CSGO has a gambling problem. Valve is involved in a suit over whether CSGO's key-and-crate loot system and the accompanying skin market should be defined and regulated as gambling, while a handful of YouTubers have been exposed as the owners of a skin gambling site they promoted. Another confessed that his gambling wins were staged in conjunction with the betting site.
This has prompted airmchair lawyers to sit up straight and start dispensing their own dubious wisdom. What counts as gambling? When should we fire up the electric chair? I'm as guilty as anyone.
Thankfully, three real lawyers—Bryce Blum, Ryan Morrison and Jeff Ifrah—held an AMA on Reddit to dissect the key issues. They often disagree, which should tell you that whatever lies ahead for betting in CSGO, it won't be a smooth ride.
So, is skin gambling actual gambling in the eyes of the law?
"For my money," Blum (/u/esportslaw) says, "I think this is a no brainer because the secondary market is prominent, permitted to exist, and skins have widely known value. That being said, there isn't a case directly on point here so it's impossible to say for certain."
"In our work," Ifrah (/u/ifrahlaw) contends, "the question is whether the skins are a 'thing of value.' Generally, in traditional gambling cases, this means cash or chips. There is a recent court decision from Maryland—Mason v. Machine Zone—that stressed the distinction between virtual things of value and things of value with 'real world' value. I think this case will be instructive in the future. Skins, even with secondary markets, hold their value because of the gaming, which puts it squarely in the virtual world. If the skins are virtual things of value, using them for gambling would be OK under most laws."
They're even further from consensus on whether the YouTubers at the heart of recent scandals are likely to face criminal proceedings.
"From my perspective," Blum says, "it’s pretty unlikely that the government will do anything here. Pretty much every government agency is understaffed and overworked. Whether or not a case is pursued is a matter of prioritization and allocation of limited resources. Remember that the fantasy sports industry was massive for years, but it took a highly public insider trading scandal and one of the largest ad buys in history to give the situation sufficient profile to warrant governmental action."
"I respectfully disagree with Bryce," Morrison (/u/VideoGameAttorney) says, "and think jail time and/or criminal charges are a real possibility here. DAs go after juicy stories to build their careers, and this is that. Thousands upon thousands of kids tricked into spending money on a site that they lied about not owning. There will be one state that goes all in on this, and that's all it takes. I really believe that."
And what about the Valve case? Does it have legs?
"I don't think the lawsuit against Valve will go anywhere," Morrison says, "but it definitely has legal ground. While I expect it to settle quickly and not see a courtroom, keep the following in mind:
"Valve owns every single skin that exists. You don't buy skins, you buy a license to use the skins.
"Valve has been reported as helping to actually run these websites (specifically CSGO Lounge according to Bloomberg article).
"Valve allows you to buy and sell skins on their own market, and allows unregulated gambling websites to use their API to operate with ease.
"So if you own every skin, help run the websites that gamble them, and then turn those skins into quick and easy cash... that's a recipe that some folks may call 'not wonderful.' For what they can do? They can stop letting these insanely popular websites use their marketplace so easily."