What is Skinbetting and How it Works?

Skinbetting is a kind of betting on e-sports and other gambling with one significant difference: instead of real money, a bettor risks playing game values ​​(weapon skins/game items). Bets are usually drawn on items from Dota 2 and Counter-Strike: Global Offensive, as the rest is either not highly quoted or can’t be converted into cash (as is the case with the popular League of Legends game in the West). In special cases, items from Team Fortress 2 are used – the first game that offered the exchange and trade of virtual items, as well as games and items for customizing the profile on Steam. The urgency and sharp increase in the volume of bets in skinbetting are due to one important aspect: the user gives not money, but already acquired or received virtual goods, with which it is easier for him to part with. In addition, a whole new age category is involved in skinning – minors, who find it difficult to play in traditional bookmakers and self-respecting online casinos.

Skinbetting can be divided into several different types, interest in which has grown significantly over the past two years:

• bets on events (and this is not just cybersport matches);
• lotteries;
• casino (roulette and card games).

According to Narus Advisors/Eilers & Krejcik Research, in 2016, the world has been supplied with gaming items worth a little more than 4.9 billion dollars, which is 88% of the total estimated amount of bets for e-sports (the remaining 12% are real money bets, including fantasy and h2h).

It is noteworthy that the skins for matches are only 45% of the total turnover of skinbetting. Another 40% of the turnover is accounted for by lottery and roulette combined.

How skinbetting works?

All sites that organize gambling on skins, use bots – programs that deal with the traffic of skins between users of the service. The user through the exchange on Steam sends items to the site, which in turn evaluates the items and displays the amount to which the user makes a deposit. Further, the user performs game actions with a deposit: bets, a roulette game, and so on. The user can withdraw the balance by exchanging it back to the game items, which can later be exchanged for real money.

Often skinbetting sites have a commission for the input and/or withdrawal of game items, so that the site is not used as an exchanger. Also there are sites that do not translate skins into balance – the user makes items and instantly uses them in the game (usually in roulette), and in case of a win the bank gets. The owners of such sites charge a commission from each game.

History of skinbetting

The era of gaming economy began in September 2011 with the appearance of the first exchangeable items in Team Fortress 2. In the summer of 2012, when such a system arose in Dota 2, people in the background of experience with TF2 already almost understood what was waiting for them. Sites and forums began to appear where the trading of game items was conducted, and even a game currency appeared in each of the games – the keys to the chests.

With the introduction of game items in CS:GO, the popularity of Team Fortress 2 began to drop significantly, and with it the economy of the game. Valve very casually promoted its gaming policy: tested the innovations on older products, such as TF2 and Dota 2, and then, if successful, implemented them in CS:GO. This led to a total economic collapse in Dota 2: once rare items like Golden Baby Roshan, costing $10,000 each and only appreciated over time, began to cost no more than $1500. This policy led to the fact that only in CS:GO the gaming economy is still in a stable state, and Valve does not risk conducting experiments on it, which is why CS:GO items are most popular in skinbetting.

It is worth noting that when the economy of Dota 2 and CS:GO was just beginning, the main consultant of Valve on this part was the current Minister of Economy of Greece – Janis Varufakis, who was personally invited by the owner of the corporation Gabe Newell. It was after the departure of Janis from the post of consultant in connection with the assumption of the post of Minister of Economy that the economic system of Dota 2 began to collapse, as Janis wrote in his blog.

The starting point for the birth of skinbetting – the beginning of 2013, when the Dota2Lounge were offered bets on game items for matches on Dota 2, which was soon followed by the opening of CS:GO Lounge. These sites first gave the opportunity to bet on the outcome of the top league matches in these disciplines on the basis of the tote: the coefficients were set depending on the amounts bet on one or another outcome, and the bets were measured in the rarity of objects (rare, uncommon and so on). The tote returned several items of a rarity in case of victory. Later, the service began to recognize the prices of items and issue prizes in the form of items, the total value of which was equal to the sum of the winnings.

Along with a sharp increase in interest in CS:GO Lounge and Dota2Lounge began to appear and other similar sites. 2015 introduced the game community with a new type of skinbetting – jackpots. In jackpots, each time interval (usually 1-2 minutes) is played out by a bank in which users place their items. Depending on the value of the items, players have a different chance of winning. For example, adding items for $10, with a bank of $100, you have a 10% chance of winning. The winner is selected randomly, taking into account the chances of each participant and receives the entire bank, except for the site commission. In 2016, a quarter of the world’s volume of skins was accounted for by jackpots.

