Gaming companies have denied any involvement in gambling, regulators are turning a blind eye, and young gamers are making their first bets.
At a time when sports leagues and media companies are starting to work with bookmakers, gaming companies seem to have been less enthusiastic about it. Popular games are often played by young consumers, and there are many prohibitions on gambling and related sponsorship in these games.
However, gaming has become the scene of a thriving underground gambling economy. With underage users barred from brick-and-mortar casinos and sportsbooks**, they often place their first bets on their favorite games.
Players can exchange their purchases for games, clothing and other virtual items for digital currency, similar to Las Vegas casino chips, at some casinos. Games on the betting include roulette, coin tosses and a brightly colored virtual gun that can sell for $400,000 on the digital market, and these virtual items are called "skins" in the game.
At risk is the financial health and mental health of millions of underage gamers around the world. A 2018 survey in the UK revealed that 10% of the country's teens had participated in some form of gaming** betting. Academic research has shown that adolescents who have been exposed to gaming** gambling have lower levels of well-being and a higher risk of gambling addiction.
Game developers, the U.S. Congress, and states have all taken steps to crack down on gaming in recent years, but a Barron's investigation shows that these efforts are far from enough, with game developers, regulators, and law enforcement watching themselves lose control of this thriving ecosystem.
Barron's found that there are at least 73 bets** with Valve CorpDeveloped in connection with the hit game Counter-Strike: Global Offensive, most of which** are located overseas. The game, better known as CS:GO, has nearly 1 million daily players.
At the same time, the problem is exacerbated by streamers who promote betting** and provide detailed tutorials on the platforms of big tech companies. Barron's found 120 gaming sponsors on Amazon's Twitch, and Google's YouTube has a lot of gaming betting content.
A YouTuber named Houngoungagne said: "As long as you play CS:GO, you see the gambling side of things. "This user has 72 CS:GO channels40,000 subscribers.
Houngoungagne is one of the many popular content creators who have attracted a large number of fans after their posts on YouTube and Twitch. These ** not only show how to play CS:GO, but also how to gamble using virtual items in the game.
These posts, which clearly violate the terms of Twitch and YouTube, have millions of views, generating significant revenue for creators and indirectly for Valve, Google, and Amazon.
Barron's asked what resources the companies were investing in enforcing anti-gambling provisions, but none of them responded.
According to Gamalytic, since the release of CS:GO in 2012, there are an estimated 20.5 billion people have installed the game. Last September, Valve replaced CS:GO with Counter-Strike 2 (CS2), a game that's pretty much the same, but with updated graphics and performance. The game market has not changed, and the player's CS:GO has become CS2.
Gambling isn't limited to Counter-Strike, but Counter-Strike is at the center of gaming, which has generated nearly 2 billion virtual items for players around the world to trade, buy, and give.
Most of the new ** come from "loot boxes", where Counter-Strike players pay 2For $5, the payment triggers a number *** that will eventually land on a new one**, the most common** being a gun with a special color and design. These items are cosmetic and have no impact on the actual gameplay, however, gamers still value these unique attributes, just as record collectors look for rare first-edition records.
Valve does not publish sales figures for its games** or loot boxes. CS2 Case Tracker estimates that Counter-Strike players spent $9 in 2023$800 million opened more than 400 million loot boxes. In total, there are about 1.7 billion of them in Counter-Strike**.
Loot boxes are closely watched by regulators and legislators around the world, but the gambling economy built on them has been overlooked.
The game is particularly lucrative for third parties that allow Counter-Strike players to upload and wager their virtual items, and ultimately convert them into cash or cryptocurrency. This is made possible by Valve's own Application Programming Interface (API), which allows gamers to log in to gambling with their VALVE authentication and access their Counter-Strike inventory.
Valve's ** shows that the company provides an API for developers to use data in "new and interesting ways", but prohibits the use of the API for "commercial purposes", particularly gambling.
These rules are only enforced incidentally, so many gaming gamblers don't worry about penalties. Many ** have CS:GO in their names (e.g. CSGO.).net), and most of them use Valve's logos and other intellectual property.
On other tech platforms, the rules governing Counter-Strike gambling content are largely unenforced and ignored.
