Valve has started to enforce a ban on the black market betting sites, and the backlash of its announcement is already being felt among young players
“Experience all the illicit thrills of black market weapons trafficking without any of the hanging around in darkened warehouses getting knifed to death.”
Reading this now, taken from the description of Valve’s CS:GO Arms Deal Update, the irony is explosive. You can even take it literally, as it perfectly sums up the state of online skin betting.
And it’s this darker side that is only just being given attention in the media.
Skin betting has been a highly lucrative pursuit for some. Players buy decorative weapon skins using real currency and bet on the outcomes of pro matches, or use them like casino chips on various casino-style gambling games.
But, despite being effectively the same as betting with real money, skin betting is almost entirely unregulated.
Last year saw more than 3 million people bet over $5.2bn worth of skins, passing through external sites. These use software created by Valve, and allow users to trade their skins for real money.
So why is this cropping up now?
Recently skin betting has been making headlines. There are justified concerns that underage players are being exposed to an adult pastime, especially when competitive CS:GO has such a dedicated following.
A slew of fixing scandals have only exacerbated matters.
It is mildly amusing that last year, U.S. District Judge James Bredar dismissed a case against a mobile gaming company that used virtual goods, saying: “The laws of California and Maryland do not trifle with play money.”
However, this view is fast becoming null and void.
Many young people are raising the issue in legal circles, and amid a surge of lawsuits accusing Valve of creating and allowing an illegal gambling environment, Valve have responded with an announcement, aimed at third-party gambling sites.
It states that their user agreement does not allow the utilisation of Steam to facilitate their business.
What effects might this have?
Valve has already started to enforce this ban by issuing cease and desist letters to various skin betting sites, warning them of continued use of their Steam accounts.
It is unclear whether they will take this further and restrict the use of their API to specific users, but at present that does not seem to be their goal.
The main concern outlined in Valve’s announcement was not, in fact, the use of their API by these gambling sites. It was that they “create automated Steam accounts that make the same web calls as individual Steam users.”
It does not appear, then, that Valve are actually banning sites from using their API to process skin betting.
Does this mean gambling sites could possibly be allowed to continue operating if they stopped the automated calls?
It’s hard to say how Valve would react if players were paired up with other real players, instead of a bot account, but this could potentially address some of the concerns.
The backlash of this announcement is already being felt. Many players have lost their investments because sites have taken this opportunity to pack up and run.
This could cause people to panic and flood the market with their skins, resulting in the prices of once valuable skins to plummet.
Chances are, the market will take a hit but bounce back after a period of stagnation. However, it does beg the question: could Valve have handled events differently to prevent this?
Depending on how far they decide to go, some grey-area sites may still linger. For instance, while turning in-game items into currency doesn’t exist in Steam, buying in-game items does on skins-to-cash sites like OPSkins.
And while websites like OPSkins aren’t skins gambling websites, they are online marketplaces for buying and selling them. Again, this is a grey area. OPSkins also uses automated API calls to process transactions, so… what’s the deal here?
And there’s also the issue of VPN and TOR. Trading could continue anonymously, pushing it further into opacity and further from scrutiny.
On the streaming side of matters, Twitch has itself announced that its streamers cannot violate the terms of service of third parties.
In other words, they won’t allow skin gambling content to be streamed on their site – not a huge surprise, given the massive CS:GO and DOTA2 presence on Twitch, both games developed by Valve.
This is also a major blow to the skin betting industry. So much of the interest in skin betting is driven by advertising on gaming streams. But could Valve go further?
While it certainly does have a financial interest in skin gambling, like any big company Valve can tell which way the wind is blowing. There’s now speculation that, if these websites attempt to continue operating with workarounds, Valve may ban item trading altogether.
The need for regulation
A ban may or may not happen. But for a glimpse into just how important regulation can be, all we need to do is look to the recent number of scandals involving celebrity streamers.
One case saw a popular Twitch personality admit that his partnership with CS:GO Diamonds had involved rigging roll outcomes.
In another case, two extremely successful YouTubers promoted a skin betting gambling site called CSGOLotto which they claimed they ‘found’.
It turns out, however, that CSGOLotto was in fact founded by the two streamers in question. Suddenly their ecstatic reactions to winning money on their own website are placed in a much darker light.
We should remember, though, that competitive gaming is a fast-growing industry, and more conventional cash betting is a significant part of that.
It is already predicted that viewership’s for DOTA2 and CS:GO will drop – a big percentage of that viewership watched for the betting aspect.
No doubt Valve will bear this in mind in any future regulations; but let’s not forget that mainstream sportsbooks that offer cash betting on eSports already operate within strict regulations.
It remains to be seen whether Valve do take the necessary measures to protect players, and whether skin betting will survive this period of turmoil. One thing is clear though: players must be careful to bet with trusted, regulated websites.
