Gambling in Video Games

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A skin for a weapon in CS:GO from win.gg© [1]

With the rise of using unlockable content as sources of income for the modern video game market, many modern video games have adopted a monetary system where players can acquire cosmetic game content in the form of texture redesigns for in-game items typically called “skins." [2] Often through some form of loot box with variable odds for random items, players can acquire different skins to customize how various items in their chosen game appear. [3] Loot boxes are typically purchased with real money on their own or by the buying of keys to open them. [4] However, certain games also allow the player to unlock forms of loot boxes with experience points which can be acquired through the continual playing of the game. [5] Some games also allow users to unlock skin content through using real-life money directly or purchasing game-specific currency that can be used in a similar fashion. These types of transactions are typically referred to as in-game micro-transactions. [5]

After acquiring these skins, players can then choose to use these skins instead of the default textures that the game presents to them. How skins can change the appearance of the game can vary from changes in clothing to avatars and even weapon camouflages in first-person shooter games. These skins can be purely cosmetic and provide no in-game utility to the player or allow the player to more easily advance in the game. [4] However, players typically aim to acquire skins of a higher rarity because of their low drop rates.[4] The acquisition of these skins through loot boxes has led to debates about them being a gateway to more traditional forms of gambling. [3] Similar to other casino games like slots and roulette, the player pays to get a random chance of potentially winning and profiting from their down payment or losing it all. Ethical implications regarding underage gambling and gambling addiction have also been growing concerns with the fewer amounts of gambling regulations in the gaming industry. [5]

Virtual currency and marketplaces

Along with the rise of skins within game systems, game-centered markets have also been formed to further monetize how players can interact with skins. One of these marketplaces has been the Steam community market. In this marketplace, players can create listings for their cosmetic skins and also buy skins from other players. These transactions create value for each individual skin, often based on their popularity and variety. The values of these skins can range from pennies to thousands of dollars.[6] In this form, skins are a form of virtual currency that players collect and exchange with each other.

Beginnings

A rare cosmetic hat for a playable character in Team Fortress 2 from Rock Paper Shotgun©[7]

In 2012, video company Valve introduced skins to their popular titles of Team Fortress 2 and Counter-Strike Global Offensive. These skins were added in an attempt to increase player engagement, and along with the addition of their community marketplace, they were immensely sought after by a variety of players.[8] In Team Fortress 2, these skins took the form of cosmetic hats and clothing that the characters could wear, and in Counter-Strike Global Offensive, they were brightly colored weapon camouflages. Along with their unique designs that appealed to their player bases, Valve assigned specific rarity values to each skin added into the games that determined the probability that a player would be able to unlock the item through a loot box.[9] These loot boxes could be randomly received through playing the game. However, the player would have to use real money to purchase the keys to unlock them. After using a key with a crate, it would consume both items to unlock a random skin.

As games have continued to develop from their early era, the use of loot boxes to acquire various in-game items including skins has become increasingly commonplace. A study conducted in 2020 on the presence of loot boxes in mobile games on both Android and Apple platforms as well as in desktop games on popular gaming platform Steam showed that 58% of top-grossing Android games, 59% of top-grossing Apple games, and 36% of the most popular games on Steam contained a form of a loot box.[3]

Loot boxes

Loot boxes are virtual item crates that can be obtained and opened by players to redeem a random in-game item. Many games offer these loot boxes as free-to-play rewards for playing the game. However, players can also often purchase these loot boxes with in-game currencies or external funds. With slight variation between different games, these boxes can typically be opened immediately after retrieving them or through forms of digital keys that players can purchase separately for real money.[4] After unlocking each box, it will be consumed and the player will receive a random item from the game. Often each unique item that can be obtained has a different category of rarity, which largely determines its drop rate. The rarest items are generally the ones with the lowest probability of dropping.[4] Much similar to more conventional gambling methods, there is a chance that a player may win big or lose out on their investment. Many popular titles in current video games include loot boxes as a form of obtaining different loot including Star Wars Battlefront 2, Overwatch, Injustice 2, For Honor, FIFA Ultimate Team, and more.[4] [10]

Controversy on gambling status

There has been debate on whether loot boxes should be categorized under gambling, largely because of a loot box's aspect of certainty. Figures from the video game industry have argued that because a player is guaranteed an item from opening a loot box, it does not align itself with definitions of gambling.[4] However, with its potential for monetary exchange, an unknown future outcome, chance determining at least part of the outcome, avoidance preventing loss, winners gaining at the expense of losers, and the ability for many games to cash out rewards, others argue that loot boxes are forms of gambling equal to conventional methods.[10] This grey area on the status of gambling results in varied levels of gambling regulations on loot boxes. Some countries such as China and Japan view loot boxes as inherent forms of gambling and have imposed regulations whereas other countries still have not fully considered where loot boxes fall on the spectrum of gambling.[4]

