Deceptive practices by CS:GO Diamond may have first brought skin betting to popular attention, but it turns out that site is not the only source of trouble. In that case, it was one guy, m0E, and his troubled relationship with his sponsor site, but this new scandal involves three streamers: ProSyndicate,  TmarTn and JoshOG. They were all attached to another site, CS:GO Lotto, and their allegations are much broader.

If you’re not familiar with this sort of gambling, here’s a recap:  CS:GO lets players accumulate virtual items, which they can trade with each other. This leads to these items taking on real-life value… which some people are now gambling with. The sites that make it possible rely on promotions from pro-gamers, and advertise to adults and kids alike. It’s dubious, it’s sleazy at the best of times, and in this case it crossed a legal line.

What did they do?

All three men were involved with using their popularity and following to promote the site, and all three failed to disclose that they owned equity in the site. m0E’s dealings with CS:GO Diamond may have been dishonest, but this case is more clearly on the wrong side of the law. Despite founding CS:GO Lotto they actively downplayed their relationship to the site in promotional videos, both damaging the crediability of the seemingly spectacular wins they used to advertise the site, but more crucially, breaking the law.

If virtual items have, thus far, managed to skirt gambling laws, advertising regulation is a lot more rigid. For the protection of the consumer, the US Federal Trade Commission (FTC) regulations require social media based promotions to disclose their relationship to the product they are promoting. All three men have since back-edited their advertising videos to reflect this, but the damage has already been done.

Allegations from JoshOG suggest many other skin betting sites have blurred the line with other, as yet unrevealed promoters having stakes in the sites they promote.

Valve under fire

Valve, the developer and publisher of most of the games in question, is already dealing with two lawsuits, claiming that Valve’s willingness to allow third party websites to link to Steam-based accounts is supporting and collaborating with illegal gambling. The lawsuit is a bit of a stretch, but it’s nasty publicity, and ties in with the oft-repeated argument that digital gambling is easy to access by children.

In this case, “access” doesn’t just mean being aware of the service, it means actively being able to play. CS:GO itself is aimed at people age 13 and up and does not contain safeguards which anticipate a connection to real-money gambling. Much of the advertising for these sites targets people under the age of 18. Although opinions vary when it comes to gambling among adults, the idea of kids gambling is not a wholesome concept.

So why is Valve involved?

The trouble is that, for Valve, the real-world value of digital items is intended and important to their business model. Items are acquired, via Valve’s Steam platform, via randomized content DLC (downloadable content) packs. Although one component of the download pack, crates, are handed out as a reward for gameplay, players need to buy “keys” to open them. These keys cost real money ($2.50, to be exact) and the resulting items can be sold and traded. Although some users collect these items for their own sake, they can also be turned into points that can be used to buy games, which establishes a baseline value.

The gambling aspect is already part of the attraction of the keys. With a slot machine style interface, although every player will win something, Valve already trades on the lure of winning big. Skin betting helps this, giving more utility for otherwise intangible objects.

Nonetheless, it’s only a matter of time before this becomes a matter for new legislation, and with the current poor public reception of the subject, it’s safe to say skin betting won’t continue to exist in its current form for much longer. And I also stand by my statement that the repeated crooked nature of the skin betting site owners suggests any sensible gambling fan will steer well clear.

V Stephens has been enjoying her first month as a rookie poker reporter. Giver your feedback to @vepols.