Skin Betting Crackdown: A Dozen Sites Rebuff Second Valve Cease And Desist Letter

Posted By Will Green on August 10, 2016 - Last Updated on January 22, 2018

[toc]If Valve Corporation did in fact send on Jul. 29 a second cease-and-desist letter to 20 skin betting sites demanding they stop using its API to facilitate gambling transactions, it has not initially proven effective.

The letter was first reported by Portuguese website Fraglider but its authenticity was not verified. The letter gave a 10-day period for the named sites to comply with its order to shut down, a window that apparently expired Tuesday.

An ESBR analysis found that 13 of the 20 sites were either still operating normally or close to normally.

Two of the 20 sites had already shut down prior to being named in the letter, while two others shut down as a result of the letter.

The final three sites have temporarily shut down but vowed to return soon with a more compliant product.

CSGOShuffle was among the more notable sites the second letter named.

The site became embroiled in an insider-gambling scandal when one of its operators was found to have wagered on the site using proprietary knowledge. Shuffle was also recently named as a co-defendant in a skin betting class-action lawsuit against Valve.

The letter also named skin betting sportsbook Fanobet, and one of the oldest skin gambling sites on record, CSGOJackpot.

Some sites named in the letter initially questioned its legitimacy. Valve did not respond to requests for comment about the letter’s authenticity.

The second C&D brings the total number of named skin gambling sites by Valve to 42 (roulette site CSGOStrong was curiously named in both the first and second letters).

The second letter comes after a July 19 C&D of the same variety that named 23 gambling sites.

Here is how the 20 sites named in the second C&D have reacted to the order to stop using Steam to facilitate gambling.

Two sites have shut down

CSGOStrong

CSGOStrong was operating normally until Aug. 8, at which point it acknowledged it was having a problem with its servers.

Attempts to log on to the website Tuesday and Wednesday were unsuccessful. The site was also named in the first C&D. It sent messages to users telling them to stay “strong,” and a moderator maintained the site would not be shutting down.

Despite taking no action during the 10-day period of Valve’s first C&D, Strong did alter its currency system. Instead of directly accepting skins through Steam, it made bettors deposit skins at a third-party site to convert them into coins, and then use those coins to gamble on Strong.

Such a workaround apparently proved unsuccessful.

CSGOJackpot

CSGOJackpot announced on Aug. 6 it would stop offering games on Aug. 7, and that it would close entirely on Aug. 24. Citing reasons beyond its control, it urged players to withdraw their skins by Aug. 11 and said skins that were abandoned by players would be lost.

The site’s tweets indicated pressure was being put on its trade bots, which other sites named in the crackdown reported being mysteriously banned.

The day after Jackpot shut down, it tweeted about a new virtual currency, GamerDollars, saying that “the future has arrived #csgo #lifeafterskins.” It’s unclear what the reference to this non-skins currency alluded to. It did not announce what its future plans would be.

Two sites had already shut down prior to the second C&D

CSGOShuffle

CSGOShuffle shut down prior to Jul. 29, and the site is gone.

The site’s owner, James ‘PhantomL0rd’ Varga, was implicated in a gambling scandal on his own site. Hacked Skype logs revealed he gambled on his own site with unlimited amounts of house money, and that he asked his web developer to feed him the “percentages” of the website’s jackpots, dramatically increasing his chances of winning.

Csg0

Csg0 shut down prior to Jul. 29, and the site is offline. Once users log in through their Steam account, the site only displays two lines of php text. It’s not clear if the site has any future plans.

Three sites shut down temporarily but have teased a return

CSGODices

CSGODices already ceased operations over three weeks ago, before even the first C&D was sent, saying it would only allow withdrawals from here on out. But a countdown ticker on the Romanian site’s home page teasing a return to the marketplace threw the site’s future into confusion.

A tagline atop its site reads “Coming Back Soon. No gambling. No losers. Only winners.” The clock had been ticking down to the afternoon of Friday, Aug. 4, for at least a week.

