In video games, skin gambling is the use of virtual goods, often cosmetic in-game items such as "skins", as virtual currency to bet on the outcome of professional matches or on other games of chance. It is commonly associated with the community surrounding Counter-Strike: Global Offensive, but the practice exists in other games such as Electronic Arts's FIFA. Valve, the developer of Global Offensive, also runs the Steam marketplace which can be interfaced by third-parties to enable trading, buying, and selling of skins from players' Steam inventories for real-world or digital currency. Valve condemns the gambling practices as it violates the platform's terms of service.
Valve added random skin rewards as part of an update to Global Offensive in 2013, believing that players would use these to trade with other players and bolster both the player community and its Steam marketplace. 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. These sites, along with Valve and various video game streamers, have come under scrutiny due to ethical and legal questions relating to gambling on sporting matches, underage gambling, undisclosed promotion, and outcome rigging. Evidence of such unethical practices was discovered in June 2016, and led to two formal lawsuits filed against these sites and Valve in the following month. Valve subsequently has taken steps to stop such sites from using Steam's interface for enabling gambling, leading to about half of these sites closing down while driving more of the skin gambling into an underground economy.
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The introduction of the Arms Deal update to Global Offensive in August 2013 added cosmetic items termed "skins" into the personal computer versions of the game. The developers had considered other types of customization drops for the game before coming to weapon skins; they had ruled out on player skins, since Global Offensive is a first-person shooter and the player would not see their customization, as well as new weapons, fearing this would imbalance the game.[1] Following the model they used for Team Fortress 2, Valve enabled players to be rewarded with random skin drops as they played matches which would be stored in their user inventory within Steam, Valve's software delivery and storefront client. Limited-time "souvenir" skins could also be earned by watching competitive Global Offensive matches within the game or through a Twitch account linked to a Steam account.[2] Unlike Team Fortress 2, the Global Offensive skins do not have any direct impact on gameplay, only influencing the look of a player's weapon. Skins, unique to specific in-game weapons, are given several qualities, including a rarity that determines how often a player might acquire one by a random in-game drop just by playing the game or as in-game rewards, and an appearance quality related to how worn the gun appeared.[2][3]
These skins were added to try to unify and increase the player size of the community, who were split between Global Offensive, Counter-Strike v1.6, and Counter-Strike: Source.[2] According to Valve's Kyle Davis, the introduction of skins to Global Offensive was to encourage more players for the game by providing them free virtual items simply by playing the game which they could then use as part of the Steam Marketplace to trade with others, boosting the Marketplace's own economy.[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.[5]
Initially, Valve had considered skins that appeared as camouflage would be more desirable to help hide on some maps, but found there was more community interest in bright, colorful skins that made their weapons appear like paintball guns.[6] The addition of skins made the game attractive to expert players, as the skins could be taken as a kind of trophy, showing off to other players how serious of a player they were.[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.[5]
Because of the rarity and other qualities, certain skins became highly sought-after by players. Skins became a form of virtual currency, with some items like special cosmetic knives worth thousands of United States dollars.[7][8] This virtual currency was further impacted by the game giving out "weapon cases" that would contain an unknown skin. A case, and discovery of that skin, could only be opened by purchasing a key in the in-game store for $2.49. At the same time, the most common skins that could be earned had a value far less than the cost of the key, so the player would effectively lose money if they bought a key and found a common skin.[9] Because of this, cases also became part of the virtual currency within Global Offensive.[6]
Global Offensive is not the first video game where players have traded, sold, or bought virtual in-game items, but the ease of accessing and transferring through the Steam Marketplace made it a successful virtual economy.[4] However, with increased monetary values placed on some skins, the Steam Marketplace became infeasible. The Steam Marketplace only allows sales up to $1800,[10] with all transactions subject to a 15% fee collected by Valve. Trades and purchases via the Steam Marketplace required players to add funds to their Steam Wallets to purchase skins from others, with those funds being placed in the Wallet of the seller; such funds could not be taken out as real-world money, as otherwise Valve would be regulated as a bank.[6] As the value of skins grew beyond these limits, new websites opened up that used the Steamworks application programming interface (API) to link players' inventory to these sites as to manage the trading of Global Offensive skins while enabling these users to spend more and receive money through other online banking/payment sites like PayPal or using digital currency like Bitcoin, and bypassing Valve's transaction fee.[6][11]
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.[12] 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,[13] Global Offensive is considered an easier game for spectators to understand and follow, making it more attractive for viewing audiences.[14] Within a year of the Arms Deal update, Global Offensive has seen a significant turnaround in player counts, and is poised to be a major eSport.[12] More than eight million players played Global Offensive by September 2015, and as of April 2016[update], Global Offensive was one of the top five games watched on Twitch, peaking at more than 525,000 concurrent viewers during a championship round.[15] At the start of 2016, Global Offensive was poised to be the largest growing eSport that year.[14][16]
As Global Offensive's popularity as an esport grew with increased viewership, there also came a desire for players to bet and gamble on matches.[17][18] 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.[19] Cash gambling on sports, including esports, had been banned in some European countries, and, up through May 2018, in all but four states within the United States under the Professional and Amateur Sports Protection Act of 1992 (PASPA).[20][21] 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.[22] American case law has also determined that the use of virtual goods for betting on the outcome of matches is legal and not covered under gambling laws. Companies like Blizzard Entertainment and Riot Games have made strong delineations between virtual currencies and real money to stay within these prior rulings while offering betting on matches within their games using strictly virtual funds.[21]
Some of the websites created to help with trading of Global Offensive skins started offering mechanisms for gambling with skins, appearing to avoid the conflation with real-world currency. These originated as sites that allowed players to use skins to bet on esport matches. Players would bet one or more skins from their Steam inventory, which are then moved to an account managed by the gambling site. Upon winning, the player would be given back their skins and a distribution of the skins that the losing players had offered.[6][23]
Over time, other sites started to expand beyond esports betting and instead offered betting on games of chance.[5] Jackpot-like sites were introduced, where users can put their skins into the pot, which will end in one person winning. The higher total value, the more chance the user would have to win.[24] A few sites reduced the gambling to betting on the result of a single coin flip.[25] Some sites also offered unopened weapon crates for purchase with skins.[2] In combination with the gambling features, players could then trade skins that they had won for their cash value through these sites, or purchase skins with currency to gamble further.[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. At that time, the use of skins for gambling on more traditional games of chance was not readily apparent.[5] be457b7860
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