Esports betting

Stemming from the growing popularity of the competitive esports industry, esports betting has become a popular form of digital gambling within video games since the rise of Twitch and streaming platforms in 2011.[11] Established sports gambling platforms have created opportunities to wager on the results of esports games and its growth has opened the door for new platforms to enter the field of video game gambling as well.[11] Online websites with little regulation allow players to trade in their skins on their websites to be used to place bets on the results of esports games.[11] If an individual successfully places a bet on the winning team, then they receive a percentage of their betting value in return depending on the favorable odds of the game as predicted by the community. Placing a bet on the wrong team would mean that the individual would lose their bet entirely. These websites for esports betting are especially prevalent for games like Counter-Strike Global Offensive, Dota 2, and PUBG where the skins can be cashed out for real money.[11] The revenue of skin betting was estimated to be $56 billion in 2016. However, steps made by game developers on regulating betting on third-party platforms have decreased annual revenues to $670 million. [12]

Match-fixing scandals

The introduction of skin betting brought to light scandals around esports betting through match-fixing.[13] Match-fixing is the purposeful losing of a game with intent for profit. There have been a few cases of professional esports teams being exposed for partaking in match-fixing. In 2014, a Counter-Strike Global Offensive team named iBUYPOWER was discovered to have wagered against themselves in a tournament match using an esport skin betting platform. Following the scandal, the players were banned from competing in future tournaments.[13] In StarCraft 2, a number of high-profile teams were exposed to have partaken in match-fixing, leading to the closing of its long instantiated ProLeague in 2016. [13]

Third-party skin gambling websites

Over the years, third-party gambling websites where players can gamble their in-game skins have also gained popularity among gamers. Players can deposit their skins and choose a variety of traditional casino games to gamble and play in an attempt to gain winnings. Some of these games include roulette, coin flip, jackpot, slots, and case opening. Played in a similar fashion to their original form, the main distinction between these online platforms and their typical rules is the use of virtual in-game skins as currency rather than direct forms of cash. [11] Players can then cash out these skins directly or use other third-party websites to sell the skins for real-life money. In turn, this process makes third-party video game gambling sites very close in function to traditional gambling websites. These websites gained massive popularity in 2016 with an estimated $5 billion dollars being used to gamble with skins. [14]

CSGO Lotto controversy

In the spring of 2016, CSGO Lotto became a popular gambling website for the game Counter-Strike Global Offensive. In design, it was closely similar to many of the other gambling platforms that had developed in recent years. However, a large part of its success was its highlighted exposure to the public through online public figures playing the gambling site on YouTube. Following an investigation by YouTuber HonorTheCall, Trevor Martin and Tom Cassel, also referred to as their online alias of TmarTn and Syndicate, were discovered to have been owners of the website despite not revealing this information to the public[14] The two YouTubers had previously made countless videos on the website where they would win thousands of dollars. Pretending as if they were typical individuals gambling on the site rather than the owners themselves, a controversy around these individuals, as well as skin gambling websites, arose because of the potential for these YouTuber's audiences to be influenced to also partake in the same gambling activities. [14]

Ethical Implications

Underage video game gambling

As games with these gambling aspects are heavily marketed to younger generations, both in-game gambling methods like loot boxes as well as other third-party gambling websites bring out ethical concerns about exposing minors to underage gambling, especially because of how unregulated the space of video game gambling is. Of mobile games on the Apple App store, 42% of games rated ages 4 and up and 60% of games rated ages 9 and up contained loot boxes. [3] This means that a large percentage of minors are being exposed to activities that closely resemble gambling in the games that they are playing from a young age. Even if the loot boxes in many of these games do not interact with real-life monetary funds, the act of exchanging in-game items for a randomized chance for profit may disguise and normalize gambling for vulnerable, under-age individuals. A 2018 study on youth gambling discovered that 3% of their youth participants had placed gambling bets using in-game skins from games before. [15] This may be additionally concerning given the potential for the monetary value to be attached to these virtual in-game skins. Certain skins have been valued at thousands of dollars.[11] Minors may not be aware of the value attached to these in-game items and unknowingly lose money for what they believe in purely an in-game cosmetic. These effects are furthered by the ease of access to third-party gambling websites for many popular game titles like Counter-Strike Global Offensive, Dota 2, and PUBG. These websites are largely unregulated in terms of managing the age of their participants and effectively allow underage minors to access its gambling features of esports betting and other wager games.[11] As soon as individuals sign up for the platform, there is no age verification and they can begin gambling their skins on the platform almost immediately. Websites typically only require a login through a player's Steam account, which does not take into account their age or any form of ID verification.[11] Social media influencers who market themselves playing the game exemplify this effect of exposing underage minors to gambling. Many of these gambling websites offer sponsorships to online streamers for them to market and play on their websites to their viewers in order to increase engagement with their website.[11] However, many of these viewers may be minors and follow their influencer's marketing to partake in gambling websites. In all, the blurred lines of what constitutes video game gambling, frequency and potential for minors to be able to access gambling features, and third-party gambling websites create ethical concerns for underage gambling.

