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Skin Gambling: The Intractable Betting Trend in the UK

Skin Gambling: The Intractable Betting Trend in the UK

What are skins?

A skin is a graphic or audio download which is used to change the appearance of a game character. The term “skin” has its origin from the typical functionality of these virtual items. Skins have no direct influence on gameplay and are aesthetic (used to decorate or customize weapons, a player’s avatar or gear). There are various ways for players to gain these skins.

What is Skin Gambling?

In ‘skin gambling’, gamers exchange virtual goods that they’ve won or bought in multi-player games for virtual gambling chips. Skins became popular after the development of Counter-Strike: Global Offensive (CS: GO) by US-based Valve Corporation in 2012. Valve Corporation also developed the Steam platform. Steam is a video game digital distribution platform, which allows players to buy, sell or trade their skin collections for actual or virtual currency. The software provides an application programming interference (API) called Steamworks, which allow developers to integrate many functions of Steam with their systems.

This developed the third-party websites which allowed users to trade their skins. By linking their Valve account to gambling sites, players could use their skins to bet on everything from CS tournaments, to simple, fast-paced games like roulette or even coin flips. Additional sites developed, which allowed users to interchange skins for cash. These casino styled websites grew in popularity over the years and their total global value has reached over £10 billion.

How do people bet skins?

Like casino chips, CS: GO chips can be traded between players and the house. This service allows the skin to serve as a currency that can be used for betting in any gambling activity. Players deposit skins at a gambling site. They gamble using their deposited skins and if they win; they are paid in additional skins, which they cash out by requesting the betting site.  Once players have skin in their steam account, they can; leave the skins in their inventory account, use the skins to change the aspect, trade skin with other players, exchanging skins for cash on third party sites or sell skins on the Steam marketplace.

Skin gambling can come in other forms such as ‘loot boxes’ and ‘mystery chests’. Loot boxes are basically a subcategory of micro-transactions. A micro-transaction is a term that applies to small value financial transactions that happen within the digital games and apps. Micro-transactions allow the exchange of real money for credits in a specific game. The credits can later acquire something inside the game (loot boxes, equipment or other things). When players buy loot boxes, they receive a randomized set of virtual items just like on a slot machine.


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Impact of skin gambling In the UK.

The development of skin gambling into a multi-billion dollar industry by turnover took a little over a year and happened in an almost organic fashion. 90% of 13-18-year-olds in the UK play games online. Parent zone (an organization that provides support and information to navigate the internet safely and confidently) commissioned an Ipsos MORI survey with 1,001 children aged 13 to 18 to find out what they know about skin gambling. According to this survey, nearly a third of these children have heard of skin gambling (30%). 10% of children across the UK aged 13- 18 revealed they have gambled skins in some form.

This percentage amounts to approximately 448,744 children in the UK aged 13-18. 1 in 5 of all the children surveyed that have skin gambled was female. This problem arises because of age verification technology that varies between different websites which offer skin gambling services. Over 46% of children across the UK aged 13-17 can access sites not intended for their use. Many adults are not aware of skin gambling and its widespread in the UK, which allows children to spend money online on these gambling platforms. There is no world in which such a rapid development occurs in such a fashion absent an intense level of inherent demand for gambling among Esports fans. There have even been reported cases of millennials addicted to skin gambling.

Legalization in the UK.

Like all things gambling, skin gambling exists in a legal grey area. The UK Gambling Act came into force in  2005 which considers gambling as a game that involves an element of chance that can be eliminated by superlative skill, and a game that is presented as involving an element of chance. The approach to deal with operators, who are offering facilities for gambling using virtual currencies, skins or other in-game items, is similar to the approach adopted when dealing with any unlicensed operator. If unlicensed gambling is taking place, the operator is told to stop providing facilities for gambling until and unless they are properly licensed. Skins are traded or are tradable and therefore act as a de facto virtual currency (do not have a fixed currency worth)which makes them hard to restrict them during gambling. Policymakers need to find a way to prevent an online ecosystem that allows children to gamble in an unregulated environment.

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