Skins betting has been in the media’s eye for the past couple of years. Reputable news agencies, social networks and online forums have been dealing with the newest form of online wagering called skins betting - gambling with digital items instead of money.
When people talk about skins they actually talk about digital items. In games such as Counter-Strike: Global Offensive, gamers use these items to change the appearance of different types of weapons or equipment.
The basic and original use of an in-game skin is to change how a game item looks like. This means that a regular knife can be made to look more ‘fancy’ by using tribal motives or a pistol can be made to look more futuristic by using some outlandish skin design for example. It must be noted however, that skins don’t make the weapon or piece of equipment more efficient in any way, shape or form. They just change their appearance. Skins are just visual and not functional items.
Most games these days employ at least some kind of skins system, but it is the Counter-Strike’s one that has been in the forefront. This is because more than three quarters of the skins betting transactions are done using the Counter-Strike: Global Offensive (CS:GO) skins.
Skins can be acquired in many different ways by players. For example, if you are an avid CS:GO player you will definitely know that you can acquire them through playing the game, during promotional periods, through trading with others, and by buying them from different online vendors.
Skins range in value from really cheap to unrealistically expensive. For example a CS:GO Karambit Doppler covert knife skin can fetch as much as $350 or even $400 on the market. On the other hand, there are some really cheap options, like the Supernova skin for a P250 pistol for example, which will cost you a measly 42 cents. The interesting thing however, is that the cheapest skins are sometimes the gateway to entering the world of skins betting. This is because players feel that there is no risk involved in gambling with such an inexpensive item, and they would much rather lose it while playing an exciting game of roulette than keep it in their inventory.
For many people who are not familiar with the gaming and betting industry, gambling on items such as skins is strange to say the least. However, if you try to ignore the fact that skins only have a cosmetic purpose in gameplay, and instead look at them as items having value, things start to make much more sense.
The closest thing that you can compare a skin to is a casino chip. Chips don’t have value in life outside casinos, meaning that you cannot go inside a store and buy bread, milk and meat with them. However, they are quite valuable inside casinos, in the sense that you can exchange them for money.
Skins are the same and they can be traded between players and the so-called house. They are in a sense, a currency which can open the doors of a skins betting site for the person possessing it. You can play the roulette, spin the slots, sit on a blackjack table or play poker if you only put a skin down as a deposit. You can also deposit them with sportsbooks, online lotteries and even coin flips. All you have to do is to make the skin change hands between you and the house and you can start gambling.
Once you have won, you are paid out with more skins which you can then:
You should know however, that even though most games use skins, not all game creators allow players to trade them freely. Of all the well-known eSports game developers, only the creators of CS – GO and DotA 2 allow skins to be easily transferred from one account to another.
The easiest way to show how big skins betting is, is to compare it with cash betting within the eSports gambling industry. In 2016, which was the heyday for skins betting, more than $7 billion worth of skins were wagered worldwide. In contrast, only $500 million in cash were wagered in the same year. This amounts to a mind-boggling difference of more than 80 percent between the two different types of deposits. This difference would only have got bigger were it not for the series of controversies which struck skin gambling in the middle of 2016.
In terms of the skin gambling market, most of the skins worldwide were wagered on sportsbooks. This is to be expected as the popularity of eSports events is huge with skins holders. Next in line were lottery games, such as the jackpot, and they were followed by roulette, coin flip, and blackjack style of games.
Skins betting started in the middle of 2013, somewhere around August. This is when the creator of Steam, Valve, made it possible to trade skins from CS - GO. As soon as this trading system was in place, gambling sites taking advantage of this novelty arose. These sites were quite basic in nature and it wasn't until 2014, that betting with skins started taking off. Sportsbooks oriented sites like CSGO were the primary benefactors of the skins trading system.
However, if we are talking about when skins betting really blossomed, it was in 2015. This is the year when other skin gambling sites facilitating gambling on online lotteries, roulette and blackjack started appearing in bigger numbers. Some of the more popular skin trading sites included CSGOBig, CSGOFast, CSGOJackpot, CSGOLounge, CSGOWild, Dota2Lounge, Fanobet, Skin Arena and Skin Joker.
In addition, there were multiple eSports players whose streams promoted the practice of skin trading and more importantly promoted specific skins betting sites. This was the last piece of the puzzle, and starting from 2015 and until 2016 skins betting really went into a realm of its own.
The meteoric rise of skins betting has, however, been marred by a lot of controversy. In May 2016, CSGOStakes, a frequently visited skins gambling website was closed without informing or paying out players who possessed skins or credit deposited at the site. Later on that year, in June, Valve was accused of knowing about and encouraging skins betting and a lawsuit was filed against the Counter Strike developer. In that same month a reputable skin gambling site stopped operating in the United States, causing a lot of concern among skin holders worldwide.
In addition to these controversies, there have also been revelations of eSports personalities being the owners of skins gambling sites they were promoting and Twitch, the eSports live streaming provider, banned streams with skin gambling from using its services. Lastly, in July 2016 Valve notified 23 skin gambling websites that they should immediately stop their operations. However, Valve's decision was largely ignored by almost all of them, with only a few complying with the notice.
Gambling is a heavily regulated industry, but in essence, it has always been an area of life which more or less exists in the legal grey area. This is even truer for skin gambling. There are various statutes in countries around the world regulating gambling (in the US for example there is the Unlawful Internet Gambling Enforcement Act, the Illegal Gambling Business Act and the Wire Act).
