It is through a terse news release, which Valve alone owns the secret, that the company from Seattle has put an end to skin betting and other “hats”. Which originally was as a mere Bloomberg article became a major issue. Two complaints against Valve, two prominent YouTube stars embroiled in an ongoing scandal and it is very likely that legal actions will become truly dangerous in the future, apostles of Saint Gaben will apply more strictly the terms and conditions of use of Steam and ban the use of API making easier all access by a third party to player inventory. How did that happen? What are the implications of such a decision? We will try and look at it a little more clearly.
Hats off !
Anyway, dirty money was emerging from the now famous “crats”, kind of Pandora’s Box of e-sport. But we have had to wait until another traditional media began snooping to see the scale of disaster exposed. The problem is simple: by allowing free trade in guns and third-party websites to use an API to connect to them via a Steam account, this has offered access to player inventory and Valve has created a whole ecosystem with many platforms which have taken advantage of it more or less legally depending on the situation. And not just a little! Bloomberg estimates that $4 billion have been bet on skins last year. And this figure only covers betting actions on game results. By 2016, $7.4 billion are predicted by the economic information site with all bets placed.By comparison, last year, Valve with Steam generated interest income of $1.6 billion for a benefit of $235 billion.
From skins to scam
The key problem is that there are very restrictive laws on gambling in France, but in the United States as well and in the very large majority of countries from which access to Steam is possible. In the United States, two complaints have been filed against Valve Corporation: the suit was filed by an anonymous parent on behalf of their child and Valve is accused of fraud, illegal gambling. And these are sound arguments. Firstly, it is hard not to match the safe opening with the jackpot. Secondly, Valve gives different rarity levels to its items, making them a great value somewhat like casino chips. And those responsible for the fraud might well retort that it was only virtual value, it is quite easy to convert, in particular through exchange and resale platforms such as Opskins, even after cutting the different committees, this game money to hard, cold cash. Finally, the “gun market” undoubtedly could end up costing Valve Corporation more money since that made possible/facilitated/encouraged the emergence and uncontrolled spreading of weapons with a free access for the under-18s.
Battle of experts
We do not pretend to have relevant legal expertise but the legal struggle to come will be at least interesting… if it occurs. It is very likely that Valve will write a pretty hefty check to complainants and call it quits. If any trial was to be held, its outcome would be uncertain but used as a reference in this field. Three lawyers working extensively in the e-sport industry have participated in the social game Ask Me Anything. Vagueness and haziness may be pointed out. The three specialists do not address the key question: Do skins gambling is a money game or not?
‘The trial against Valve will not come to anything even if legal bases are definitely well-established. I am expecting a quick out-of-court settlement.’
Ryan Morrison, American video game attorney
For Brice Blum (@esportslaw), ‘the question does not even arise; the secondary market is significant and authorized (by Valve, editor’s note), and skins have a market value commonly accepted. That being said, there are no such cases which could be used as a reference in the present case and it is therefore impossible to predict the outcome with certainty.’
For his colleague Jeff Ifrah (@ifrahlaw), the issue is more complicated : ‘for that to be regulated by the rule of law, valuable things have to be involved”. However, traditional gambling cases, this term refers to only the cash, tokens or real objects. A recent court ruling has made the distinction between virtual value and “real-world” monetary value. Skins, even if in secondary markets, have value due to the game itself (CS:GO, editor’s note), connecting them only to the virtual world. If skins are items
with a virtual value, using them in betting would be acceptable in most legislations’.
‘What’s Valve got to do? They may begin by preventing these incredibly popular sites to use so easily their shop’
Whatever it be, the third attorney, Ryan Morrison considers that ‘the trial against Valve will not come to anything, even if legal bases are definitely well-established. I am expecting a quick out-of-court settlement. While pointing out that the company is not beyond reproach: Valve allows you to buy and sell skins via its own website and enable gambling sites falling to comply with regulations to use its API in order to operate easily. Thus, if you have all skins (weapons belongs to Valve and the player just buys a license to use them, editor’s note), help websites to bet for them and quickly convert them to easy money… You’ve got a recipe which could be considered as rather odd! What’s Valve got to do? They may begin by preventing these incredibly popular sites to use so easily their shop’. And that is exactly what Saint Gaben, with his infinite wisdom, has just done.
