[toc]Nearly 60 pages of Skype chat logs between the supposed owner and paid developer of a skin gambling website appear to illustrate dozens of requests by the owner, who gambled personally on the site and streamed his activity to tens of thousands of followers at a time, to obtain the outcome of jackpots so he could improve his personal odds of winning.
The logs took place over a seven month period during the second half of 2015 and early 2016. They appear to reveal that James Varga, known in the esports space as PhantomL0rd, is an owner of CSGOShuffle, a skin gambling site that allowed players to wager skins in a jackpot, with winners being selected at random.
The conversations in question are between Varga and his business associate at Shuffle, a France-based web developer and esports gambling entrepreneur named Joris Duhau. According to DomLab, Duhau registered the domain CSGOShuffle.com.
Esports journalist Richard Lewis provided the chat logs to ESBR after receiving them unsolicited, he said, from a hacker who was attempting to penetrate Shuffle’s back end for monetary gain and, in doing so, compromised Duhau’s Skype account.
Shuffle has been offline in the United States since this past weekend, when Lewis’ initial video was published. Shuffle was not among the 23 skins sites mentioned by Valve in its cease and desist letter sent Tuesday evening.
Assuming the logs are accurate, legitimate, and reflective of the actions represented therein, they reinforce several themes that have arisen in the unregulated skin gambling industry.
Skin gambling sites do business with daily fantasy esports sites
The logs suggest that former daily fantasy esports website Vulcun attempted to purchase Shuffle, and actually did purchase CSGOJackpot, in 2015. An independent source has verified to ESBR that both details are true.
Varga noted at one point in the logs that Vulcun, which was in discussions with Duhau and not Varga, wanted to purchase Shuffle for something approximating $20,000. Both Varga and Duhau scoffed at this offer, and negotiations according to multiple parties did not get past the initial stages.
[geoip2 region=’ROW’][show-table name=betway][/geoip2]
DFeS operators, similar to larger DFS operators, staunchly stand by the characterization that their product does not constitute gambling. That evidently did not stop Vulcun from purchasing a website that definitionally offers a gambling product.
The logs also discuss a 2015 promotional agreement between Shuffle and another DFeS site, AlphaDraft, where users were entered into a drawing to receive a free skin if they signed up for an AlphaDraft account, or engaged with Shuffle’s social media accounts.
Casting fuels advertising, which fuels gambling, which fuels referral fees
The chat logs between Shuffle’s operators again illustrate how streaming one’s activity on the site is considered the dominant form of advertising in the industry. This type of streaming by Twitch users with large audiences appears to not only raise awareness of skin gambling sites, but also increases legitimacy and drives traffic.
Varga and Duhau’s repeatedly reference a broad network of paid streamers—with names like ‘care,’ ‘hotted’ and ‘chelxie’—who advertised Shuffle. Those streamers appear to have been paid varying amounts in skins based on the amount of followers they had. Hotted pulled in $16,000 in skins per month, while chelxie earned $2,500 in skins per week.
Duhau also proposed working with a streamer named Yacine Laghmari, a Swede who is known for his streaming of Ninjas In Pyjamas’ professional CS:GO matches.
Varga appeared more consistently bullish on the need to aggressively advertise through these streamers, while Duhau advocated multiple times for ending business relationships with various streamers who he felt weren’t earning what they were being paid.
Duhau also expressed skepticism over sending Varga such a large amount of skins (essentially, house money) for him to bet and advertise with. The two had a disagreement prompted by Varga stating he was streaming to 24,000 people and wanted more skins to bet with.
“What about routing all the skins we earn to you? so that you can bet them all?” Duhau sarcastically quipped.
“Not wanting to capitalize on a unique moment of massive advertising is silly you should know better,” Varga responded.
Owners of skin gambling sites often play on their own site
Varga’s comments, specifically about paying Duhau money and referring to the business as “ours,” reinforce the idea that he’s an owner of the site and that Duhau was either a paid partner or a paid employee. Assuming this is true, Varga’s ownership role in no way dissuaded him from gambling on his own website.
Repeated dialogue from Varga to Duhau, who provided Varga with the percentages of jackpots whenever Varga asked, suggests that Varga felt it was vital not only for popular streamers to advertise the site by playing on it, but that it was vital for him to personally do so.
This resembles the activity that CSGOLotto owner Trevor Martin engaged in, when he advertised for Lotto by streaming his repeated winnings on the site.
Varga identified Lotto, along with CSGOWild, in the logs as potential rival businesses, and said he was “talking to both looking into what they’re doing and if its a threat or not.”
Some quotes from that illustrate Varga’s role conflation between administrator and consumer include:
“so give me skins so I can advertise to 26,000+ people.”
“I need skins for todays stream. care went to sleep. or else i can’t promote shuffle today.”
“need some help winning a few rounds lost a 10k one.”
“I’d like to fail snipe a round tell me when the % is low”
“mind helping me win a few rounds?”
Admins can signpost odds of winning for employees playing on site
As we see above, Varga told Duhau to deposit skins into his account so that he could gamble with house money. Varga also repeatedly asked Duhau to tell him percentages of jackpots that significantly increased his odds of winning.