However, skins gambling operates in a legal vacuum since it is not a currency which can be useful outside of the virtual world, and has no real world value. This has been the main reason why so many skins betting sites continued existing even after they were involved in court battles. They are virtually 'untouchable' as long as they don't break the law with some other illegal action which doesn't involve skins.
This doesn't mean that there haven't been cases which involve skins gambling. Some of the more famous ones include Soto vs. Sky Union, Mason vs. Machine Zone, and Kater vs. Churchill Downs Inc. In all of the cases mentioned, a skins gambler accused the skins betting website of breaking state and federal laws because they claimed that the skins betting site knew that skins which were traded on their site had real world value.
However, in all of these cases, and in all the other similar ones as well, courts ruled that the skins gambling sites were not illegal websites because their customers didn't wager, didn't win and didn't lose real money. In addition, they concluded that skins had real value only in the virtual world, but only in terms of using them in gameplay, which is not punishable by any law, act or statute in the world. As far as they were concerned, skins were only virtual prizes.
Even though, skin betting sites are impervious and not affected by cases such as the ones mentioned above, they still have lots of vulnerabilities which should be worked and improved upon. For example, an age verification system is lacking in most of these sites. This is a really pressing concern as most skin holders and traders are teenagers or adolescents, meaning that most of these youngsters are participating in illegal gambling.
Skins betting sites should also be careful not to advertise themselves as something that they are not on streams showing eSports events. This might be interpreted as a deceptive behavior and they might render themselves liable to punishments and fines.
The rise of skins betting caught many people off guard. However, if you think about it, a commodity such as a skin, is really the only thing which could interest millennials into gambling. This is because most young people don't have a budget to operate with and having an alternative such as a skin is really useful. In addition, the appeal of skins betting arises naturally from the young generation's love for eSports events which both incorporate and promote skins.
The fact that the skins betting industry became a billion dollar industry in a period of close to a year really speaks volumes. The rise happened so quickly that no other gambling industry in the world can boast numbers which come even close to how fast the evolution of skins betting happened.
Even though the rise in popularity and demand of skins gambling has been meteoric, most people and most of the gambling industry still doesn't understand the appeal behind skins betting. This is because every generation of gamblers has different gambling preferences. The same goes for different cultures. What is a popular gambling product in India may not be a popular product in Europe.
Skins betting is popular among young people who participate in and follow eSports events. They don't have much of an interest in the traditional products that conventional gambling providers offer, and as we earlier said, they also don't have quite enough money to participate in, say, regular online casinos where you have to put your own money as a deposit.
This also raises the question of whether the gambling industry is at fault for not following new trends and for not modifying its offer so that it is more inclusive and attractive for milennials. Would there be skins betting if the gambling industry was more perceptive to the needs of eSports enthusiasts? We will probably never know.
The rise of the skins betting market is in fact a good indicator of what the new generation of gamblers is looking for and what the gambling industry should strive towards. The right way of approaching eSports enthusiasts and millennials is always through the media that they find most appealing.
The gambling industry has been bewildered by the rise of the skins trading and betting phenomenon and right now they are trying to figure out which things are important for a skins trader when choosing a gambling product. How do milennials and eSports fans actually choose on which games of fortune to deposit their skins on?
This is where our four ‘Ss’ take centre stage. These include what we call social, simple, swift and of course, skins.
Most skin gambling sites offer their customers the chance to place their bets in a pool, which is also known as tote betting. This type of betting means that all the stakes are summed up together and then the betting organizer removes a percentage from the total. What remains is then divided between the players who won their bets.
Social interaction is crucial to eSports enthusiasts and even in games in which you would expect them to play alone against the betting provider (the house), you could find some element of social interaction with other players as well.
Milennials love simple things. Skins trading is quite simple in itself and therefore you can expect that the games milennials will indulge in will be simple as well. In fact, most of the games which have been mentioned in this article are with few options and outcomes and they don’t tend to get overcomplicated.
Coin flips and lottery and roulette games all have one thing in common and that is their simplicity. You don’t have to rack your brain over which option to choose and you don’t have to go and overanalyze things. All you have to do is pick an option and wager your skins on it.
This one is connected to the previous entry. Swiftness and speed are key factors when a millennial chooses where to deposit his skins. In fact, most games that eSports fans choose are games with a quick resolution and not much waiting time between different rounds. Lottery games, coin flips and roulettes fall perfectly into this description.
As we said earlier, it seems like eSports fans really prefer skins to real world money. This obviously means that when they are choosing a gambling product it would most definitely have to enable gambling with skins instead of the universally accepted cash.
When skin betting enjoyed its days of glory in early 2016, predictions went that it would be a $20 billion gambling industry by 2020. However, because of the recent controversy and scandals surrounding skin gambling these predictions were expected to be lowered significantly.
Surprisingly though, early this year, the analysis firm Naruscope came out with a prediction that approximately $13 billion worth of skins will be traded in the year 2020. This is a lower number than what was previously expected, but it is still much higher than what has been traded in the past two years.
This means that, today, skin trading may not be as big as everyone expected before controversies hit back in 2016, but the phenomenon is still going strong and it is still the highest growing gambling market in the world right now.