Valve’s Prized Pot of Gold
How CS:GO turned teenage gamers into gamblers
If you’re a gamer, you’re probably aware of the recent Counter-Strike: Global Offensive (CS:GO) skin gambling epidemic, and if you know nothing about, there’s even more reason for you to read on. Pretty much everyone knows a gamer, so this issue really involves everyone. Here’s a bit of a look back at how skin gambling started and what’s in store for the future.
How did this all start?
CS:GO was released by Valve in 2012. The fourth game released in the Counter-Strike series, it has since become one of the most popular and reliably played titles on Steam, along with DOTA 2, and more recently PlayerUnknown’s Battlegrounds.
Skins were released in 2013 along with the Arms Deal update. Following the model from Team Fortress 2, Valve enabled skin drops to occur after playing games of CS:GO. The skins are purely aesthetic, having no impact on gameplay outcomes whatsoever.
CS:GO isn’t the first game to have tradeable in-game items, but the pure ease of access to and demand for the game items established an extremely successful virtual economy. This was later bolstered by the addition of weapon cases in the game. These can be sold on the Steam Market, usually for a couple of cents, but cost $2.50 to open. This in itself already flirted with gambling elements, as you’re paying money for the chance to receive a random skin (even the act and animation of opening a case in-game is reminiscent of roulette wheels).
From market to black market
As the demand and interest in cosmetic skins grew, so grew the interest in CS:GO as an eSport. The major CS:GO tournaments can garner over a million concurrent viewers on Twitch. Interest in betting and gambling on these eSport matches soon grew exponentially. While gambling on sports (including eSports) is banned in 46 states in the US and parts of Europe, American case law determined that using virtual goods to bet on the outcome of matches is legal and that existing gambling laws are not applicable in these cases.
This first took the form of allowing players to bet on eSport matches with their CS:GO skins. Sites offered odds on teams to win matches, and you placed your bets based on the monetary value of the skins you deposited. If you were successful, you’d receive back whatever skins you’d won from the jackpot; if you were unsuccessful you lose whatever skins you bet on the outcome.
Soon however, this form of gambling morphed into websites offering betting on games of chance. These sites sprouted up everywhere. Most only allowed depositing of skins, but some even allowed you to deposit actual money, a clear violation of that virtual/real line that Valve skirts. Propelling this was the YouTube gaming community, as numerous prominent YouTube gamers advertised and garnered attention about these sites, acting as partners and giving away referral codes. And thus, the black market was born.
The primary mechanism that allows these sites to operate are Steam Trading Bots. These are automated Steam users that you essentially trade your CS:GO items to, most likely for nothing — in order to receive credit for the skin gambling sites. A problem arises, however, if these sites don’t give you any site credit, or there’s a problem with the transaction. It’s very easy to have your skins stolen this way. All of these sites lacked any sort of regulation by Valve. An estimated $5 billion was used to bet on eSports in 2016. Projections saw an unregulated market growing to over $20 billion by 2020.
Concerns were raised about these sites; specifically, that their activities were potentially predatory towards younger gamers, encouraging underage gambling. More concerning was the validation of gambling behaviour by YouTube gaming personalities, many of whom are looked up to as role models by young children in today’s societies. Approval from these personalities also leads to less vigilance when going to these sites, as they have the gamers’ seals of approval.
Further advertising strategies (which I actually consider to be pretty smart) included offering free site credit for anyone who used a referral code from a friend or anyone online (sounds like a casino, gulp) and free credit for anyone who put the URL of the website in their Steam name. Other issues and problems were characterised by the legitimacy of these sites; many were simply scams that took your skins and ran. The largest ethical issue — that of underage gambling — was clear, prominent and all but present.
Even I got in on it
In order to avoid some perception of a moral superiority, I’m going to be clear here: even I got in on this skin gambling. I was first informed of the practice by some friends. I loved it at first, because the idea of being able to gamble without having to spend any actual money seemed pretty good, and also a bit of harmless fun.
It is a pretty dope feeling when you turn a 10c skin into a $2 skin, but then you realise how disturbing it is. This isn’t skin gambling. It’s just gambling. Sure, you might not be exchanging real money to bet on these sites, but the skins have monetary value. The principle is the same. The feeling you get is the same. The behaviours are the same. And the line between virtual and real is so blurred, who can really separate the two?