Over the past 12 months, viewers have streamed 700 million hours of Counter-Strike on Amazon's Twitch, where gaming betting offers six- to seven-figure sponsorships to the most popular game streamers.
Barron's found that 120 of the top 300 Counter-Strike streamers on Twitch were sponsored by gaming betting.
In its first interview with Barron's, Twitch said, "There is no way to verify that there has been a violation of our Community Guidelines. Barron's then gave Twitch an example where a Twitch user livestreamed his virtual betting process with multiple bookmakers** sponsorships on the screen.
A spokesperson for Twitch later confirmed that the company prohibits "CS:GO betting – and any promotion or sponsorship of gaming** betting." Asked why these rules are different from what Barron's sees in reality, the spokesperson said: "Our team is digging into the examples you mentioned. ”
Counter-Strike also has a large audience on Google's YouTube, with the three most popular content creators collectively having over 11 million followers, each of whom has received sponsorship for the game. Like Twitch, YouTube's terms prohibit such sponsorships.
"Our policy makes it clear that YouTube creators have a responsibility to ensure that their content complies with local laws, regulations and YouTube's Community Guidelines, and that if content is found to violate those policies, we take action, including removing the content," YouTube spokesperson J**ier Hernandez told Barron's in a statement. ”
Barron's sent multiple examples to YouTube that included gaming content. In a segment, a YouTube user with 2.3 million subscribers paid $750 for a virtual *** and after winning, he had the option to transfer it to his Valve account or sell it back to the casino for $487.
This user trades on skinclub, and he says on his own: "Every participant has an equal chance of getting an expensive one." Thank you for sponsoring the Game Club! ”
Barron's also sent Google a YouTube account run by online gambling Hellcase, which recently posted a promise: "An incredible 120 of the $4,550 prize pool are waiting for the most competitive users." ”
In a statement to Barron's, YouTube said: "After review, we believe that the channel you mentioned did not violate YouTube's Community Guidelines. ”
Valve is a privately held company that does not disclose financials or other business details, and the company's executives rarely give interviews. When Barron's reached out to Liam L**ery, Valve's general counsel, he declined to comment, and neither his voice nor his voicemail went unanswered.
Valve also did not respond to other requests for comment from Barron's.
Valve's unusual presence in the tech world is that it has no venture capital involvement, and Pitchbook, which closely tracks start-up fundraising, has no track record of raising external funding, but that hasn't stopped it from becoming a dominant player in the PC gaming industry.
Valve was founded in 1996 by two Microsoft employees, and the company has created several award-winning franchises that have garnered a cult following among gamers. Consoles from Sony, Microsoft, and Nintendo are the most popular ways to play games on big-screen TVs, while Valve's business focuses on those who prefer to play games directly on their PCs.
In addition to developing ** games, Valve also owns the digital distribution platform Steam, which sells its own PC games and games from third-party publishers on Steam, similar to Apple's App Store.
Michael Pachter, a game industry analyst at Wedbush, said, "Valve could account for more than 50% of all PC games, and maybe even as high as 70%. The overall market size is between $10 billion and $15 billion per year. ”
According to Gamalytic's estimates, Steam users spent about $4.6 billion on games in 2023. Like Apple's App Store, Valve takes a 30% cut of purchases.
Steam is also part of a social network where users can play games together and interact with each other in user-generated forums. Steam also operates a marketplace where users can buy, **, and trade virtual items from the game.
This "Steam Community Marketplace" does not allow gambling, but some of the virtual items on the market change hands at eye-popping prices. Many players keep a close eye on the market and see their virtual items as investments, while others choose to take their virtual items to a third party where there is a chance to win items of higher value.
Possess 41A 70,000-subscriber Counter-Strike YouTuber named TDM Heyzeus said: "CS:GO probably wouldn't have been as successful without **, there's a lot of symbiosis in this." ”
TDM Heyzeus said he earns a decent amount of money from content creation and trading, but not as much as gaming bettors, saying, "Let kids gamble on yours and take theirs, that's where the real money comes in." ”
In July 2016, when Valve publicly acknowledged the existence of gambling, the Washington State Gaming Commission's investigation into the company had been ongoing for months. In late 2017, the commission concluded that Valve had intentionally facilitated illegal** gambling in Washington State and recommended that a lawsuit be filed with state and federal prosecutors. The findings were part of a case report that Barron's received through a public records request that had never been reported before.