Before users participating in a given jackpot deposited skins into that jackpot, an automated system on the site’s back end would pick a percentage that it would not disclose to the participants. That percentage would help signpost, but not ultimately determine, who would win.
If the percentage on a jackpot was 50 percent, and its total size was $1,000 in skins, then the person who deposited the skin that pushed the value of that jackpot past the $500-mark would be selected as the winner.
Obtaining house skins and these percentages from a back-end user almost identically mirrors m0E’s behavior as a sponsored player on CSGODiamonds, when he would request skins from the house to play with, as well odds of winning dice rolls.
Owners are not compelled to disclose ownership position or use of house money
It does not appear that Varga disclosed to anyone who he was playing against, or his video audience, that he was playing with house skins or that he owned Shuffle. It is not known how many skins Varga won on the site, or if Varga cashed his skins out on third-party sites for real money.
This again invokes themes from the Lotto scandal, in which that site’s owner did not disclose his ownership position, instead claiming to viewers that he stumbled across the site.
Varga, however, did appear to be aware of the poor optics of gambling on one’s own site. After entering the day’s largest jackpot on Aug. 30, 2015, he asked Duhau to delete portions of his gambling history on the site because it looked “really bad.”
Duhau also appeared compelled to send Varga whatever he requested because he was in a paid working relationship. The logs contain multiple references to payments and international wire transfers from Varga to Duhau’s French bank, plus detailed requests for and discussions of Duhau’s personal bank account information, which Varga would need in order to compensate Duhau.
The payments and working relationship also indicate Varga had some level of ownership over the site.
Operators knowingly offered gambling product in ‘legal gray area’
User data for Shuffle referred to in the logs by Varga illustrated that its user base was one-fifth American. Countries like Germany, Sweden and Norway also made up material portions of its customers.
This traffic data was referenced on Sept. 17, 2015, around the time U.K. regulators sent a letter to skin gambling sites that told them they needed a license to operate. Comments from Varga suggest Shuffle was one of the sites in direct receipt of the letter.
Duahu said in the logs that he found the announcement was troubling, and was worried about his nominal complicity in offering a skin gambling product in Great Britain. While he strategized ways to mitigate potential fallout, Varga took a more reassuring approach, saying it “was bound to happen” and that they should prioritize blocking U.K. customers, and then move on.
At one point Varga suggested moving Shuffle’s servers out of the U.S. and to a country “where it is legal,” suggesting a clear knowledge of the product’s non-legality.
Varga noted that it was impossible to 100 percent block people from certain countries due to bettors’ use of a VPN to access Shuffle. He also explicitly spoke to Shuffle’s legality and noted the possible need to “lawyer up.”
“People will VPN if they want to play. And if they take any further action we lawyer up and take them head on. You’re fine, they don’t have any laws on this specifically acting as a secondary currency. And I know this because of the other business partners I speak with. It’s a gray area not regulated at all around the world. If they want to take action that’s something they’ll have to do vs valve.”
– James ‘PhantomL0rd’ Varga
Many skin gambling, skin betting and skin marketplace sites, including CSGOBlackjack, Fanobet and OPSkins, respectively, continue to offer their products around the world (although Fanobet restricted U.S. use four months prior to Valve’s announcement).
Those three sites were not among those mentioned in Valve’s cease and desist letter.
Gambling sites use bots to transfer skins, OPSkins to cash out skins
The second claim of wrongdoing in Valve’s announcement earlier this month said gambling sites used bots to facilitate the transfer of items between the house and wagerers.
The chat logs directly refer to this practice of utilizing bots to move skins around, including to Varga personally.
Varga would remind Duhau at various points, saying things like, “all bots are full,” “I’m out of skins, I need more and for the bot to not give me such expensive ones,” and “I’d like for you to setup a bot to add 3k over the week so like 450 a day.”
The site also appeared to use third-party marketplace OPSkins to liquidate its large amount of skins. Duhau in early August noted that the site had $298,000 in skins on the site, and Varga responded that he was in contact with someone at OPSkins.
At one point Varga pondered whether to ask OPSkins if it would allow Shuffle to sell more items faster. Duhau also referenced making “the thing for selling the skins.” It’s unclear if that referred to a system of bots or something else.
Steam has previously interacted with, combatting gambling sites
Conversations between Varga and Duhau reveal that Steam was aware of Shuffle and actively restricting it as early as this past January, over six months before its parent company asked sites to stop using the API.
Duhau noted that Steam did not like Shuffle because Shuffle used a second, shorter domain in an attempt to bypass Steam’s filters. When that second domain was blacklisted, Varga attributed Steam’s combative attitude to Shuffle’s aggressive use of a referral system, and said that sites like CSGODouble were blocked as well.
Duhau responded to this theory with: “There’s no referral system there’s just a moron at steam targeting us for no reason.”
“This was 100% set manually by someone from steam even if there’s no more codes spam,” Duhau said.
These comments would appear to highlight Steam’s capacity to block select sites from using its API, an approach it still could take in the event gambling sites don’t heed its cease and desist letters.
It’s also reflective of Steam’s relationship with the skin gambling economy: It controlled the spigot all along. It only just now turning it off.