Numerous clones of the pioneers of the industry were promoted mainly by advertising on the channels of popular streamers and players on YouTube/Twitch. Some such personalities were later noticed in fraud: either they themselves opened such sites and covered themselves with invited guests, or website owners “twisted” their wins on the site, which created an incredible excitement: viewers simply fled to the site and lost everything, while the owners could any time to choose the winner at its discretion, and the user could not prove the act of fraud – and he had no one to turn to.

It is worth mentioning separately and skinbetting fantasy leagues. Cybersport fantasy is an analogue of fantasy leagues for traditional sports where the user assembles a team of several players who take part in real sporting events and, based on the performance of these players in the real world, gains points in fantasy, having the opportunity to receive a prize depending on the bet made. Originally there was a project Vulcun.com, which allowed playing in fantasy leagues for real money. Since the project was Canadian, a year has not passed since their activity was suspended by the Canadian government. The project reacted quickly, replacing the cash bets for skinning, which allowed the site to survive for another year, until it was taken up by Valve. They drew attention to this project only after Vulcun became the general partner and sponsor of Starladder and other cybersport organizations. Today Vulcun is completely collapsed, and its creators went into streaming.

Valve hunting for skinbetting

In 2016, Valve started hunting for skinbetting. It all began with the Washington state authorities who sued Valve because the developer’s products, in their opinion, were used in illegal gambling. Valve was forced to impose sanctions: the company began to block gaming accounts that were used by large skinbetting sites, and also agreed with large-scale media and social networks such as Twitch and Hitbox that advertisements for such services were blocked there. Even before the public statement about the fight with skinbetting, Valve blocked the domains of these sites during authorization via Steam, which led to the appearance of notifications that the site may be fraudulent. However, this did not prevent owners of skinning resources, which used a proxy, with which Valve did not even fight.

No matter how threatening this attack may look on skinbetting services, they still exist, including some of the oldest ones, such as CS:GO Fast. But some of them still had to stop their activities. The first to be distributed were the most popular resources, such as Dota2Lounge, CS:GO Lounge, CS:GO Double and others. Each of these resources was given the opportunity to suspend its activities for two weeks, after which Valve threatened to start blocking their bots. Almost all agreed with the terms: someone closed their resources, because they no longer had any sense, someone changed the services provided by the site. The project Lounge also had to abandon skinbetting and take in the form of bets virtual currency, which can neither be acquired nor withdrawn – only for the form and statistics.

It can be concluded that while Valve failed to deal with skinbetting. Until now, there are a huge number of sites offering gambling with skins from Dota 2, CS:GO and TF2 as bets. Although on January 30, 2017 Valve again made itself felt: this time he declared war on sites offering bets on skins from Team Fortress 2. It’s unlikely that the only case will be limited to Team Fortress 2, because the scandals surrounding the skinbetting resources are becoming increasingly large, and already Valve users themselves ask the company to solve this problem.

The future of skinbetting

Forecasting the future of skinbetting is as difficult as releasing Half-Life 3 – and here too everything depends on Valve, which has always been famous for its laziness, slackness and propensity for false promises. It’s been almost a year since Valve announced the fight against skinning, but even those sites that were listed in the letter from Valve are partially working. Why? Perhaps Valve has no motivation to do it properly.

The very existence of skinbetting brings Valve a huge profit: people buy items to use them for betting and gambling, and of course buy better from a trusted source, I mean Valve. And periodically Valve blocks the accounts of active players, and this leads to the fact that players again buy items – and so on ad infinitum. This all sounds like fighting with cheats in CS:GO. Instead of creating antiquity Valve blocks players, and this leads to the fact that violators buy the game to a new account – which significantly increases the developer’s profit.

Whatever it was, once owning several skinbetting resources and understanding the concept of such services, we can say that there is almost always a loophole for work. Perhaps the only solution that can completely stop this activity is the disabling of the exchange on Steam with the retention of only the Steam Market. The only and most serious problem in this case is the user’s response, because people have invested and are investing huge amounts of money to purchase skins for personal use or collections that will depreciate after the introduction of such sanctions. Although it is impossible to say for sure that this will stop Valve, at one time destroying the economy of Dota 2 and devalued a huge number of inventories.