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IN-DEPTH 19 November 2018
Is Skin Betting still a threat to the industry?
The founders of EbetFinder, an esports betting portal, and gambling prevention software company Gamban, discuss how skin betting can be handled legally, and what can be done to combat this threat to children and the regulated gambling industry
By Gambling Insider

Mattias Fröbrant , Co-founder, EbetFinder

It’s important to know that there are two types of skin betting sites available. On one hand, you have a certified and legal site that operates under a strict gambling legislation, and then you also have the rogue sites that are operating without any license.

The first ones make betting with skins possible, through trading skins for money through a deposit method called SkinPay. This means you don’t really bet with the skins, but you have sold them for real money that can be wagered. These sites have a gambling license and have strict rules they need to follow, which includes not letting underage people gamble. If they did, they could receive a heavy fine or even lose their gambling license. To prevent underage people from gambling, they have verification processes that every player has to go through at some point, which includes sending in a copy of your ID.

With the illegal sites, it’s a whole different story, as no gambling license exists whatsoever. The difference here is you don’t have to create an account with your personal details; all you have to do is sign in using the Steam platform and then you’re all set. There is no verification process or anything keeping underage people from gambling. In other words, anyone can visit these sites and deposit their skins (which sometimes are traded for points) to gamble with, and then just as easily withdraw skins back to their Steam account.

The skins generally aren’t used to gambling on competitive video game matches taking place, but they’re often placed on roulette and other luck-based games that have more in common with casino games.

EbetFinder is not operating under any laws at all, as we don’t offer gambling ourselves, but as enthusiasts of esports betting, we simply exist to help players find the best places for it and to provide information about it. Our site relies on good relationships with both betting operators and users in order to function.

We have to keep an honest and professional profile to attract both visitors and new partners. This is done by promoting an operator to give them visual traction, but at the same time being very honest in the reviews we do and highlight the downsides as much as the pros so that our visitors can rely on the information we provide.

With all of this being said, every operator we work with has their own strict terms and conditions of what we’re allowed to do if we want to work with them. This has nothing to do with our site’s honesty, as we have never received any criticism for highlighting weak points, but relates to obvious things such as avoiding promoting underage gambling.

I believe the one company suffering the most from the illegal skin betting is Valve, as it is through the Steam platform that this form of betting has become possible and they have received a lot of criticism for it. Betting on esports is flourishing and becoming more popular every day. Underage gambling taking place on illegal sites isn’t going to change this, just as wine sales at supermarkets aren’t affected by shops selling alcohol to underage people.

Despite this, underage gambling is a big issue and it’s a touchy subject that nothing good can come from, with the esports industry being somewhat linked to it in a negative way. The number of esports betting sites is rapidly growing. Although it’s still only a few, we’re able to see an increased number of licensed and legal ones offering the payment option SkinPay that allows you to sell your skins and gamble, which is a good thing, as these sites are trusted.

Jack Symons, Founder and CEO, Gamban

Gambling doesn’t look like it used to and I think many gambling elements continue to slip under the radar, disguised as 'harmless fun.' Parents just don’t know about the risks and gambling regulators always seem to be a couple of years behind – that’s just the way it goes.

We need to recognise skins – with a real-money value – represent more than in-game collectables. They are, in fact, a currency.

Valve continues to battle the third party unofficial trading and gambling sites that use skins as currency. They continue to fail. On the one hand, they condemn these platforms, on the other they provide API functionality to connect to Steam. From our point of view – and we’re in talks with Valve about this – if they cared enough about blocking these harmful platforms, then they would work with us to prevent them from being accessible to children and vulnerable adults.

Time will tell.

With a Steam account, I can buy and download a game. Let’s say Counter Strike (CS:GO) players buy loot boxes. Now I don’t necessarily think this is a bad thing – so long as games are fair and can be played without in-app purchases, otherwise they give a skewed advantage and cease to be fair. Sure, some will get carried away and buy copious amounts of loot boxes and that’s a problem in and of itself, but this may have more in common with spending or shopping than gambling, so long as it’s for gaming, rather than gambling.

The next stage is where things get particularly dangerous for all. A large number of skin-betting sites – completely separate to Steam but often using the API to log in, gamble and trade – offer similar gambling products, but instead of pounds, dollars and euros, it’s skins. Skins lottos, skins match betting, skins roulette, skins blackjack, skins raffles, skins coinflips. So now I’m able to use my skins on these gambling products – I can even throw in all my skins and gamble on the outcome of a game.

Would this be a problem without real-money value? Yes, it normalises gambling for children.

The fact is there is a real-money value attached to skins and frankly I’m appalled that so little has been done to educate, prevent and protect young people – children – from developing an addiction that is said to be more harmful than heroin.

In the UK, spread-betting continues to fall under the Financial Conduct Authority, not the Gambling Commission. The clue is in the name: it’s betting. So what hope is there that skin betting will be classified properly and swiftly? I would imagine it is a very slim chance.

A skins-based market has been created due to demand and supply, and the added rush of a financial windfall has changed gaming. It’s difficult to put the cork back in the bottle.

