CSGO Diamonds is a gambling platform where players deposit skins, convert their value to “Diamonds” and then wager Diamonds on variable-odds outcomes based on dice rolling. Diamonds can then be used to purchase skins on the site’s marketplace. One Diamond is worth roughly $1 in skins value.
The site made the announcement in direct response to the sponsored player, prominent Counter-Strike: Global Offensive caster m0E, accusing the CSGO Diamonds on Sunday of preventing moE from withdrawing tens of thousands of dollars in virtual currency.
According to the statement from CSGO Diamonds, moE and the site entered into a relationship in early 2016 whereby moE would promote the site on his Twitch stream in exchange for a percentage of site profit.
CSGO Diamonds said it made “a mistake” in providing moE with advance knowledge of game outcomes, and did so in order to make the sponsor’s stream “more entertaining.”
m0E gives CSGO Diamonds ultimatum
On Sunday, m0E, a gregarious former professional CS:GO player who commentated alongside Richard Lewis during the first three weeks of Turner’s ELEAGUE broadcasts on TBS, threatened in a tweet to “expose” CSGO Diamonds.
moE wrote that CSGO Diamonds was preventing him from withdrawing $26,000 in Diamonds on the site. He appeared to give the site an ultimatum to either allow him to withdraw the Diamonds within 24 hours, or else shine a light on something the company wouldn’t want exposed.
On Monday afternoon he uploaded a Skype conversation to Twitter:
CSGO Diamonds admits divulgence of roll results
On Monday, the website issued a response revealing on its own what it says m0E was threatening to “expose.”
From a CSGO Diamonds TwitLonger post:
“…we made a mistake with Moe and decided to tell him some of his future rolls in an effort to make his stream more entertaining on our site. (It’s important to note we did not do this with any other sponsor and, rightly so, have learned from the mistake.)”
The intent to acquire the outcomes of rolls in advance was a two-way street, according to CSGO Diamonds, with m0E asking for them at some times and the site providing them at others.
“This happened in both directions, at times we provided him a future roll and other times he would ask us for a roll result while on stream. This is what he is threatening to ‘expose’ us with, although he had a willing part in this too.”
Profit-sharing agreement terminated
CSGO Diamonds said it engaged in a sponsorship deal with m0E earlier this year in which he would cast his playing on the site for between 110 and 130 hours a month in exchange for 10 percent of monthly profits. The site also said it provided m0E with Diamonds he could wager but not withdraw.
When his casting hours dipped below that mark, the site said it wanted to either renegotiate with him, or offer him a severance payment to end the sponsorship. It was at this juncture, the site said, that m0E threatened to “expose” the site revealing its roll outcomes to him in an effort to keep his 10 percent deal intact.
The site then terminated its sponsorship deal with m0E and went on to accuse him of making defamatory statements about the site to other sponsors. From the post:
“…we decided to offer him the severance payment and part ways. He agreed to the payment and to part ways. Following this, we found out that he had been providing false, negative information regarding our site to our sponsors. He has now taken to Twitter, regarding the withdrawal of Diamonds that, as mentioned previously, were never to be withdrawn as part of the original agreement.”
Need for skins gambling regulation
Skins gambling represents not only a extremely lucrative form of esports gambling — Narus Advisors and Eilers & Krejcik Gaming estimate the global skins gambling market in 2016 will reach $7.42 billion in handle — but a highly unregulated form as well. As the overall volume of wagering expands and puts more money up for grabs, the temptation for and prevalence of unchecked malfeasance will almost assuredly grow.
Several industry leaders have called for regulation in recent months, smarting at the idea of players in some instances as young as 13 years old wagering hundreds of dollars worth of skins on the outcomes of esports competitions. There is still the absence of a recognized regulatory body that could bring stakeholders across titles together to formulate common standards and practices. This is in part because the esports industry is online-native, and therefore diffuse and fragmented across different cultures, regulatory jurisdictions and game titles.
It’s also because esports wagering represents a double-edged sword for gaming companies: Skins wagering is good for business and helps drive engagement and growth, but can open game makers to both regulatory scrutiny and, in instances like CSGO Diamonds, bad publicity.
While sportsbook-style, outcome-based wagering with market odds is the most dominant form of skins wagering, roulette, jackpot, coin-flip and other types of wagering, such as what’s offered on CSGO Diamonds, compose a multi-billion dollar sub-industry themselves, according to Eilers.
Skins are not directly redeemable for real money on sites like CSGO Diamonds, or with game maker Valve, but can be sold for cash on third-party sites. CS:GO is by far the dominant title in the skins wagering market, and is responsible for roughly 85 percent of all skins gambled, according to Naurs / Eilers. Skins from another Valve game, Dota 2, are also commonly wagered.
Protecting consumers… against companies
The focus of many of the high-level regulatory discussions involving esports has thus far been the consumer side. Common questions include:
- How does one protect players from throwing esports matches that others wager on?
- How does one establish age verification and geolocation for players?
- How does one determine the legality of players wagering skins sportsbook-style under both state and federal law?
- What type of regulatory body could be created and positioned to ensure player safety regulations?
This incident raises larger questions about regulating the operators of skins betting sites themselves, rather than just the activities of the wagerers.
The case of CSGO Diamonds is one where an operator admittedly engaged in deceptive practices. The supplying of roll outcomes to m0E to assure winning outcomes — even if m0E could not withdraw the Diamonds — nonetheless ensured a particular, and not necessarily accurate, portrayal of the game-playing experience in what is effectively online advertising.
Deceptive advertising isn’t uncommon in the gaming industry. In the case of daily fantasy sports, New York Attorney General Eric Schneiderman said he will prosecute DraftKings and FanDuel on false advertising charges despite reaching a settlement that could absolve the two largest DFS operators of other charges.
The operators portrayed their products as contests that anyone had a relatively decent chance at winning. Further research cited by the operators in court cases noted that since the games were highly skill-based, a vast majority of the winnings were concentrated in a small minority of professional users.