Video game gambling addition

Virtual cosmetics in video games are highly sought-after items in many popular video games that players hope to obtain in order to specialize their experience playing the game. However, many games make the process of obtaining these virtual in-game items, especially ones of higher rarity, especially difficult without adding external funds in one way or another. For many games such as Overwatch, Apex Legends, Counter-Strike Global Offensive, Team Fortress 2, and other loot box-centered games, this is exactly the case. Purely playing the game will only leave a player with extremely common, low-valued skins in typical cases. To counter this challenge, many players partake in video game gambling through the game in the form of loot boxes or through third-party websites that allow users to wager their skins for the potential of profiting if they win. However, engaging in these websites has shown to be highly addictive and lead to symptoms of compulsive gambling typically more associated with traditional gambling methods. This process can be a slippery slope, starting with hopes to acquire a particular skin and growing into an addiction to win more returns or recover from losses.[14] In particular, a minor's family that is now in a class-action lawsuit against Valve, the major video game company that developed the popular titles of Team Fortress 2 and Counter-Strike Global Offensive, recalls the process of their son beginning his gambling addition behind their back through virtual third-party skin betting websites in Counter-Strike Global Offensive. Starting with small transactions, he eventually began selling his own personal items and even stealing their credit card information to obtain more skins to wager on gambling sites.[14] When these instances of gambling are made more mainstream through the normalization of loot box gambling in video games, video game gambling addiction becomes a growing ethical concern for some. Loot boxes are extremely prevalent in video games, with around 56% of mobile games and 35% of desktop games containing a form of a loot box. [3] This frequency may open the doors of gambling to more susceptible individuals and leave them vulnerable to potential gambling addiction and its other negative effects.

Low win rates

Many modern video games with cosmetic items introduce these virtual in-game items through loot boxes. The growing ethical concern around this method of skin distribution is the low win rates of these loot boxes in particular not allowing individuals to fairly access certain aspects of the game's contents. This effectively creates a divide where only wealthier players can obtain the rarest skins. It is generally unknown the exact probabilities of unlocking different rarities of items in different games. However, regulations first made by the People's Republic of China have begun to require games to disclose the exact probabilities of obtaining different rarities of items.[16] In certain video game examples released by these regulations, it was disclosed that for a game named Game 75 the probability of obtaining a Super Super Rare reward was 0.5%.[16] This probability, which reflects similar probabilities of loot boxes in other popular game titles, indicates the chance of obtaining extremely rare items through loot boxes are very low. Statistically, a player would have to unlock 200 items to expect one extremely rare item with these odds, and nothing is guaranteed. Games typically price each loot box at a few dollars, resulting in loot box successes costing hundreds of dollars of investments. These investments are not feasible for many players, bringing into question the ethics of these extremely low win rates of loot boxes for players of mobile and desktop video games. On the contrary, many video game industry leaders discuss that loot boxes themselves are fair because for many games, the in-game items have no real-life value outside of the game and the player is guaranteed to retrieve an in-game item after unlocking one.[4] Taking an alternative view on the discussion of loot boxes, video game companies like Riot Games have already started branching away from loot boxes in their recent video game Valorant. [17] Instead of encouraging players to unlock virtual in-game skins through random chance in loot boxes, Valorant has a business model focused on in-game store and battle pass microtransactions.[17] In this manner, players can purchase skins directly or through a battle pass that will guarantee that they will receive certain items if they play enough to earn the required amount of points to complete it.

