I've always disclosed that my CSGO videos were sponsored & even asked a YouTube employee if anything more was needed & they said it wasn't.
— Mr. Syndicate (@ProSyndicate) July 4, 2016
The United States Federal Trade Commission's guidelines say that "as long as the audience knows the nature" of the relationship between a content creator and someone endorsing a product, they're in the clear. Here's some relevant questions from the FTC:
When should I say more than that I got a product for free? It depends on what else (if anything) you received from the company.
For example, if an app developer gave you their 99-cent app for free in order for you to review it, that might not have much effect on the weight that readers give to your review. But if the app developer also gave you $100, that would have a much greater effect on the credibility of your review. So a disclosure that simply said you got the app for free wouldn’t be good enough.
Similarly, if a company gave you a $50 gift card to give away to one of your readers and a second $50 gift card to keep for yourself, it wouldn’t be good enough to only say that the company gave you a gift card to give away.
... Are you saying that I need to list the details of everything I get from a company for reviewing a product?
No. As long as your audience knows the nature of your relationship, it’s good enough. So whether you got $50 or $1,000 you could simply say you were “paid.” (That wouldn’t be good enough, however, if you’re an employee or co-owner.)
After the scandal broke, footage emerged of TmarTn being logged into Steam under the account "csgolottobot5" (highlighted in red), while he was betting on CSGO Lotto.
Another person listed on one of the business listings is Josh Beaver, who streams and uploads videos under the account JoshOG. Previous videos mention CSGOLotto as one of his sponsors, but not all of them. At the time of writing, a video uploaded on February 11 (US time) shows Beaver betting thousands of dollars worth of skins, with only a link to CSGOLotto in the description.
Social media put the question to Beaver about failing to properly disclose his ownership in the business. He responded during a livestream that he was one of the first users to be "sponsored" by CSGOLotto.
"Like I said, i was the first sponsorship that CSGOLotto acquired and when it comes to start-up, especially a start-up, it's not uncommon for a sponsorship to ask equity of a company, so. That's not uncommon at all. And you actually find out that a lot of streamers have equity in some of these websites. Or you used to."
The broadcast has since been deleted from Twitch, but segments of the livestream have been reuploaded on various websites.
"I'm listed as secretary on there because I do have equity stake, and they have to put me as something, they have to label me as something, so I'm the secretary," Beaver went on to say. "That's pretty much it. There's no way for me to explain it any more, to be honest. That's pretty much what it comes down to. But as far as any shady shit that went down, I was not involved with any of that. I don't even think any shady shit went down."
The scandal has ramifications outside of YouTube, however. As it turns out, Martin is a co-owner of the professional esports organisation EnVyUs. Mike Rufail and Tyler Thompson, the managing partners and co-owners of the team, published a statement overnight saying that "we gave a small amount of equity" in the team to Martin "in return for his advisement and support of our video content on the YouTube network".
"As a company and as managing partners, we have absolutely no involvement with or ties to CSGOLotto.com," the EnVyUs partners wrote. "Recently, a few of our CSGO players have been offered sponsorship with CSGOLotto.com among many other lottery driven or skin marketplace type web destinations on an individual basis. Our organisation does not manage those relationships and have advised our players to avoid further relationships with any company that may be deemed as negligent by the vocal community."
Martin previously listed himself as a co-owner of EnVyUs on his Twitter profile, but at the time of writing that has been removed. He also wrote on social media that he had publicly admitted wishing he was "more upfront about owning the site" but that he was never outspoken about his position in the business.
"My idea was to keep business business, while the focus of YouTube was simply making entertaining content," Martin said via Twitter, which has since been deleted. "Obviously that was misleading to viewers and something I very much regret. I've never been perfect and I 100% own up to that mistake."
It's not the first time that streamers have been exposed for their relationship towards skin betting or gambling sites. Recently, popular streamer and CS:GO analyst Mohamad "moE" Assad exposed evidence showing that the gambling website CSGO Diamonds had shared the results of bets with him before they had taken place.
This is the first conversation on skype i had with the owner of csgodiamonds when this was brought up pic.twitter.com/nHF8dmKtX4
— mOE (@m0E_tv) June 13, 2016
Assad intended to force the website to pay him money that the site allegedly owed, but the ploy massively backfired. Further evidence later emerged that Assad was given "house money" to bet with and was never at any real risk of winning, as the owners of the website would top up his account whenever it ran dry. The streamer and analyst then later told Richard Lewis in an interview that he received more than $US90,000 from the website in partnership fees, with a further $US300,000 from affiliate referrals from the beginning of this year.
Martin has said over Twitter that he will publish a statement by tomorrow Australian time. I've reached out to Martin, Cassell and Beaver for comment, but did not receive a reply by the time of publication.
Note: Analysts Eilers & Krejcik Gaming and Narus Advisers estimated that the total value of items wagered on skin betting sites this year was $US7.4 billion. A copy of their latest annual report was provided to Kotaku Australia.