Counter Fraud: Global Defensive

Counter Fraud: Global Defensive

Hiding in Plain Sight

July 2016 is a month that will be branded in the minds of eSports enthusiasts the world over. One of eSports biggest assets, Valve’s ‘Counter Strike:Global Offensive’ (CS:GO for short) was rocked by arguably its biggest ever scandal. The implications of which go well beyond the realm of video games.

Counter Strike in its current form was released in 2013, although the earliest edition in the franchise was initially released in 1999, with Valve acquiring the intellectual rights and re-releasing the game on Microsoft PC’s in 2000. The first person shooter has seen exponential growth over the past few years, boasting over 10 million unique players a month and at peak 850000 people online simultaneously in April 2016.[1] The game has benefited largely from the increased investment into eSports and the explosion of Youtubers and Twitch streamers who command followers ranking in the millions.

On the 27th of June, a small Youtuber going by the moniker ‘HonorTheCall’ released a video (https://www.youtube.com/watch?v=4IuXz-cux1M) exposing two substantial Youtube content creators of operating the gambling site CSGOLotto.com. The aforementioned website is a place where anyone can go to gamble with ‘skins’; aesthetic objects which can be applied in game to change the appearance of a user’s gun. Skins were introduced to the game in August 2013, when Valve introduced the ‘Arms Deal Update’, “which lets you experience all the illicit thrills of black market weapons trafficking without any of the hanging around in darkened warehouses getting knifed to death.”[2] The two Youtubers implicated in HonorTheCall’s exposé were TmarTn and ProSyndicate, who together possess a combined following of over 10 million people, although their main target audience is teenagers and young adults.

Whilst operating an unregulated online gambling site can be considered problematic within itself, the videos they released gambling on these websites can be considered nothing less than morally deplorable. One of the most widely condemned of these was a video made by TmarTn, titled “How to make $13,000 in 5 minutes”. (https://www.youtube.com/watch?v=1v6t6iqhoSI) In this video he makes a quick buck gambling skins. What TmarTn failed to mention, however, was that he was the co-owner of the site on which he was betting… Failing to disclose this information to his young and impressionable viewers obscures the fact that he stood to gain financially from the increased traffic to his new website. The most damning quote from this series is “[A friend] has been hitting me up and we found this new site named CS:GO Lotto. I’ve put a link down in the description, check it out. Anyway, we were betting on it today and I won $69 or something, so it was a pretty small pot but it was the coolest feeling ever!” Here he not only insinuates that he has no stake in the site, but also encourages his viewers to pay it a visit, in his pandering, relatable tone. Since the story broke, the two have been named in a class actions lawsuit alongside Valve, the developer of CS:GO.[3]

“I won $69 or something, so it was a pretty small pot but it was the coolest feeling ever!”

Popular gaming website Vulcun has also been exposed by investigative journalist Richard Lewis as having suspiciously close ties to CSGOJackpot.com. The site is run by a group based in San Francisco, yet the sites terms of service stipulates that they are subject to the laws of Portugal. It is the small nuances such as this that are coming to light thanks to the work of members of these gaming communities. Lewis also exposed a number of popular Twitch streamers of rigging the outcomes of the skins betting, as they had access to the backend systems of their websites, allowing them to know the likelihood of them winning if they bet at any particular time. The work of Richard Lewis and others like him is shedding light on the shady operations of some of online gaming’s most popular characters. Sadly those affected by this the most are the young players of these games, as they learn that their naivety has been exploited by the people that they had previously looked up to and trusted.

But is this all technically illegal? Sites such as CSGOLotto and CSGOJackpot have benefitted from the legal grey area surrounding the monetary value of skins. A class action lawsuit filed in the USA contends that skins are no different from casino chips by virtue of that fact that they can be converted by various sites such as opskins.com to cash.[4] The lawsuit was initially filed by a player who said that he lost large sums of money betting with skins whilst he was underage. Since this became public many others have jumped on board and there are now numerous cases being brought against Valve and the betting sites.[5] An important consideration is the fact that people do not own the skins with which they are betting, rather the skins are licensed by Valve, meaning that company in fact owns all in-game items.[6] Whether or not Valve has inadvertently created a new form of digital currency is a contentious issue, it will be interesting to see the outcome of this debate.

