It’s common thinking these days that eSports as an industry has only just started. Its also fair comment to say that eSports betting is also increasingly on the rise especially considering that some major online sports books such as Betway eSports and Bet365 have started offering markets on various games within the eSports arena. This type of betting is part of the traditional bookmaker or parimutuel betting that has been offered for literally 100’s of years although nowadays the online betting segment is outgrowing the traditional shop or offline betting segments but they all still offer the same model.
What many people don’t know is that there are additional ways or forms of betting on eSports and its something that the public have been actively participating in since 2013. So active in fact its estimated that this segment generates upwards of $4.5 million in wagering every day! It’s referred to as “Skin Betting” and its mainly taking place on two of the most popular eSports games namely, Dota2 and more significantly CS:GO. Ever since the introduction of skins to these games and the release of various skin betting websites, analysts say that viewership has hit double digit growth going from 30,000 viewers to 600,00 viewers and it continues to grow on a monthly basis. “Skin betting” as it is most commonly referred to, is where players bet in-game virtual items in tote or Parimutual style betting pools. These bets are made on the outcome of a particular match such as win, lose or tie. Alternatively there is also casino jackpot style betting. These virtual items offer status symbols and boasting rights among its community of players and ego and pride are huge elements of Skin Betting.
Now, remember these virtual items should have zero cash value as the IP and rights of these items are owned by the games publisher, in this case the Valve Corporation, and readers should note that there is no way of selling these items back to Valve. So whats the catch? The catch is that these items can very easily be exchanged or converted into real cash on one of two ways:
- They are offloaded via Valve’s own Steam marketplace. Steam is mainly used to distribute Valve’s huge catalog of game titles, users can deposit money into their Steam account and then they can buy or sell items on the Steam Marketplace. Valve take commission off of each sale made.
- They are sold via independent (or not, depends how you look at it) 3rd-party sites and market places. Site such as OPSkins or CSGO Lounge.
The sale price of these items are determined mainly by the market. Skins are generated by Valve, the games publisher. When players to purchase new Skins, the players buys both a “Case” and a “Key”, together they become random items or skins and the more rare the item the higher the price tag and the more money it could be sold for on the Steam marketplace or the various other 3rd party sites.
Some may argue that because these items are so easily sold for real cash on the open market, games like CS:GO and Dota 2 are essentially facilitating illegal betting activities, especially considering there are no proper KYC checks on customers that are purchasing the skins to sell, bet or exchange. This could cause major problems from an under age gambling perspective. Many industry insiders have commented that Valve is actually responsible for this Skin betting activity. They are providing these 3rd party sites with access to their API’s and bots so they can in turn facilitate this entire skin betting activity. Don’t be mistaken, Valve are making a killing from this and considering the latest sagas in the Daily Fantasy Sports (DFS) market, we think its only a matter of time until the gaming regulators start investigating Valve and the various Skin betting exchanges and marketplaces. If and when this happens, these sites will need to apply for a gaming license in order to continue to operate and then they need to compete with the rest of the traditional online gaming operators.
Only time will tell what will be next for the skin betting segment of the eSports community. We all know prohibition ultimately never works and on the internet its nearly impossible to stop.