The Skinny On A Skin Betting Scandal

Valeria Stephens : June 22nd, 2016
Former CS:GO player, m0E promoted a gambling site that worked around the law.

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Rigged games and  blackmail form the core of a recent online gambling scandal, focusing on the site CS:GO Diamond and the popular Twitch streamer and former professional CS:GO (Counter-Strike: Global Offensive) player, m0E. Neither party has clean hands. The site allegedly fixed its games in m0E’s favor to make their offerings appear more exciting on Stream, but when m0E wanted to cash out his fraudulent winnings, the relationship soured.

What’s Skin Betting?

With online poker and other forms of gambling restricted to a handful of states, entrepreneurs and gambling enthusiasts look for ways to bend the rules. It’s a risky business at the best of times- depending heavily on finding legal grey areas and to identifying alternative things of value to gamble with. One such thing is virtual items in digital games, which has produced a fringe market known as skin betting.

In CS:GO, as in many online games, particularly FPSs and RPGs, players gain collectable items for their characters.  In the case of CS:GO, it’s “skins,” cosmetic changes to the player character avatars and their equipment. Although earned as a reward for play, these items can be traded among players, and with that option comes the opportunity to turn them into sellable collectables.

Some players do just that, turning good reflexes and tactical skill into hard cash. CS:GO Diamond offers an alternative to this, swapping in-game items for virtual currency. Their “Diamonds” can then be used to play dice-based gambling games, the proceeds of which can then be used to purchase other, potentially more prestigious skins. Since no money is changing hands, CS:GO  Diamond argues that it doesn’t meet the legal description of a cash based system. Of course, players can attempt to use the service to acquire more desirable skins, which can then be sold for real money, but as far as CS:GO Diamond is concerned, it’s all just play money. That’s the legal argument, anyway, yet skin betting has not been without risk or controversy.

The Scandal

CS:GO Diamond, like all skin betting sites, operates in a niche market. Their customers come from a pool of Counter-Strike players, not all of whom necessarily have an inclination to seek out gambling sites of their own accord. The sites, however, have an inroad in the form of the gamers’ favourite medium: live streams such as Twitch. Like anyone, Twitch streamers like to make money and will often accept sponsorships to promote a given product. What’s different in the case of CS:GO Diamond is that there’s damning evidence that they rigged their dice system to allow at least one streamer, m0E, to defy probability and win more often than a fair throw of the dice would allow.

We know this because m0E ratted them out. He posted detailed logs, so the evidence is pretty damning.

Unfortunately for him, m0E’s own confessions raise questions about his motivations. CS:GO Diamond needed something to make their simple dice rolling simulation seem more exciting than a random number generator bolted on to an Excel spreadsheet. However, as evident is a twitter post prior to the revelation of the rigged rolls, m0E wanted to cash out his fake winnings and made it clear they had to let him, or the story of how he earned them went public. Evidently he didn’t because we all found out.

It doesn’t matter if m0E’s own, expressed ethics seem as crooked as a corkscrew. Any site or casino that has been known to skew the odds is to be avoided like the plague in future.

But is that the only issue with these quasi-legal sites?

All online gambling that attempts to skirt restrictions is, at best, ripe for another Black Friday style crash when their luck runs out. They also tend to have at least one of two big flaws, either a giant weakness on which their ability to function depends, or a lack of regulation putting the player at additional risk.

A single point of failure for the provider.

Online game items and currencies can often translate into real world economic activity. For example, the space-faring game Eve Online has millions of dollars of virtual items locked up in their entirely imaginary world, which has led to vast offline conspiracies. WoW gold can be valuable enough to be “farmed” in parts of the world where the real-world value of the virtual currency which can be earned is in excess of the hourly rate the average worker earns in conventional employment. The trouble is that virtual currencies offer considerably less security than real dollars.

With all games, the value of items is intimately tied to the popularity of the game. New video games are released annually, and when they become outmoded, their virtual items become worthless and may even vanish entirely if the servers are shut down. CS:GO is only the latest iteration in a popular series of squad-based shooters, and will likely be supplanted by another sequel in future.

Beyond that, even if the gambling providers themselves might fly under the radar, the more valuable game currencies tend to be attached to major gaming companies with a strong incentive to shut such activities down. The video games that provide the means to play are generally available to people too young to legally gamble, so these companies don’t want their brands associated with these grey markets.

In the case of skin betting based on CS:GO, even if it gains in popularity, its existence rests entirely on Valve’s grace. As the provider of the Steam gaming service, it’s they who make it possible to accumulate and use skins for other purposes than prettying up your play experience.  If they change their Terms of Use to ban gambling with virtual items, the current level of tacit legitimacy vanishes.

Other, non-gaming virtual currencies, such as those offered by BitCoin and Linden Labs, have likewise been used for grey market gambling, relying on governments’ refusal to classify them as legitimate currencies. Such efforts eventually faced legal scrutiny, and in the former case, because of Bitcoin’s decentralized nature, even resulted in jail time in the Seals with Clubs poker site bust. In the case of Linden Labs, an FBI Investigation left the owners so spooked they’ve since banned things even resembling a casino experience.

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