CSGOLounge To Limit Skin Betting, Says It Will Acquire License

Written By Will Green on August 1, 2016

[toc]Nearly four hours after it went offline for maintenance, skin betting giant CSGOLounge returned to operations and announced it would limit betting functionality to users from countries where online esports betting is legal.

It said it planned to acquire a license to legally operate its esportsbook-style betting on CS:GO matches as if it were accepting real-money bets, signaling a potential move toward operating as a regulated sportsbook.

Lounge had previously facilitated skin betting worldwide, often in a legal grey area.

The announcement, signed in part by site founder Robert Borewik, said users from 18 countries—including the United States, the United Kingdom, France, Spain, Belgium, Scotland, Turkey and Israel—would no longer be able to access the site’s betting feature, but would still be able to deposit and withdraw skins.

The site’s popular skin trading platform will remain open to users everywhere.

Move follows Valve crackdown

The decision comes in the wake of Valve Corporation’s cease and desist crackdown on unregulated skin gambling on July 19. The game maker told sites that use its API, Steam, to facilitate commercial gambling purposes that they were in violation of the platform’s terms of service.

The C&D gave 23 named skin gambling sites a 10-day window to comply with its order to stop using Steam to facilitate skin gambling. Lounge, the first site named in the notice, still operated for more than 48 hours after that time period expired.

The initial reactions from other sites named in the C&D varied from compliant to combative, with nearly a dozen sites shutting down.

A second C&D from Valve was allegedly sent to 19 additional skin gambling sites on July 29, according to sites that said they received the letter. Valve has not confirmed the authenticity of that letter.

Other skins sportsbooks, such as Fanobet and CSGOCenter, were still operational on Monday.

A ‘confusing’ response

Lounge’s notice said Valve’s actions had created a “confusing” situation surrounding skin betting, and emphasized that virtual items such as skins in both Counter-Strike: Global Offensive and Dota 2 have no monetary value.

Nonetheless, Lounge said it would force users to comply with an updated version of its own terms of service.

It re-emphasized that users must be 18 years old to bet, but because it enforces age verification on the honors system, the barrier to entry for younger players is easily subverted.

“The situation is highly confusing – we are not offering games of luck, we are not offering any transactions with real money or equivalents,” Lounge’s note said, adding that it had no profit interest in skin betting and that its service was intended as entertainment.

The site also maintains that, unlike a traditional sportsbook, it did not collect any commission on bets that it transacted in June 2016. The site has been in operation since late 2013.

Third-party marketplaces like OPSkins facilitate the transfer of skins to real money, and vice versa.

A recent ESBR analysis put the average market value of a skin at $9.75. Skins range in value from one cent to thousands of dollars.

The largest skin betting site in the world

According to data compiled by ESBR, Lounge is estimated to have processed more than 90 million skins in betting handle on CS:GO matches in the first half of 2016 alone.

Lounge is the largest skin betting website in the world. Even through the tumultuous month of July, the site still took in more than 12.4 million skins worth of bets over 130 matches, including one million skins in the past three days.

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2016’s largest CS:GO events, such as ESL One Cologne and MLG Columbus, each took in an average of over 160,000 skins per match on Lounge, according to data scraped by ESBR. Each tournament featured 27 matches.

The site most recently took in a combined total of 6.5 million skins in handle over 103 matches of Turner and WME/IMG’s ELEAGUE, which concluded Saturday afternoon.

A recent report from Narus Advisers and Eilers & Krejcik Gaming projected prior to Monday’s notice that the site’s betting handle would increase by 35 percent year-over-year.

Not without controversies

The site has not existed without some controversies, though. It was one of three skin websites named in a recent lawsuit against Valve, accusing the company of being complicit in what it called an illegal gambling market.

In early 2015, the game maker banned seven players from Valve-sponsored competitions for life after they were found to have placed high-value bets via Lounge on their own match, which they then attempted to throw. 

Lounge did not face any public repercussions for having its platform compromised by match-fixers, and in September of 2015 even sponsored a short-lived professional CS:GO team.

Despite a barebones design and simple infrastructure, Lounge also enjoyed strong brand loyalty and consumer recognition.

In 2015, there were a greater number of searches for the term “CSGOLounge” than there were for terms like “FanDuel,” the world’s largest DFS operator, or for “PokerStars,” the world’s largest online poker site.

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