Post-Valve Announcement - What’s next for esports gambling?

Post-Valve Announcement - What’s next for esports gambling?

Tuesday, August 9, 2016 Posted by Andy McCarron
Skins troubles post-Valve - what happens now?

There has been much ado about something in esports recently following Valve’s announcement of its purported crackdown on esports skins betting sites.

The company, which is the developer of Counter-Strike: Global Offensive, the game from which the overwhelming majority of the traded skins are wagered, issued cease and desist letters to 23 sites which offered betting on such skins.

Many promptly issued messages on their sites stating that they’d paused trading; CSGOWild went with the optimistic “Our team has been working on a secret project for the past few months. All we can say is stay tuned. #GoWild” whilst CSGOBig said “Hey guys, #CSGOBig will be disabling deposits and shutting down temporarily to comply with Valve.”

Valve’s somewhat vague wording in its announcement was seized upon by some quarters as proof the developer could be doing more. The statement read:

“A gambling business is not allowed by our API nor our user agreements. We are going to start sending notices to these sites requesting they cease operations through Steam, and further pursue the matter as necessary.”

What qualifies as gambling in Valve’s eyes is unclear, is this real money wagering, skins betting or token betting? Moreover what will the pursuing consist of.

There is no doubt that skins gambling has played a part in ensuring CS:GO’s position as one of the most popular esports titles; sites such as Twitch attracted huge numbers for CS:GO skins betting focused streams and with a lack of age controls over who was watching these it’s incalculable to discover how many teenagers were watching these.

Rahul Sood stated his view last week that it’s despicable how zero arrests have been made to date. He said: “It’s insane to me that these Twitch streamers ran the largest child gambling ring in history and yet no one has gone to jail yet.”

It was a huge controversy in the CS:GO world involving these skins streams that, in part, contributed to Valve’s announcement. With a combined audience of in excess of 10 million streamers Trevor ‘TmarTn’ Martin and Tom ‘ProSyndicate’ Cassell failed to tell fans that they were part owners of the site CSGOLotto, all the while creating numerous streams to young audiences ‘explaining’ ways to win big betting on the site, and in general encouraging gambling of this sort. They have since been banned by Twitch.

The tide appears to be turning now however with regulation potentially the aim of the game. One of the largest skins sites CSGOLounge has applied for a gambling licence. The site took 12.4 million skins’ worth of bets on over 130 matches in July.

Skins do not technically have monetary value but converting them to cash is incredibly easy on sites such as OPSkins. A study by Esports Betting Report concluded that an average skin is worth a reported $9.75, though the variations are huge from as little as 1 cent to upwards of $1000.

Under its parent company Lounge (it also runs Dota2Lounge), a statement signed off by founder Robert Borewik said the following: “The situation is highly confusing - we are not offering games of luck, we are not offering any transactions with real money or equivalents. Despite those facts, in order to avoid or reduce the confusion, we have decided to acquire a license to legally operate in most of the countries and be able to accept the esports bets by our community, as if it would be real money.”

It’s an understandable prediction that with the closure of many of these sites, and with more and more betting operators including esports markets or creating standalone sites, that traditional betting will see a surge in numbers.

After all skins betting was estimated by Eilers & Krejcik Gaming and Narus Advisors to be worth in the region of £1.9bn in 2015, with a prediction of this to be £6.2bn in 2016, prior to the Valve announcement.

ESIC’s Ian Smith doesn’t agree with this prediction however: “I think it’s largely a different market. Many were from the States who are legally prohibited from real money gambling online, and moreover many were underage. I also believe that huge numbers of the accounts on these sites were duplicates. I do think there’ll be a small migration to the traditional bookies but it won’t be hugely noticeable from their side volume wise.”

As sports betting operators begin to better understand esports, the various communities within it and what the punters are after, volumes will increase. With a conveyor belt of opportunities being created in the form of new tournaments such as Overwatch World Cup announced last week, and established competitions such as the huge The International which ends on August 13th, operators must work out how best to seize upon them.

Totally Gaming says: It has been clear for some time that skins betting has needed overhauling and serious levels of regulation. Valve’s announcement was long overdue, and arguably insufficient in that it wasn’t conclusive enough.

Whilst sportsbooks can expect a rise in esports betting volume, this would have occurred naturally with or without the ‘cease and desist’ as the sites refine their offering in this regard, and expand the markets too. Keeping a close eye on Lounge’s bid for a licence will be very interesting indeed.

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