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As CS:GO’s popularity as an eSport grew with increased viewership, there also came a desire for players to bet and gamble on matches. Outside of the United States, several sites arose to allow users to bet with direct cash funds on the result of matches from games like CS:GO. Cash gambling on sports, including eSports, is banned within 46 American states and in some European countries. However, American case law has determined that use of virtual goods for betting on the outcome of matches is legal and not covered under gambling laws. Companies like Blizzard Entertainment and Riot Games have made strong delineations between virtual currencies and real-money to stay within these prior rulings while offering betting on matches within their games using strictly-virtual funds.
Some of the websites created to help with trading of CS:GO skins started offering mechanisms for gambling with skins, appearing to avoid the conflation with real-world currency. These originated as sites that allowed players to use skins to bet on eSport matches; Players would bet one or more skins from their Steam inventory, which are then moved to an account managed by the gambling site. Upon winning, the player would be given back their skins and a distribution of the skins that the losing players had offered.
Over time, other sites started to expand beyond eSports betting and instead offered betting on games of chance. Jackpot-like sites were introduced, where users can put their skins into the pot, which will end in one person winning. The higher total value, the more chance the user would have to win. A few sites reduced the gambling to betting on the result of a single coin flip. Some sites also offered unopened weapon crates for purchase with skins. In combination with the gambling features, players could then trade skins they won for their cash value through these sites, or purchase skins with currency to gamble further. The exact timing for the growth of these gambling sites is unclear, but Chris Grove, an analyst for Eilers & Krejcik Gaming and Narus Advisors, observed as early as August 2015 that skins were being used for betting on eSports. At that time, the use of skins for gambling on more traditional games-of-chance was not readily appearent.
These sites have created a type of black market around CS:GO skins, generally unregulated by Valve. The exact monetary values processed by these skin gambling sites are difficult to measure due to the opaqueness of the ownership. Eilers and Narus estimated that $2.3 billion in skins were used to bet on eSports in 2015, $5 billion in 2016, and projected that over $20 billion in skins would be gambled by 2020 if the market was left unchecked. Of the $5 billion in skins during 2016, Eilers and Narus estimated that only $2 billion were used for eSports betting, while the rest was used on traditional games-of-chance. Some individuals are estimated to have a cumulative worth of tens of millions of dollars of skins in their inventories. The effect of CS:GO gambling is estimated by the Esports Betting Report as an “eight figure” number that feeds the overall area of professional eSports due to viewership and promotions related to the skin gambling.
Several factors led to concerns about the CS:GO skins market and gambling. The skin gambling mechanisms work towards those predisposed to gambling because of the ready-availability and acquirability of skins within the game, and can earn great rewards, according to UCLA’s co-director of gambling studies Timothy Wayne Fong This is particularly true for younger players, which make up a substantial portion of the CS:GO player base, who also may be encouraged through peer pressure to obtain unique skins to show off to their friends