The CSGOBig announcement
CSGOBig, which offers a number of casino-style games, made the announcement late on Tuesday night, on the heels of a cease-and-desist letter being issued by Valve to nearly two dozen skin gambling operators:
— CSGOBig 🌐 (@CSGOBig) July 20, 2016
Here is the full statement from CSGOBig:
We are writing to let everyone know that we have disabled deposits and we will be shutting down temporarily to comply with Valve’s terms of service agreement here: https://drive.google.com/open?id=0B1EkBkEqPo3zbTdjWDJIRlJWbUE
Do not worry, we are only shutting down temporarily and we will definitely be back soon, so stay tuned. We are posting this as a PSA for everyone to be aware that other sites are affected too (please see attachment) and anyone who has items on other sites SHOULD withdraw them if they claim they will continue to operate.
We will keep everyone updated as we go and we are and have always been grateful for all your support. Thank you.
The latest site to shut down
A number of skin betting sites have shut down — either for good or temporarily — in recent days, including CSGODouble and CSGOWild.
Those actions came after Valve indicated it would “start sending notices to these sites requesting they cease operations through Steam, and further pursue the matter as necessary.”
Valve is trying to distance itself from the skin betting industry, which has come under increasing scrutiny for its legality in the U.S. and elsewhere, scrutiny fueled by a number of high-profile scandals and class action lawsuits filed against Valve regarding skin betting.
Just temporarily for CSGOBig?
How — and in what form — CSGOBig would reopen is unclear. But it is not the only site that has taken the tack that a shutdown and a suspension of deposits was not a permanent solution.
CSGOWild had hinted at pivoting to a new type of product without saying exactly what it had planned. It had already left the US market.
CSGOBig just said it would be “back soon,” with no indication of how such a return would be possible, and if its product would be the same.
On its website, CSGOBig says nearly $1 million in skins have been wagered over the past 24 hours.
That’s per a copy of a cease and desist notice that appears to be from Valve, a notice that targets 23 individual skin betting sites.
ESBR has not been able to independently verify the authenticity of the letter, but it was also publicly posted by a major skin betting site.
That site, CSGOBig, posted the letter as part of an announcement regarding the site’s decision to “temporarily” shut down “to comply with Valve.”
Focus on “commercial use”
The letter (text below) centers around alleged violations of the Steam Subscriber Agreement concerning use of Steam accounts for commercial use.
The terms contain multiple prohibitions on commercial use of accounts, including under Section 2 (Licenses):
Steam and your Subscription(s) require the automatic download and installation of Content and Services onto your computer. Valve hereby grants, and you accept, a non-exclusive license and right, to use the Content and Services for your personal, non-commercial use (except where commercial use is expressly allowed herein or in the applicable Subscription Terms).
That specific language was absent from Valve’s initial announcement of the company’s decision to block skin gambling sites from utilizing the Steam platform.
It also raises the question of whether Valve’s action will extend to non-gambling businesses that utilize the Steam platform for commercial purposes.
All types of products targeted
The list of sites included in the cease and desist includes leaders in most major skin betting product categories.
The letter also answers a question that has been floating around the CS:GO community in the aftermath of Valve’s initial announcement: Would CS:GO Lounge be included in the crackdown?
Lounge is the clear market leader among skin-based sports betting sites, which is the largest segment of the overall market for skin betting.
Some speculated that Valve might draw a distinction between what is effectively a peer-to-peer betting system and the casino-style games offered by other skin gambling sites, especially given the apparent interplay between betting skins on esports matches and viewership.
Assuming CSGO Lounge complies, companies that offer cash-based esports betting could see a material spike in demand. Skin-based betting on esports matches is roughly six times the size of cash-based betting on esports in terms of total amount wagered.
Text of the letter
Re: Violations of Steam Subscriber Agreement
Sites included in the letter
The UKGC already allows its licensees to offer esports betting, but it expressed concern over several areas of the growing market.
The UKGC noted that it was not alone in considering the issue:
“The growing market in esports and computer gaming has scope to present issues for regulation and player protection – issues which are being examined by gambling regulators in other international markets.”
Industry growth makes esports betting impossible to ignore
The report introduction by UKGC CEO Sarah Harrison lists esports as one of the “emerging products” in the industry. From its current global base of $594 million in annual revenues, Eilers & Krejcik Gaming estimate that real money esports betting will grow to over $10 billion in the next four years.
Each figure is the base case scenario in the report “Esports & Gambling: Where’s The Action?”
The bullish case sees growth to $13.6 billion by 2020, and that excludes the value of skin gambling which was estimated to grow from $7.4 billion this year to $19.7 billion by 2020—both figures the base case.
The potential for skin gambling has probably taken a big hit with the decision by Valve to shut down access for skin gambling sites to its Steam platform, but even so the figures for the industry are likely to be staggering.
It is this phenomenal growth trajectory that has lifted esports betting up the priority list for the UKGC, and other regulators around the world.
Skin trading, the line between social gaming and gambling
The UKGC report’s comments about esports are sparse, as it is clear that the UKGC is still in the process of understanding the key issues.
“These issues range from the emergence of real money esports betting markets, to trading in-game items which blur the lines between gambling and social gaming. Our focus will be to understand developments, including engaging with key stakeholders, and we will work wherever we can to ensure the risks associated with these, particularly to children and young people, are minimised.”
It can be expected that the UKGC will work with the new UK governing body for esports, the British eSports Association (BEA).
The BEA will work to the Department for Culture, Media and Sport (DCMS). The DCMS is also the parent body of the UKGC.
Several other quasi governing bodies have been established by the private sector, including the UK based Esports Integrity Coalition (ESIC); the World eSports Association (WeSA) and the World eSports Council (WeSC).
All are likely to be keen to help the UKGC in its process of understanding the issues surrounding esports competitions and betting, but there is the strong possibility that these private sector bodies may provide conflicting advice.
Match fixing is a wider priority for the Commission
Sarah Harrison sees the problem of game integrity and match fixing as a wider issue that affects many betting products.
“We will continue to focus on giving consumers confidence that markets are not rigged, or subject to fixing, and otherwise are kept free from crime.”
She sees this objective as being achieved through a strong partnership between the regulator and the industry.
“Keeping crime out of gambling, preventing unlicensed gambling, and maintaining integrity, for example in relation to sports and sports betting, are highly dependent on strong partnerships and effective powers. We will continue to use these to the full.”
For the UKGC, the “onus will be with the operator to use the very same approaches that are used to design products and understand customer ‘profitability’, to guard against crime and problem gambling.”
The lessons learned from other sports betting activities are highly likely to form the basis of controls over esports, although the particular nature of esports may merit additional regulations specific to the activity.
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