Phil Kornychev – Forget the TV show, this is the real Skins drama

The gambling boom of Counter Strike: Global Offensive started just over three years ago, with the launch of CSGO Lounge – a website where players could bet their ingame skins on the outcome of competitive matches.

Created by Robert Borewik, a Polish web developer, the site was similar to his Dota 2 betting website Dota2Lounge. Eventually CSGO Lounge eclipsed it in popularity – CS:GO was perfectly suited for gambling with its dynamic rounds and back and forth action packed gameplay.

Over the next three years, the website became an iconic trading ground, operating millions of skins.  Every gamer that played CS:GO had heard of it and even people who didn’t play the game used it.  Word of mouth spread quickly, and traffic to the website grew fantastically – Lounge did not have any form of age verification and everyone playing CSGO had some skins.  Until June 2016 they did not collect any commission, their website was functional and easy to use, and the support team quickly responded to all issues.

As the betting market grew, so did the popularity of CS:GO. According to a NewZoo report, up to 40% players didn’t even play the game and bought copies merely to trade and gamble. By this time, it was Valve’s top-selling game – a spectacular turnaround in just two years, considering that rather poor initial reception.  This success could not go unnoticed and similar betting sites started to pop up. None of them would require neither a license nor an age verification to operate, meaning that, once again, even gamers from restricted countries would be welcome.

After a series of minor drama and match-rigging allegations, the CSGO betting community finally experienced the first large match fixing scandal. In August 2014, two North American teams played each other – iBUYPOWER and NetcodeGuides.com. The odds favored iBP massively, but they were defeated 16-4. Despite evidence that the match had been fixed, no action had been taken until 2015, when Esports journalist Richard Lewis published evidence linking iBP members and several high-volume bets on CSGO Lounge. After an internal investigation that confirmed that indeed these won skins ended up on the accounts of the players, Valve responded by banning all involved indefinitely from taking part in sponsored events and tournaments.

The second controversy ultimately led to the industry shakeup we have today. YouTuber Trevor Martin spent a great deal of time and effort promoting a website called CSGOLOTTO in his videos – he would show his winnings and invite his viewers to bet. An investigation revealed that he was one of the owners of the company running the website, together with several other high-profile CS:GO celebrities.  Though the only proven accusation was promoting underage gambling, this called into question the integrity of these so-called jackpot and lottery sites and their system for choosing the winner – some have gone so far as to speculate that owners would rig the websites and collect the users’ skins for themselves.

The event received wide coverage with bloggers and sparked an outrage from the community and several weeks later the parents of one underage CS:GO bettor filed a class action lawsuit against Trevor, his company and Valve. The lawsuit stated they were promoting underage gambling and of deliberately allowing the creation of a market where players and third-parties trade weapon skins like casino chips. This prompted a harsh response from Valve, who published a cease and desist letter to skin gambling websites and warned that their activities violate the user agreements (sites use steam accounts to collect skins from users).

The reaction from betting websites varied, as many evaluated the costs of ‘going legit’. Some jackpot sites like CSGO Wild ceased operations, others like CSGO Lounge published an announcement about purchasing a gambling license and moving closer towards becoming a real-money bookmaker. Most have not made a statement though, and as the deadline to stop operations set by Valve looms closer, it will be interesting to observe how the situation pans out and whether Valve will actually shut down the trading bots.

Although it is too early to signal the end of skin betting in CS:GO, the industry is definitely going to shrink within the next few months, as age verifications and country restrictions are introduced.