By WILLIAM ARNOTT
When Wei-ning Yong checked his phone, his already exceptional evening had been made even sweeter.
The 20-year-old had been celebrating with close friends when he found out he had won $750.
Yong says he earned about $3000 during the course of that meal. He encouraged his friends to bet as well and says the group ended up collecting about $15,000 in total.
They weren’t betting on a horse, a soccer match, or even a lucky dice roll. They won by betting on a video game.
Gambling companies have been providing a space to wager over competitive gaming for the past six years, and the market is growing. It is estimated the number of frequent eSports viewers will reach 145 million within the next three years. In December 2014, there were more than one million bets on competitive gaming matches.
But that’s not how Mr Yong managed to win thousands. Instead, he used a third-party website that uses in-game items as betting chips.
The game he was gambling on is a multiplayer shooter called Counter-Strike: Global Offensive. In this game, cosmetic upgrades for weapons (also known as skins) are found in randomly dropped cases. Players can unlock these cases by spending US$2.49 and are then given a randomly selected skin.
Each of these items has a different rarity level and value, ranging from a couple of cents to thousands of dollars, which can then be sold for real money or store credit to buy other items or other games from online retailer Steam.
Third-party websites allow users to bet on competitive Counter-Strike matches with their items.
Mr Yong says he has made at least $10,000 through this process, at first only small stakes, but then escalating.
“It was insane,” he says. “Sure, there were days I was losing $1000 ... but overall I was making enough to support a decent lifestyle with minimal effort.
“It didn’t feel like I was winning or losing money because I never saw the cash in my bank account.”
Dr Sally Gainsbury, a gambling researcher at the University of Sydney’s School of Psychology, warns that adopting this attitude makes it trickier for people to understand how much they are losing.
“When people are betting with virtual currencies and they can transfer from a credit card or a bank account, they tend to discount what they’re spending,” she says.
“That’s certainly the case as well for virtual items. Even though they have monetary value, it’s not clearly displayed to the player so they might not be aware of the value of what they’re losing.”
Most of the sites lack any real way of stopping young people from gambling.
“The earlier someone starts gambling, the greater risk they have of developing problems,” Dr Gainsbury says.
“Gambling is restricted to adults because it’s risky. You need a certain level of cognitive maturity to appreciate what risks you are taking and make appropriate decisions.”
The majority of eSports fans are young men, with over half of them being under the age of 35.
Skin gambling in action. Warning: obscene language.
This could lead to serious issues among younger audience members who fail to grasp the stakes they are dealing with.
“Young people are simply more likely to take risks, especially young men,” Dr Gainsbury says.
“They could end up losing large sums of money, which might happen quickly or over a long period of time.”
Alex, who did not want to give his real name, made his first bet when he just turned 18. At first, he bet small – only $5 or $10. As he started to build a decent collection of items, he was able to sell a few online to put some cash straight into betting on other skins.
“I used to put $350 bets on games that I knew would be a slaughter,” he said.
“Using this method I built up around $1000 in a weekend.”
“I remember during this tournament I was going to university, and I remember watching a text update of the game as I was catching the train in, a bit anxious as it was a big amount of money.”
By the time Alex quit, he had managed to make $2000, a small amount compared to the large amounts others bet.
Gambling with skins isn’t just for betting on eSports. Other services are more than happy to offer games such as roulette and coin flips, where the outcome relies more on luck than analysis.
Alex avoided these sites as he saw them as shady.
“There may have been a couple that were legitimate, but there was no way of knowing whether it was or not,” he says.
“The risks involved were too great; from a programming perspective, how easy would it be to engineer dodgy wins to favoured people, like the owner of the website?
“I actually considered setting up a roulette site which I could control at one point. But then, I thought about how unethical it would be.”
Dr Gainsbury, whose expertise is in internet gambling, says these sites are risky for consumers.
“There’s nothing to say that the sites are fair,” she says.
“They might just disappear overnight with the player’s currency.”
In Australia, these third-party websites are breaking the law. The Interactive Gambling Act 2001 makes it illegal for operators to offer gambling online to Australians, including bets made with virtual items.
South Australian Senator Nick Xenophon says the Act is behind the times.
“It's 15 years old, but may as well be 150 years old in terms of dealing with these issues,” he told The Sydney Morning Herald.
"This is the Wild West of online gambling that is actually targeting kids. We need to listen to the researchers who are concerned with the links between video games children play and gambling.”
A lack of regulation in the space allowed two influential YouTubers, Trevor “TmarTn” Martin and Thomas “ProSyndicate” Cassell, to promote the gambling website CSGO Lotto without disclosing they owned the website.
Internet backlash against the two brought the entire scene to a halt, as class action lawsuits were filed and cease and desist letters sent to other gambling websites.
While most of the sites have been shut down, it is estimated they were earning $7.4 billion dollars annually.
Influential YouTuber Trevor “TmarTn” Martin promotes a skin gambling app, without disclosing that he has a stake in the company, or can control the outcome.
Valve Software, the company that developed Counter-Strike: Global Offensive and Steam, has been criticised for not acting sooner and ignoring these third-party websites until public opinion forced their hand.
Alex, who has used this system, criticised Valve’s response to this public pressure.
“Valve acted in a very off-hand manner, ignoring the problem of underage gambling, how it was illegal to gamble in some countries, and the ease at which people had access to gambling,” he said
“They, in my opinion, made it easy to set up these things and, in turn, deserve the consequences.”
Valve takes a 15 per cent cut from items sold on the official Steam marketplace, allowing the company to earn millions through people cashing out.
Dr Gainsbury agrees with Alex’s assessment.
“Valve have been pretty complicit in knowing this has been going on for a long time, and if not directly encouraging it, definitely facilitating it,” she says.
“It’s up to them to be aware of the laws and if they’re breaking them.”
As a result, Valve has been threatened with legal action from the Washington State Gambling Commission if they fail to explain how they were in full compliance with Washington’s gambling laws.
“In Washington, and everywhere else in the United States, skins betting on eSports remains a large, unregulated black market for gambling,” Washington State Gambling Commissioner Chris Stearns said in a recent press release.
“And that carries great risk for the players who remain wholly unprotected in an unregulated environment. We are also required to pay attention to and investigate the risk of underage gambling which is especially heightened in the eSports world.”
Valve has since denied these claims, saying they are not engaged in gambling or the promotion of gambling.
“The operation of Steam and CS:GO is lawful under Washington law,” the company said.
“We were surprised and disappointed that the commission chose to publicly accuse Valve of illegal activity and threaten our employees with criminal charges."
For players, these changes have meant the once prosperous practice of skin gambling is much harder.
For Mr Yong, he’s left his betting days behind him.
“I cashed out when the market crashed. I sold as much as I could as fast as possible,” he said. “I have looked at starting again but there are very few places that are safe and reliable left."