Is Skin Betting still a threat to the industry?

he 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

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.