References

  1. ↑ How to trade and sell CSGO skins for real money outside of Steam. (2022). WIN.gg. https://win.gg/news/how-to-trade-and-sell-csgo-skins-for-real-money-outside-of-steam/ ‌
  2. ↑ Gibson, E., Griffiths, M. D., Calado, F., & Harris, A. (2022). The relationship between videogame micro-transactions and problem gaming and gambling: A systematic review. Computers in Human Behavior, 131, 107219. https://doi.org/10.1016/j.chb.2022.107219
  3. ↑ 3.0 3.1 3.2 3.3 3.4 Zendle, D., Meyer, R., Cairns, P., Waters, S., & Ballou, N. (2020). The prevalence of loot boxes in mobile and desktop games. Addiction, 115(9), 1768–1772. https://doi.org/10.1111/add.14973
  4. ↑ 4.0 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 IS THE BUYING OF LOOT BOXES IN VIDEO GAMES A FORM OF GAMBLING OR GAMING? | Gaming Law Review. (2021). Gaming Law Review. https://www.liebertpub.com/doi/full/10.1089/glr2.2018.2216
  5. ↑ 5.0 5.1 5.2 Gibson, E., Griffiths, M. D., Calado, F., & Harris, A. (2022). The relationship between videogame micro-transactions and problem gaming and gambling: A systematic review. Computers in Human Behavior, 131, 107219. https://doi.org/10.1016/j.chb.2022.107219
  6. ↑ Steam Community Market :: Showing results for: Counter-Strike: Global Offensive. (2021). Steamcommunity.com. https://steamcommunity.com/market/search?appid=730#p1_price_desc
  7. ↑ Castello, J. (2019, August 3). Valve address market-crashing Team Fortress 2 hat glitch. Rock Paper Shotgun; Rock Paper Shotgun. https://www.rockpapershotgun.com/valve-address-market-crashing-team-fortress-2-hat-glitch
  8. ↑ Wikipedia Contributors. (2022, January 15). Skin gambling. Wikipedia; Wikimedia Foundation. https://en.wikipedia.org/wiki/Skin_gambling
  9. ↑ Wiki Targeted (Games. (2022). Skins. Counter-Strike Wiki. https://counterstrike.fandom.com/wiki/Skins#Skin_Quality:
  10. ↑ 10.0 10.1 Drummond, A., & Sauer, J. D. (2018). Video game loot boxes are psychologically akin to gambling. Nature Human Behaviour, 2(8), 530–532. https://doi.org/10.1038/s41562-018-0360-1
  11. ↑ 11.0 11.1 11.2 11.3 11.4 11.5 11.6 11.7 11.8 View of Esports Betting and Skin Gambling: A Brief History. (2022). Camh.net. https://jgi.camh.net/jgi/index.php/jgi/article/view/4059/4471
  12. ↑ WHERE’S THE ACTION? Analyzing the intersection of the gambling and esports industries. (2016). https://www.thelines.com/wp-content/uploads/2018/03/Esports-and-Gambling.pdf
  13. ↑ 13.0 13.1 13.2 Esports consumer perspectives on match-fixing: implications for gambling awareness and game integrity. (2019). International Gambling Studies. https://www.tandfonline.com/doi/full/10.1080/14459795.2018.1558451?casa_token=a7UaqkCnMOwAAAAA%3AXvlN-REr9mw5mBdY7D4AGDwffHCo9XokEz5nWpAHL8H5-bMARrqKEJab3NBnT-DtLhpQCwhr5N2ljw
  14. ↑ 14.0 14.1 14.2 14.3 14.4 How Counter-Strike spawned a $5 billion gambling market you’ve never heard of. (2015). ESPN.com. https://www.espn.com/espn/feature/story/_/id/18510975/how-counter-strike-turned-teenager-compulsive-gambler
  15. ↑ Macey, J., Abarbanel, B., & Hamari, J. (2020). What predicts esports betting? A study on consumption of video games, esports, gambling and demographic factors. New Media & Society, 23(6), 1481–1505. https://doi.org/10.1177/1461444820908510
  16. ↑ 16.0 16.1 Xiao, L. Y., Henderson, L. L., Yang, Y., & Newall, P. W. S. (2021). Gaming the system: suboptimal compliance with loot box probability disclosure regulations in China. Behavioural Public Policy, 1–27. https://doi.org/10.1017/bpp.2021.23
  17. ↑ 17.0 17.1 Brown, F. (2020, March 5). Valorant will have a battle pass and sell cosmetics, but it won’t have loot boxes. Pcgamer; PC Gamer. https://www.pcgamer.com/valorant-will-have-a-battle-pass-and-sell-cosmetics-but-it-wont-have-loot-boxes/
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