Dumb et Dumber
The company’s goal is to generate benefit as much as possible with the creation of a virtual casino and Justice is not opposed to such activities, this is not really surprising to hear that. During our time, we have gotten used to living things much worse. Since CS:GO goes free to play, it needs to create a sustainable economic model. And then, each one will attempt to express moral ideas where it will be more legitimate to express them.Arguments of both sides are equally relevant, even though we realize that the youngest people are exposed to high risk of gambling and betting addiction. This is a very serious problem that we will talk about very soon in a big file for health. If Valve has made an error – through the press release it has attempted to make a confession – the company shall pay and be liable to be sued. It will therefore be interesting to monitor the judicial aftermath of this case because it raises real legal issues.
But the story would not be much fun if it had ended with ethical and legal discussions. We wouldn’t have talked about this case if it had not been for our two unrivalled champions, the famous YouTube stars TmarTn and The Syndicate Projet. With their amazing number of videos posted on YouTube – 12 million videos watched – the geniuses, we must call a spade a spade, have shown that they were successfully gambling on CSGOLotto.com, a site which allows Counter Strike players to gamble with weapon skins which have real-world monetary value.
In many videos, they heavily promoted the site which allows players to gamble these skins, almost like chips in a casino, against other players. A slot-machine-like random number generator then decides a winner. Plot Twist: TmarTn, real name Trevor Martin, was CSGOLotto’s president, while ProSyndicate, real name Thomas Cassell, was the Vice President. At no time did they deem that it would be necessary to share information. “But what I am hearing? The gambling website I recommend you is owned by me and I can rig very easily results of my online betting to get us interested in going there and spending your money ? This is crazy! I swear it’s a random coincidence! The YouTube channel h3h3productions sums up perfectly the situation and reveals the scope of this massive scam.
Are we beating a dead horse?
Given that the various betting scandals (without talking about “Moe” Assad and CSGDiamond scam or CSGO.one accused of match-fixing), it is not hardly surprising that Valve decided to put an end to all this. It may be regrettable that it has been done so late.But let us not turn our noses up. By contrast, at this stage it is still difficult to gage the implications of such a decision. Valve’s press release must in fact be read properly: “Using the OpenID API and making the same web calls as Steam users to run 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”. We are far from a high impact operation. By reading between the lines, we understand that Valve, threatened with lawsuit for its involvement with the plethora of gambling websites, was forced to claim negligence. We could hear things like: “Look, our user agreements was very straightforward: It is strictly forbidden to use our API to place any bets. Those who did that was acting against our rules – these are little snots – we therefore don’t have a hand in these irresponsible behaviors. Certainly, very little was done to prevent the system from being completely out of control but we will take steps as soon as we have completed Half Life 3!” More seriously, will Valve really be scalped and give up gambling and betting websites or is this simply a landmark with a pragmatic, judicial strategy of defense?
One thing is clear: skins market is in trouble. Everyone is selling and the skins price is plummeting. Some gambling sites have already gone belly up and it is very likely that many users will lose a big part in their bets compared to other players. We know what gambling sites can do, including the most famous. As usual, it’s the small saver who gets it in the neck! What’s going to happen when people are told the truth? The question can be addressed in two different ways.
In a cynical way :
Once the settlement agreement signed by Valve with the US legal authorities, everything will return to normal. A community based around the trading of CS:GO items as CSLounge gathers so many players for e-sport events that it would be very astonishing if skin gambling activities ceased. And let’s be honest, if CS:GO is nowadays so popular, it is largely due to online betting because most of players spend far more time on CSLounge or Opskins than servers… Accused sites will only have to find an alternative to access to the player’s inventory in order to carry on with their activity as if there is nothing amiss. It is unlikely that Valve will ban skins exchange. Among the audience (sponsors and media), money from skins exchange/bets ($7.3 million!) and moral attitudes, Valve will waste no time selecting it.
In an optimistic way :
With these different cases, to which must be added the matter of cheating, Valve Corporation is participating in a smear campaign which could be highly prejudicial for itself.Furthermore, it is in Valve’s interests to promote a clean sport without any other betting scandal.If one of the most important actor of the e-sports scene doesn’t take a short-term decision, then it will lose its golden goose which just wants to be known and respected. Valve is about to give up gambling activities in order to make more money with e-sports since it is expected to grow and emerge quickly just like other popular sports. That would seem to be a good choice. It is totally possible that betting sites generating the most audience are regulated and sites with a slot-machine-like random number generator are removed.Anyway, it is a sine qua non condition. E-sport wants to be seen as a real sport but it is unfortunate that it has been intimately involved in a scandal. It will now be necessary to weed out unscrupulous people before it is too late.
It remains to be seen which of the two approaches will prevail…