Now, that clock is ticking down to the afternoon of Wednesday, Aug. 10. The ticker indicates the site had already planned to return to the market before Valve sent its second C&D.

CSGOBubble

CSGOBubble shut down on or before Aug. 8, the day before the second C&D’s window was set to expire.

An announcement on the site read in part, “After receiving the Cease&Desist letter from Valve on July 29, CSGOBubble kept operations going forward and allowed users to enjoy their time here.”

It advised users to stay tuned because it would be back with a “totally new” product. It previously tweeted that it had received a copy of the letter, but did not indicate whether it would comply or appear to take any action to reform its product.

[show-table name=betway]

CSGOSpeed

CSGOSpeed announced Aug. 2 it would shut down Aug. 7“Our intention is to return with an alternative that complies with Steam’s Terms of Service and Subscriber Agreement,” the notice said. On Sunday it characterized the shut down as a “pause.”

Speed tweeted July 30 that it had received a copy of the second C&D from the email address [email protected] on July 29, but then said that it believed the correspondence was fake, apparently justifying the claim with an image of several lines of code.

It’s unclear why CSGOSpeed changed its mind as to the letter’s legitimacy. 

Three sites are operating normally but preventing some Steam log-ins

CSGOHowl

CSGOHowl appears to be operating normally, although repeated attempts to log in to the site over the past week via Steam were denied.

CSGOHowl.eu, the European counterpart to its .us website, voluntarily shut down in the wake of Valve’s Jul. 13 warning salvo. CSGOHowl.us was the only Howl site named in either C&D.

CSGO.One

CSGO.One appears to be operating normally, although repeated attempts to log into the site over the past week via Steam were denied.

CSGOFade

CSGOFade appears to be operating normally, although repeated attempts to log into the site over the past week via Steam elicited a blank white screen.

10 sites are still operating normally

CSGOBetting

CSGOBetting appears to be operating normally. This website was one of the most outspoken in the wake of the second letter, which it was among the first to publicize.

Despite being one of the 20 parties named therein, and despite posting the letter, the affiliate site said it had not received the second letter. It tweeted that it suspected the letter was forged.

The site said it welcomed any action by Valve, but expressed confusion over why it was named at all, since it has never operated any gambling service and has never utilized Valve’s API.

“We solely advertise regulated and licensed bookmakers and other gambling sites, such as casinos, who comply with the laws of the United Kingdom, United States of America and Australia,” it wrote in a post.

An announcement on the site that predates the second C&D says that Valve is cracking down on skin gambling, and urges people to sell their skins and take their business to a regulated sports book.

Kickback

Kickback appears to be operating normally. It also stands out from the rest of the sites named for allowing players to win either cash or skins by actually playing Counter-Strike: Global Offensive, either in 1v1 or 5v5 match-ups.

The site would appear to facilitate head-to-head wagering as opposed to esportsbook betting, but using skins instead of cash. Nevada and New Jersey have regulations that authorize head-to-head wagering at licensed casinos.

The American site says it partners with PayPal to process cash withdrawals. Instead of prompting users to log in with their Steam account, which most skin gambling sites do and is the improper use of which is at the heart of Valve’s C&D, Kickback also employs an email-and-password style log-in system.

CSGOPolygon

CSGOPolygon appears to be operating normally, despite the fact that a July 14 announcement on its Steam group in the wake of the first C&D said it would “either close the site and allow withdraw of every single coin or most likely make an alternative system!”

“Do not panic,” the announcement continued. “If our site will have to be close which we doubt… all users will be able to withdraw their coins!” Its future plans are unclear.

Fanobet

Fanobet appears to be operating normally. The skin betting sportsbook has not offered its product to US customers since March, citing the Unlawful Internet Gambling Enforcement Act of 2006.

CSGOPoor

CSGOPoor appears to be operating normally.