My advice to everyone but games developers/operators is this: learn from online gaming. Those operating in the skin-betting space may want to see their traditional counterparts’ failings as cautionary tales, but let’s be honest, the downsides have been minimal. Paltry slaps on the wrist with little impact on the bottom line or share value have been handed out, and let’s not expect too much out of self-regulation.

Effective regulation is needed – but that’s easier said than done and I don’t have enough experience to comment on policy and enforcement. I like the way the Gambling Commission has responded to loot boxes, but equally I’ve not seen much on the topic of skin-betting sites that exist outside gaming platforms.

Cynically – and I hope to be proven wrong – my advice is this; don’t expect much and there will be at least five years before anything gets done. Despite the World Health Organisation’s Gaming Disorder classification, the best course of action is to inform and educate parents of the risks. By all means let your children play the games their friends are playing, but know the signs and be aware these games contain the same stimulus response that is shared across all other gambling products.

We must all take responsibility for underage gambling. It’s something society can’t afford and, one way or another, we’ll all pay the price.
IN-DEPTH 4 September 2019
Virtual reality: Creating next-gen experiences for players

Singular CEO George Shamugia discusses a new revenue stream for casino operators

The competition in online gaming is intensifying, with players becoming more and more demanding. In some markets, single-customer acquisition costs can reach up to €400 ($440) alongside growing churn rates. Furthermore, the online gaming sector struggles to attract one of the most lucrative groups of players – millennials. The experience provided by casinos no longer appeals to the younger generation.

On  the other hand, the video gaming industry perfectly understands the needs of millennials and by introducing elements of luck in their games offers the best of both worlds. With the launch of loot box systems and Grand Theft Auto’s in-game casino, we have seen their first successful steps in targeting the online gaming sector. GTA V online, with 33 million active players, recently opened an in-game casino, where players gamble real money on games such as poker, roulette, slots, etc. As a result, churn users returned and GTA Online reached the highest number of active players since its launch in 2013.

The online gaming industry has almost fully utilised the potential of the mobile medium. The time has come to look for new, innovative ways of delivering a next-gen experience to customers.

The potential of VR

Could the next big thing for online gaming be a fully fledged virtual reality (VR) casino delivering an immersive experience and limitless new opportunities?

Although not widely adopted yet, VR has a sizable number of customers. Analysts predict it’s poised for explosive growth to become mainstream in about five years. According to market intelligence firms, the VR market will be worth $117bn by 2022, and according to Juniper Research bets made through VR will reach $520 billion by 2021. Upcoming 5G mobile network technology will propel VR’s mass adoption by allowing the development of fully portable untethered and affordable VR headsets.

Different level of social interaction

The captivating nature of gambling comes from its social aspect. Unfortunately, personal interaction is widely missing from online gambling sites. VR technology creates multiple opportunities to bring back and even enhance that social moment. The ability to connect with other players is one of the main reasons behind Fortnite’s popularity. This form of co-experience is the next generation of entertainment. Research conducted by Facebook has found participants spend more time on VR compared to any other medium. This directly translates into increased profits for casinos.

Pokerstars has made efforts in this direction by implementing Voice UI. Instead of using hand controllers to make a call, pass, or raise, players give voice commands.

Another opportunity for bringing in the social element are the players’ avatars. They enable players to build their identity reflected in the avatars’ appearance, but also the avatar's social, competitive and community status. For instance, players are willing to pay real money for virtual drinks at the bar. Operators can offer these social touchpoints for free to VIP customers as an act of appreciation.

VR also brings a new dimension to customer support. Customer support can also be represented with avatars to assist the player in person. The social moment increases the LTV of players and contributes towards lower churn rates.

Rethinking game design

VR is a way more capable medium than a 2D mobile or desktop screen. Instead of copying the existing online experience, games must be redesigned from the ground up for a competitive advantage with VR. For example, a VR slot game can become fully immersive by teleporting the user into the slots’ world of Ancient Egypt. Next, enrich the experience with high-fidelity graphics, realistic spatial sounds and animations. When betting on virtual race cars, the user can be teleported inside the car he/she made a bet on and experience the race firsthand.

New revenue streams

VR casino lobbies create new revenue stream opportunities: ad placement of brands on the venue walls, company logos decorating the bar etc. This kind of branding is not intrusive in the VR space and feels natural from the user's perspective. VR also gives users the ability to change venues from a Las Vegas casino today, to Macau or even Mars casino, the very next day. The dynamic and diverse experience increases retention rates.

The majority of profits for online gaming operators come from their high-roller players. Although they represent a small subset of active players, an operator can launch a separate VR casino brand for them. Providing exclusive VR gaming experiences to high rollers/VIPs, the operator can minimise churn and maximise VR efforts for these player demographics.

The catch with VR is to focus on quality, rather than scale. The target audience might be limited yet, once these players experience it, they will become ambassadors for your offering.

Surely, the opportunities and possibilities offered by the VR medium truly exceed anything offered by mobile and desktop. VR is a new frontier not just for gaming but for every industry, and it’s exciting to see where it takes the industry and what kind of innovation it brings upon us.