Valve countered the arguments of the Washington State Gaming Commission, with the company's general counsel, Lawilli, saying in a letter to the commission in late 2016 that "Valve does not engage in gambling and does not promote gambling." We are surprised and disappointed that the Commission has chosen to publicly charge Valve with illegal conduct and threaten our employees with criminal charges that have no factual or legal basis. ”
Ravelli also wrote: "We don't want to shut down the Steam services because the gaming betting has already taken advantage of them. He noted that Valve's API "has substantial benefits for Steam users and Steam game production partners."
Valve has sent cease and desist letters to 42 online casinos, asking them to stop using their Steam accounts "for commercial purposes" within 10 days, Rawilli wrote.
Barron's found that seven years after Valve's 10-day ultimatum, six of the 42 are still in operation.
One of the first CS:GO Lounges mentioned in the cease and desist letter is one of the ones that is still in operation, and users who have been around for more than a decade have gathered in a discussion board on Steam with more than 600,000 members.
A Steam group forum hosted by Valve that focuses on a game called CS:GO Lounge.
Steam's rules for its discussion boards — called Steam Groups — and user-generated content prohibit commercial content, including "gambling and **."
Barron's found that 28 out of 73 gaming bettings have Steam groups, many of which contain links to betting and list them for first-time bettors
Later, the Washington State investigation turned to whether Valve profited directly from gambling**, which the company denied.
Gary Drumheller, who oversees the investigation, told Barron's that Washington state and federal prosecutors did not press charges because they could not successfully prosecute Valve.
Drumheller, who currently serves as deputy director of the Washington State Gaming Commission, said the commission's investigation uncovered plenty of evidence that Valve profited from gambling.
When a player is on Valve's Community Marketplace***, Valve takes a 15% commission. As the value of ** gets higher and higher, so does the commission that Valve receives.
Victor Matheson, a professor of economics who studies gambling at the College of the Holy Cross, points out that gambling can indirectly increase the value of the game. "If these things are valuable because of gambling and not just because of dressing up, then obviously it's going to move something forward," he said. ”
Matheson also noted that gaming has increased the demand for virtual items, and that if gambling is not involved, "it is almost certain that the value of gaming will decline".
At the end of the investigation, Drum Heller was convinced that Valve was "doing everything in its power" to curb gaming**, telling Barron's that at a 2017 conference, Valve employees, led by co-founder and CEO Gabe Newell, demonstrated tools to curb gambling, including denying gambling ** access to its API, which was a fatal blow to betting** that relied on Counter-Strike players.
Seven years on, why do 73 bets** still have access to Valve's API? Valve did not respond to this for comment. Newell did not respond to Barron's' requests for comment.
Daniel Kaufmann, head of gaming services at Kindbridge Beh**ioral Health and a researcher in game psychology, points out that what drives players and collectors to spend money on virtual items is their desire for a unique identity.
"From a personality and motivation standpoint, the biggest motivation that motivates people to put a lot of effort into video games is 'customization,' which is why it's important for them to have a purple flame automatic rifle that glows," Kaufman said. ”
Max Center, a recent graduate of The Ohio State University and has been playing CS:GO since eighth grade, says the game has given him "a level of authority." Cente previews it on YouTube and says he's "experiencing life through a popular streamer on YouTube", whose channel is all about unboxing CS:GO loot boxes.
YouTubers advertise by posting an introduction to which odds are the highest, or by offering free bets, and some of these content creators are sponsored by gaming operators.
After collecting enough ** with a friend, "we decided to start gambling," Cente said. He was 13 years old.
There is little resistance to minors gambling with their own games**. To create a Steam account, install Counter-Strike, open loot boxes, or make a purchase, all they need to do is tick a box that confirms that they are 13 years of age or older, some bets include a checkbox for being 18 years old or older, but most don't.
