World’s Largest Skin Betting Site, CSGOLounge, Closes For Maintenance

Posted By Will Green on August 1, 2016 - Last Updated on January 22, 2018
[toc]CSGOLounge, the world’s largest skin betting site, shut down for what it termed “a short maintenance” on Monday morning.

Its sister site Dota2Lounge, which offers betting on the eponymous game, posted the same message shortly after. 

The moves came in the wake of Valve Corporation’s cease and desist crackdown on unregulated skin gambling on July 19. The nature of the maintenance, or when Lounge will be back online, is unknown. Site administrators did not respond to request for comment. 

CSGOLounge 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. 

If the shut down is long term, it could be a massive blow to skin betting, in which players use Valve’s API, Steam, to link their skin accounts to Lounge’s platform. Players then wager those skins on the outcome of professional Counter-Strike: Global Offensive matches.

Valve’s crackdown

Valve last week sent cease and desist letters to 23 skin wagering sites, including both CSGOLounge and Dota2Lounge. The letter informed the companies that their use of Steam for commercial purposes was unlicensed and violative

The C&D gave the sites a 10-day window to comply. That window was believed to have expired July 29, meaning Lounge still operated for over 48 hours after that time period expired. A copy of the letter can be read here.

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 commented on the authenticity of that letter.

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A previous notice posted by Valve’s Erik Johnson earlier in July specifically identified the commercial activity it wishes to prohibit as skin gambling. 

The initial reaction from other sites varied from compliant to combative. If both Lounge sites shut down completely, they would be the 12th and 13th to do so, respectively, of the sites named in the initial C&D. 

Another sportsbook-style skin betting website, Fanobet, appears to be continuing operations. The Curacao-based website blocks US users from its site.

CSGOCenter, a skins sportsbook which was also not named in the C&D but which does accept US customers, remains operational as well.

A fallen giant?

Lounge had been the undisputed industry leader in the skin betting space since it was created in 2013 by a man named Robert Borewik.

According to data compiled by ESBR, Lounge is estimated to have processed 90 million skins in betting handle in the first half of 2016. That number was likely boosted by the site’s recent decision to increase the maximum number of skins per bet from four to six.

A recent ESBR analysis put the average third-party market value of a skin at $9.75 (skins range in value from one cent to thousands of USD). 

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

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

The Narus report, citing Google Trends data, found that for most of 2015 there were a greater number of searches for “CSGOLounge” than there were for terms like “FanDuel,” the world’s largest DFS operator, or for “PokerStars,” the world’s largest online poker site.

Not without controversies

Lounge was one of three skin websites named in a recent lawsuit filed by a Connecticut man against Valve, accusing the company of being complicit in what it called an illegal gambling market.

While the lawsuit likely faces an uphill climb in the courts, it did claim that Valve knowingly allowed Lounge to link to Steam for purposes of facilitating commercial activities.

In early 2015, Valve 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. 

A subsequent investigation found that seven members of the iBUYPOWER team used “smurf accounts” on Lounge to make the wagers, and then conspired to throw their match. Valve explicitly bans professional CS:GO players from wagering on their own matches. 

Lounge did not face any public repercussions for having its platform compromised by match-fixers, and in September of 2015 even sponsored a professional CS:GO team. The organization only existed for eight months before parting ways with its roster.

Noteworthy timing

Lounge’s shut down came less than 48 hours after the Season 1 championship of Turner & WME/IMG’s ELEAGUE, a high betting volume event that fell outside of Lounge’s original ten-day window to comply with the C&D.  

By staying open through this past weekend and not shutting down on July 29, the site took in a total of 650,000 extra skins, over half of which were bet on the ELEAGUE’s final three matches. 

Other CS:GO events have even dwarfed that per-match figure. The year’s largest CS:GO tournaments, such as ESL One Cologne, took in an average of 178,000 skins per match on Lounge, while April’s MLG Columbus took in an average of 161,000 skins

It remains to be seen if Lounge will go the way of certain sites like CSGOFast, which shut down recently without apparent intent to pivot to a new product, or of CSGOBig, which hinted at a return with a new product.

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