Skin gambling

A number of websites were created to bypass monetary restrictions Valve set on the Steam marketplace to aid in high-value trading and allowing users to receive cash value for skins.

Some of these sites subsequently added the ability to gamble on the results of professional matches or in games of chance with these skins, which in 2016 was estimated to handle around $5 billion of the virtual goods.

The introduction of the Arms Deal update to Counter-Strike: Global Offensive in August 2013 added cosmetic items termed "skins" into the PC versions of the game.

[4] The Arms Deal update drew an audience back to the game, with a six-fold increase in the average number of players from the previous year about seven months after its release.

[2] Valve's CEO Gabe Newell described the offering of skins as an "investment" that would retain some nominal value well after the player stopped playing the game, though did state that they had concerns about factors that might fall out of their control with this feature.

[9][10] This virtual currency is further impacted by the game giving out "weapon cases" that contain an unknown randomized skin, which can only be opened by purchasing a key in the in-game store for $2.49.

[6][13] The player community for Global Offensive grew quickly following the addition of skins, further enabled by the growth of streaming services like Twitch.

Valve promoted features into Global Offensive that made it favorable for professional play (eSports), including sponsoring its own tournament.

[14] Several teams arose from high-ranking players, creating viewing opportunities during tournaments; this was further enhanced by the ability for viewers to earn "spectator" skins simply by watching these matches.

[2] Compared to League of Legends, one of the most-watched eSports in 2013,[15] Global Offensive is considered an easier game for spectators to understand and follow, making it more attractive for viewing audiences.

[19][20] Outside of the United States, several sites arose to allow users to bet with direct cash funds on the result of matches from games like Global Offensive, Dota 2, and League of Legends.

[22][23] With the decision in the Supreme Court case Murphy v. National Collegiate Athletic Association that ruled PASPA unconstitutional, states are now free to enable sports gambling, including for esports.

[6] The exact timing for the growth of these gambling sites is unclear, but Chris Grove, an analyst for Eilers & Krejcik Gaming and Narus Advisors, observed as early as August 2015 that skins were being used for betting on esports.

[39] Skin gambling contributed greatly to the success of Global Offensive as an esport, but some argued that it needed to be regulated to avoid legal and ethical issues.

When roulette-like websites were created, browser extensions claiming to automatically bet for the user were actually malware designed to steal skins and coins.

Justin Carlson, the creator of skin-selling online marketplace website SkinXchange, said underage gambling is a huge issue, and that there were "countless times" when he has called parents to tell them that their children had used their credit cards to buy items.

[22] In early July 2016, the video posted by HonorTheCall led to the discovery that one gambling website, CSGO Lotto, was owned by two YouTube users, Trevor "TmarTn" Martin and Tom "Syndicate" Cassell, and supported in equity by Josh "JoshOG" Beaver, none of whom disclosed this relationship in their videos while promoting the website to their subscribers, with some of this promotion paid through Global Offensive skins.

This practice was identified as conflicting with Federal Trade Commission (FTC) regulations on promotional videos, though the owners have claimed they are operating within the law.

[48][49][50] The lawyer representing Martin and Cassell said that CSGO Lotto should not be classified as a gambling site, as through its fine print, it allows users to participate without having skins by simply requesting entry tickets for its events, similar to the manner in which McDonald's Monopoly promotions are run.

[23] In January 2015, Valve banned seven professional Global Offensive players from the same team after finding evidence that they were match fixing in association with skin-gambling site CS:GO Lounge during a major competition.

[55] Despite this discovery, CS:GO Lounge continued to remain active, and later that year announced its sponsorship of a professional Global Offensive team, raising questions of its legitimacy.

[59] The government of the Isle of Man enacted licensing conditions in February 2017 permitting online-gambling operators to allow players to deposit, gamble with and withdraw virtual items such as skins.

[62] The commission published its report in December 2017, finding that 11% of 11-to-16-year-old children in the UK had participated in skin gambling, in part as the result of the lack of safeguards against underage use on skin-gambling sites.

The telecommunication companies had initially refused to comply with the demand by the Danish Gambling Authority to block access to the sites on grounds of principle, which led to the case going to court.

[65] On the June 20, 2018 deadline, Valve disabled Global Offensive and Dota 2 item trading for users within the Netherlands to comply with the Gaming Authority's order.

[5] Jasper Ward, a lead counsel in both cases, undertook the lawsuits due to his current involvement in the legal investigation into gambling issues with DraftKings and FanDuel, sites that allowed players to bet on fantasy teams.

Ward noted that, as of a July 6, 2016 interview, Valve had not issued a response to either case, and believed that the company's "public silence [...] is unconscionable", particularly in light of them unbanning CSGO Lotto.

[77] On July 20, 2016, Valve followed by issuing several cease and desist letters to 23 sites they believed involved in skin gambling that were inappropriately using their services, giving them ten days to discontinue use of the Steamworks API.

This was met with criticism from players, particularly those that have run legitimate community trading sites and streamers that offer skins for viewers, and a petition with over 100,000 signatures had been started to have Valve review this decision.

[5] It is unclear if the two lawsuits against Valve will come to a full trial, and thus attention is being placed on the Washington State Gambling Commission's pending actions to resolve the situation.