White Paper: What You Need To Know About Esports Skin Gambling

Posted By Joss Wood on July 28, 2016 - Last Updated on January 22, 2018

[toc]The esports media and even some of the sports betting media have made skin gambling front page news recently, as various controversies have brought the previously obscure activity out of the shadows.

To help illuminate the situation for those in the industry who are not completely up to speed with skin gambling developments, ESBR has produced a white paper, “Understanding Skin Gambling,” which explains the essentials of the new betting segment.

The six page paper plus two short annexes covers skin gambling succinctly, but with enough detail to ensure readers can obtain a thorough understanding of skin gambling in the minimum time.

The white paper is available here.

Contents

Overview

The overview explains what skins are, how players acquire them and how they can use them to gamble.

Counter Strike: Global Offensive skins make up around 80 percent of all skin gambling.

The overview consists of four sections:

  • What are skins?
  • How do players acquire skins?
  • How do people bet skins?
  • How large is the market for skin betting?

Using data from Eilers Research, the white paper provides a snapshot of current demand:

skin betting market size

 

The paper notes that future growth is likely to be reduced substantially by the decision Valve took in late July to stop skin gambling sites using its Steam platform. Skin gambling operators used the platform as an essential technical means for skin trading.

Skin betting: industry timeline

A brief history of skin gambling is provided demonstrating how recently and rapidly the industry has developed. A summary of skin gambling products and providers is provided in Annex B.

Introduction and recent controversy

The recent chain of events which led up to Valve’s dramatic exit from facilitating skin gambling dates back to May 2016, when CSGOStakes closed with no notice, failing to reimburse players who had skins or site credit still on deposit.

There is a brief note on each subsequent key event until Valve finally issued “cease and desist” letters to 23 skin gambling operators.

Skin gambling and the law

A summary analysis of the US laws which may bear upon skin gambling’s legality is supported by some case law and opinion.

Skin gambling may be legal, but it remains vulnerable to challenge, and specific actions by skin gambling sites might transgress consumer protection laws.

Key takeaways for the commercial gambling industry

For the industry, one essential message is that skin gambling is a big thing. The white paper notes that total handle for skin gambling in 2016 could easily exceed that for DFS.

The millennials whom gambling operators are targeting gamble differently than older generations. Operators that fail to understand the new gambling culture may be making a serious mistake.

The white paper breaks down the issue into three areas of focus:

  • Strong demand for gambling exists among esports fans.
  • That demand may not be obvious through the prism of traditional gambling.
  • Focus on speed, simplicity, social (and skins).

The white paper is free and can be downloaded here.

Joss Wood Avatar
Written by
Joss Wood

Joss Wood holds an English degree from the University of Birmingham and also earned a master’s degree in organizational development from the University of Manchester. Joss has a special focus on the international online gambling market, though he also writes extensively on US regulated markets, sports betting, and esports betting.

View all posts by Joss Wood