While spending the night at a friend's house, Cente said, he took the money he paid for pizza to a nearby gas station to buy Visa gift cards to top up his gambling efforts. He bets with his friends on a Skype group call, and he says, "It's like an addictive swarm mentality." ”
Cente said he quit gambling at the age of 17 and now barely plays Counter-Strike. But not everyone can do this.
A 2021 study by the Journal of Beh**iOral Addiction of nearly 1,700 teens aged 12 to 17 who had gambled in the previous month found that they had "lower levels of well-being, symptoms of gaming disorder, and criteria for problem gambling."
The Society for the Study of Addiction has found that gaming betting is particularly a problem for young people. The association conducted a 2022 study of young people aged 16 to 26 and concluded that participation in gaming** gambling was one of the "highest** factors" in the Problem Gambling Severity Index score out of 19 forms of gambling.
Research in the Journal of Behavioral Addiction shows that the number of teens involved in gaming gambling is likely to increase given the "normalization of gambling and the poor regulation of gaming gambling".
After the Washington Gaming Commission concluded its investigation, Valve launched an all-out crackdown on gaming betting, and these efforts made it more difficult to operate these games, but they didn't stop them.
In March 2018, Valve announced that CS:GO items earned through trading (not all of which involve money) would be limited to a seven-day cooldown period. The company said that third parties "rely on the ability to trade every item very frequently" and noted the presence of bots on its platform.
It didn't take long for these ** to find a workaround. Instead of using bots as intermediaries, some have become trading brokers: one person exchanges the game for currency on the spot, and another person exchanges the currency for the game on the spot.
Gambling isn't the only one making money with CS:GO.
Many create third-party marketplaces for games by using Valve's API, which functions similarly to the Steam Community Marketplace but with a commission of less than 15% of Valve's, removing the $1,800 list price cap and allowing users to transfer these currencies directly to their bank accounts or crypto wallets in real money.
The homepage of a third-party skinbid, where users buy, sell and trade Counter-Strike games. Users can log in via the Steam Web API provided by Valve**.
While these ** are clearly in violation of Valve's rules, Edward Toma, a staff member at third-party marketplace Skinbid, said that Valve has no objection to his **, saying that ** like him "creates value for users and Valve".
On SkinBid**, some games** have a list price of more than $20,000, well above Valve's own cap.
Dram Heller said that at the time of his meeting with Valve in 2017, the "only job" of "several IT people" was to monitor the Steam platform for wrongdoing "and try to stop some of this activity." According to Washington's case report, Valve wants to "take care of their clients, but doesn't see themselves obligated to enforce the law."
Enforcement is indeed very complex. The shell companies behind the gaming are usually registered in countries such as Cyprus and Belize and are not under the jurisdiction of regulators such as the Washington State Gaming Commission. Washington, D.C. attorney Jeff Ifrah said there are other obstacles to law enforcement; Ivra's company specializes in gambling laws.
When federal prosecutors tracked down poker in 2011, "they suspended a multibillion-dollar poker network, intercepted transfers, froze bank accounts, and they had chips in their hands," Efra said.
When it comes to enforcement against gaming betting, prosecutors don't have that leverage because these transactions take place outside the United States. Ivra asks the question, "What's the reward for their efforts to remove a game that will be remade tomorrow?" Ifra likens the situation to "whack-a-mole."
Many Counter-Strike players have come to terms with the prevalence of betting, even if they don't like it.
Last summer, aforementioned YouTuber Houngoungagne (known to his subscribers as Jeff) released a two-part series on the unregulated nature of gambling and the harm they do to the Counter-Strike community, and concluded with a plea for other content creators to do more to draw attention to the issue. He told Barron's: "We have to find a way to force Valve to react. ”
Houngoungagne said Valve never responded to his **. "Valve unfollowed me on Twitter and that's the only response I've gotten from them," he said. ”
Avi Saltzman also contributed to this article.
Text |Nick Devore
Edit |Guo Liqun
Copyright Notice: Barron's original article, without permission, may not**. For the English version, see February 23, 2024** "Counter-Strike is one of the world's most successful videogames." how it also became a gateway to gambling.”。
The content of this article is for informational purposes only and does not constitute investment and financial advice of any kind; The market is risky and investors should be cautious. ）