Above: A market listing of a ‘skin’ available to purchase in game

So where does Valve stand in all of this? Their open API (Application Programming Interface) has facilitated the gambling sites as companies utilise this system to exchange the skins. Since the story broke, Valve has sent out cease and desist letters to the worst offenders, with varying degrees of success. Needless to say the betting of skins could be stopped tomorrow if Valve decided to restrict their API. This would most likely cause a crash in the market of CS:GO skins, some of which are worth thousands of dollars. With the vast amounts of money invested by players, the complete destruction of the market seems unlikely. Similarly, Valve trying to make the problem disappear by settling the lawsuits is most likely off the cards as settling one would be an admission of guilt, meaning substantial payouts to claimants.

Valve’s efforts have not completely been in vain, however, as on August 16th the largest of the betting websites, CSGOLounge, shut down its skin betting operations with immediate effect. Whilst this may be considered a step forward by some, there are still other places for people to bet their skins. As long as Valve allows anyone to use their open API, there will be imitators and coders setting up their own unregulated websites in the hopes of exploiting the lack of control exerted by legislative authorities to make money.

The danger of a draconian backlash from governmental bodies is that it may drive online betting underground into the hands of organised criminals. Weighing this up against underage gambling is a difficult binary to consider. Perhaps the most feasible option would be the regulation of these new forms of online gambling. A case study to consider could be that of online poker in the USA. Online poker is currently legal in only 3 states: New Jersey, Nevada and Delaware. Proponents for the regulation of online poker argue that it is a skill based game and that they should be allowed to bet on this, although poker players in the US have been rallying for regulated online gambling for years with little success. The federal embargo on online poker has had a similar effect to prohibition in the 1920’s and 30’s. Those who want to play are finding ways to circumvent the rules. In the case of online poker this involves playing on unregulated offshore websites, where this money ends up is anybody’s guess. In the case of prohibition, we know that the profits ended up in the hands of organised criminals, will history repeat itself?

Calls for legislative action are not confined to the US, as an Australian independent senator Nick Xenophon commented that “Instead of shooting avatars, parents soon find out that [their children] have shot huge holes in their bank accounts.”[7] He has since called for games such as CS:GO to be classified as gambling games and has sought support from Australia’s numerous parties. South Australia’s state government has already directed the Independent Gambling Authority not to approve betting of any kind on eSports.[8] Whether this is the legitimate concern of a troubled senator, or the demagogic ramblings of a self-interested politician (his independent party is rather humbly named the ‘Nick Xenophon Team’), his words ring true. Young kids are being encouraged to gamble, and it is their parents who are more often than not footing the bill.

What does this mean for the future of Counter Strike within online gambling? For a game which has already had to deal with numerous moral quandaries such as the fact that the game is based around battles between terrorists and counter-terrorists, or the hacking scandal which marred the CS:GO eSports scene back in 2014, the events of July have thrown another ethical spanner in the vast machine that Counter Strike:Global Offensive. At this point all we can do is speculate, all we know is that the days of the digital Wild West are numbered, and perhaps nearing their close.

Joshua Olson-Kerrigan.

[1] http://steamcharts.com/app/730#6m http://blog.counter-strike.net/

[2] http://blog.counter-strike.net/index.php/2013/08/7425/

[3] http://www.dailydot.com/esports/csgo-gambling-scandal-explained/

[4] http://www.polygon.com/2016/6/23/12020154/counter-strike-csgo-illegal-gambling-lawsuit-weapon-skins-valve

[5] http://www.dailydot.com/esports/csgo-gambling-scandal-explained/

[6] http://www.polygon.com/features/2016/7/18/12203534/counter-strike-cs-go-skin-gambling

[7] http://www.smh.com.au/technology/games/just-when-we-got-used-to-kids-dying-or-killing-on-screen-something-worse-came-along-20160728-gqfp5x.html

[8] http://www.esportsbettingreport.com/south-australia-prohibits-betting-esports/