While I avoided blowing hundreds of dollars on these sites (as many a streamer brags of doing), I had to look at my own behaviour and realise it’s not a good road to go down. Just think about it. There’s a billion dollar industry for virtual skins. Some of these skins sell for the same price as real guns do in the US. It’s ludicrous, beyond any sort of comprehension.
This leads me to another point; none of these in game items can ever be sold for real money, and that’s what allows Valve to capitalise on the practice. Every single cent spent on the Steam Market stays in the Steam Market. There’s no operation whereby you can withdraw money from your Steam Wallet. Furthermore, hundreds of thousands of items, if not millions, are traded everyday on the Market, and Valve collects transaction fees on all of these (more on this later).
While Valve might not be making any money off these black market transactions, they’re still complicit in the actions of these sites.
The collapse of a white dwarf
Perhaps more startling than the great skin gambling rise, was the brevity with which these gambling sites collapsed. Eerily similar to the volatility of cryptocurrency, once Valve introduced more regulation, the black market imploded. In late March, Valve introduced new updates to trading, meaning that now any CS:GO items received have a seven-day cooling down period before they can be traded or sold on the market. Before this update, skins bought on the market had a seven-day cooling down period, but this didn’t apply to items traded. This meant any items you won or withdrew from the gambling sites could be sold straight away on the Steam Market. Without this, the mass exchange of skins and cases that allows the skin gambling sites to operate collapsed. As the supply contracted, so did the sites.
However, Valve’s recent move has nothing to do with their moral concern. They have a documented history of having a hands-off approach to their platform. There’s a large prevalence of hate groups present in their community, but that’s another concern. What their policy change is actually about is that dastardly Steam Tax. For those of you who don’t know, Valve actually charges a 15% tax on transactions on their market. This means if you sell an item on the market for say 8 cents, you usually only get 2 cents back. Just think about that. The reason they’ve crippled skin gambling is because they’re missing out on a billion dollar market, a huge amount of transactions they’d rather be able to charge fees on.
So let it be abundantly clear — Valve’s move isn’t an anti-gambling act, it’s simply an action to rake in more of that Steam money they’ve been missing out on. In fact, they’ve never taken a stance against these third-party gambling sites. They haven’t condemned their actions. They have attempted to directly shut down some sites associated with the skin gambling, but this has nothing to do with their moral compass. As I said, Valve doesn’t generate any profit off these third-party sites either. Even back in 2016, they refused to cease their skin trading activities when asked by the Washington State Gambling Commission. This reflects that their interests lie with the lost profits, not necessarily the predatory nature of underage gambling.
If you consider how concerning the prevalence of sports gambling advertisements during broadcast television is, and the impact it has on young brains in forming gambling behaviours, this skin gambling is an equally disturbing reality.
So, what is the caveat?
Unfortunately, it’s unlikely that skin gambling dies. As of now, these new Valve regulations only apply to CS:GO. With the recent addition of skins to PUBG, along and its even larger player base compared to CS:GO, it’s possible skin gambling rises to even bigger heights than previously.
Along with other recent public big business scandals, like the Cambridge Analytica situation with Facebook, it’s also becoming clear that today’s big corporations seem to lack an understanding of the moral responsibilities that they bear to the public. Time and time again, corporations and conglomerates don’t get the message.
While yes, it is true that Valve isn’t directly responsible for the black market sites promoting skin gambling, they’re still enabling that sort of behaviour, which leverages the frameworks they have built. Bear in mind, they introduced the cases in the first place that incorporate an element of chance in terms of rewards. They were the ones who saw a chance to make money off gamers who’d already bought there games with virtual skins. Sure, some look cool, but how can any of them be worth anything close to thousands of dollars?
Ultimately, the public, I believe, have a strong role to play. Game developers, publishers, and Valve ultimately can’t completely ignore us gamers, as without us, they have no business. The past has already shown that public discourse can sway publishers (I’m looking at you Battlefront II) and public opinion can be effective if expressed loudly enough. So what do we do? We raise our voices.
We need to be loud in condemning this kind of predatory behaviour towards young people. It might be difficult from preventing these sites existing, but we don’t know unless we try. If we don’t try, we can’t expect change from corporations like Valve. For them, it’s about the money first, and the customer second.
After all, no one wants to lose their prized pot of gold.