The UK Gambling Commission is responding to changes in the online gambling world including the rise of skins betting in eSports by warning online operators that they must be licensed to offer gambling in Britain.
The commission outlined the policy in a recently released discussion paper that laid out the commission’s positions on virtual currencies, eSports and social gaming. The commission said it released the paper in response to the rise of social gaming products that involve gambling and technological advances and the expansion of digital or virtual currencies.
The commission also recently updated a clause in its license conditions and codes of practice to include the use of digital currencies, such as Bitcoin, as a valid method of transactions for its licensees.
However, recent developments in the eSports world over skins betting on games like Counter Strike: Global Offensive called attention to the commission’s position on eSports. “Skins” betting is the wagering of virtual items from the game—such as weapons—which players have attached monetary values to. This type of betting is largely unregulated and often involves young teens and children.
“Our key concern is to ensure that consumers are protected and that children and other vulnerable people are not harmed or exploited by gambling,” said Neil McArthur, general counsel for the commission in a press statement. “This discussion paper brings to the fore some areas where we see real issues for regulation, player protection and the protection of children and young people.”
The paper also spoke to virtual currencies.
“We are concerned about virtual currencies and ‘in-game’ items, which can be used to gamble,” the statement said. “We are also concerned that not everyone understands that players do not need to stake or risk anything before offering facilities for gaming will need to be licensed. Any operator wishing to offer facilities for gambling, including gambling using virtual currencies, to consumers in Great Britain, must hold an operating license. Any operator who is offering unlicensed gambling must stop or face the consequences.”
Gambling on eSports was recently jarred by scandals involving skins betting and centering on Counter Strike: Global Offensive which resulted in game developer Valve moving to shut down skins betting sites using its software platforms. The company is also facing lawsuits on skins betting, mostly by parents claiming their young children lost large amounts on the sites. Valve has said it did not participate or gain revenue from the betting sites.
The company sent cease and desist letters to 42 sites offering skins betting using its Steam Platform, by reports say only about half the sites have shut down, while another nine have temporarily stopped taking bets. Skins betting continues, however, on another nine sites according to esportsbettingreport.com.
However, CSGO Lounge, one of the largest and most popular betting sites recently complied with the letter and shut down skins betting. The site initially posted comments that skins betting could not be construed as gambling as the virtual skins have no real monetary value, but the site has also been named in lawsuits from players seeking to recoup losses.
Recent reports have also disclosed that CSO Lounge is majority-owned by ESForce Holding, the same organization that owns top Counter-Strike team Virtus.pro. That creates another potential conflict, as players can bet on the team at a site owned by the team’s owners.
Much of the controversy over CSGO began when it was disclosed that many known eSports players were using YouTube to promote CSGO sites they also had a stake in.
The UK commission’s paper carried a warning to skins betting sites still operating in the UK.
“We are also concerned about betting on e-sports. Like any other market, we expect operators offering markets on e-sports to manage the risks—including the significant risk that children and young people may try to bet on such events given the growing popularity of eSports with those who are too young to gamble.
Social gaming issues were also addressed.
“Finally, in terms of social gaming, the Commission’s view has not changed significantly since the publication of its social gaming paper in January 2015,” the statement said. “But if we discover that items such as additional spins, credits or tokens or even loyalty points are tradeable, then we will be taking a keen interest.”
Reactions to the paper can be filed with the commission until September 30.