Its website has posted since late July an announcement reading, “CSGOPOOR is NOT going to close and will be always online, tell your friends! No one is going to get banned for playing on the site!”

Others

CSGOMoment, CSGOBestPot, CSGOBetbig and SkinArena all appear to be operating normally, facilitating skin gambling through players’ Steam accounts.

What about the first C&D?

The second C&D follows an initial C&D sent July 19 that named 23 sites. Those sites named in the first letter have reacted differently from those named in the second one.

11 of those sites have shut down entirely

Three sites have temporarily shut down but teased a return and say they are amending their product to comply with Steam’s terms of service.

One site already shut down completely, said it has amended its product to comply with Steam’s ToS, and relaunched.

Two sites, including global skin betting leader CSGOLounge, restricted certain betting features to players in certain countries, and said they will apply for a gambling license to be able to return to those markets.

Two sites, including the controversial CSGOLotto, are not currently offering skin gambling, but have not shut down either, instead saying for several weeks that they’ve been under “maintenance.” While their online infrastructures remain in place to theoretically re-offer gambling, their future plans remain unclear.

The four remaining sites that took no action in the letter’s aftermath have all been curiously brought to their knees.

Two sister sites seem to be experiencing extended problems with their servers. Two other sites, both of which previously posted bold notes on their homepage saying they would not shut down, are now telling bettors that their bots were mysteriously suspended.

Since bots facilitate the mechanical transfer of wagered items to and from bettors, those sites are not operable.

Valve engaged in game of cat and mouse

Regardless of the second letter’s authenticity, the 42 total named sites’ divergent reactions underscores a skin gambling market that is diffuse in nature.

It also foreshadows potential intransigence Valve could face if elects to combat skin gambling solely with a cease-and-desist approach.

As it sends out a new cease and desist letter, new skin gambling sites emerge or other existing skin gambling sites aren’t named. For every site that shuts down, there seems to be another still operating.

Some prominent skin gambling sites not named in either C&D are still operating include CSGOBlackjack, CSGOHunt, CSGORage, CSGOCenter, and CSGOAnalyst.

Because Valve owns Steam, owns all skins, and controls the ecosystem in which skins exist and derive value, it could of course take a much more direct approach and shut down or restrict access to these sites’ Steam accounts.

Such an action would more succinctly eliminate sites’ ability to facilitate skin gambling, but could present other issues for the game maker, such as altering its long-held belief that its API should be “open” to public use.

Skin betting activity nosedives as sites reach for workarounds

CSGOLounge’s decision in the wake of Valve’s C&Ds to no longer offer its betting product in almost two dozen countries has resulted in a massive drop in betting activity.

  • The average per-match handle on Lounge in the month of July was just over 40,000 skins per match.
  • The average per-match handle on Lounge in the first week of August was 6,000 skins per match.

At first, Lounge barred users in over 20 countries from placing bets, but users from those countries were still allowed to view odds as well as the total items bet on a match.

Lounge eliminated this functionality as of early this week, and now bars visitors from those countries from even viewing betting activity.

Other sites that have tried creative workarounds instead of fully removing some or all of their betting functionality have fared even worse. 

CSGOStrong and CSGOCosmos had pivoted their business model slightly in recent days to no longer accepting direct skin deposits. Instead, the sites only accept coins from third-party cash-out site Skntrades, which effectively adds another (thin) layer of protection between the sites and the skins-to-currency conversion process.

Meanwhile, European bettors reported that players on CSGOFast, a site named in the first C&D that shut down last month, were using online marketplace G2A to purchase coins, depositing those coins on Fast, then purchasing skins to bet with on Fast’s casino.

Fast still appears to be offline in the US, but apparent European operation raises the question of whether other sites will continue to operate in non-American jurisdictions.

It and other sites’ move to new, non-skin currencies that nonetheless facilitate the purchase of skins that users can then bet, raises questions as to how much patience Valve will exercise in the future.

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