CCP Follows Valve And Begins The Shutdown Of Third Party Skin Gambling
Esports Betting Report

Future Of Skin Gambling In Doubt After CCP Changes License Agreement And Takes Action Against Sites

Tree hangs in precarious balance
On Oct. 12, CCP announced that it was making changes to its End User License Agreement (EULA) to prevent its in-game assets from being bought and sold.

CCP owns the Eve series of games which offer play in a science fiction universe.

According to the EULA:

“You may not transfer, sell or auction, or buy or accept any offer to transfer, sell or auction (or offer to do any of the foregoing), any content appearing within the Game environment, including without limitation characters, character attributes, items, currency, and objects, other than via a permitted Character Transfer as described in section 3 above.

You may not encourage or induce any other person to participate in such a prohibited transaction. You may not use, transfer or assign any game assets for games of chance operated by third parties.”

The aim of the new rules is to prevent Eve users from engaging in any form of gambling – skin betting – via third party websites.

The blog post from CCP explains:

“In short, this addition to the EVE Online EULA means that as of the launch of EVE Online: Ascension, players will be prohibited from using in game assets and currency, as well as the EVE IP, to take part in or promote gambling services or other games of chance that are operated by third parties.”

The new EULA will come into force on Nov. 8, coinciding with the launch of new game EVE Online: Ascension.

CCP has already taken action against IWANTISK and EVE Casino

In a demonstration of the will to enforce its opposition to skin gambling using its game assets, CCP said that it had already shut down third party site IWANTISK’s in-game access.

It has also confiscated all ISK and assets “after extensive and exhaustive investigation has brought forward compelling evidence of large-scale Real Money Trading.”

CCP said that “those involved” had had their accounts permanently suspended.

IWANTISK has made an angry reply threatening legal action.

CCP has also shut down Eve Casino “in game” and implemented the same confiscation “after multiple and sustained breaches of our Developer License Agreement.”

Eve players who have used the two third party services will not be reimbursed their “outstanding ISK or asset balances.”

Other operators have been given a warning

There is a stark warning for any other third parties:

“In the run-up to November 8th, all services that offer any form of third party gambling of this nature are required to wind down their operations.

During the time from this announcement until the release of EVE Online: Ascension, our security team will be closely monitoring all these in game entities to ensure that no illicit behavior occurs, and that any movement of in game assets and currency remains in line with our current EULA and Terms of Service.”

CCP allowed an exemption for the Alliance Tournament

The Eve Alliance Tournament XIV, which began on Oct. 1 and finished on Oc. 16, was granted a small exemption to the new policy.

“Given that the Alliance Tournament is currently ongoing, we are aware that some players may have outstanding wagers on alliances who are competing with other third party services who have not been subject to account action and/or ISK and asset confiscation.

These third party services are free to finalize these wagers over the course of the weekend given that they have not broken our rules, but must wind down operations in an orderly fashion before 11:00 UTC on Tuesday November 8th, 2016.”

The wider threat to skin gambling

In recent months, the skin gambling industry’s focus has been on CS:GO and Valve’s decision to stop third party sites from allowing skin gambling through the Steam platform.

ESBR’s Will Green has written an exhaustive analysis listing the gambling sites which have closed, varied their business model, or ignored the directive from Valve. He has also produced what is currently the definitive short guide to skin gambling for Narus Advisors.

The report, “Skins In The Game: The size of esports skin betting in 2016, its convoluted closure, and how it could shape the future of esports wagering,” is available to download for free here.

Following the Valve shutdown, Narus Advisors and Eilers & Krejcik Gaming reduced their projections of skin gambling’s global handle in 2020 from almost $20 billion to less than $1 billion.

CCP is following Valve’s example, in what looks like the beginning of a trend which may spread to all major game makers. If so, we could be seeing the start of the end of the skin gambling industry.

Regulatory risk sharply reduces skin gambling upside for game makers

Skin gambling can only happen if game makers enable skins, whether in-game artifacts or frequent player “coins,” to be traded outside of their game.

As the UK Gambling Commission (UKGC) has pointed out, should such transactions have a financial value where the stakes and winnings from skin gambling can be monetized, then as far as they are concerned the activity becomes classified as gambling.

The UKGC makes the clear distinction that in-game currencies and artifacts that can be monetized change the essentials of the activity from social gaming to real money gambling and therefore necessitate a license and all that that entails.

The Dutch regulator, Kansspelautoriteit has issued a similar warning, and US legislators are becoming involved now. The Washington State Gambling Commission has directed Valve to stop the transfer of skins via its Steam API, or face possible criminal charges.

Game makers have no desire to clash with regulators over an activity which has only a limited upside potential for them, so the easy option is to ban third party gambling and make whatever technical changes are needed to keep any gambling on a social basis.

The new game from Amazon which allows in-game betting, Breakaway, uses Twitch’s new virtual currency Stream+.

Although details have not yet been promulgated, it is now inevitable that Twitch will make sure that the use of its currency does not bring it into the realms of real money gambling regulation.

Reputation risk may be even more important

One of the bigger issues faced by game makers is that the use of their skins for gambling brings with it a serious reputation risk.

The whole Valve/skin gambling furor appeared to begin with a series of skin betting scandals. In a market without any oversight or regulation, these self-inflicted wounds were foreseeable.

In addition, third party sites have been accused of inducing underage gambling. Such accusations produce an unacceptable reputation risk for game developers.

Gaming executives have no need to take such risks and unless they can see a real financial upside in real money gambling, are going to steer well clear of any imputations that they are encouraging gambling, especially in children.

It is difficult to see how skin gambling can survive in this environment, other than as a social activity practiced within a single game or platform.

Sign Up For The Grove Report – US Online Gambling Industry Insights Delivered To Your Inbox:
Joss Wood
- Former editor of Poker Industry Pro, gambling industry expert focused on legal online gambling and sports betting issues. For ESBR, Joss spotlights the intersection of the burgeoning esports industry with that of gambling.