The owners of an online casino associated with virtual items in the Counter Strike: Global Offensive online game are coming under fire for sponsored advertisements they did without revealing a connection to their business. If allegations are true, the two YouTubers are likely to face sanctions by the Federal Trade Commission (FTC).
In response to a wave of sponsored videos on YouTube, the FTC introduced policies against "paid product promotion" on the world's number one video streaming site. If a person is affiated with a product, then they cannot pretend otherwise in a YouTube video. Like an advertisement on television or radio, the audience must realize a commercial is sponsored.
TmarTn and Pro Syndicate
Two men, Trevor Martin and Tom Cassel, appeared in videos showing them winning skin in the Counter Strike: Global Offensive gambling site, CS:GOLotto. Martin and Cassel won rare "skins", which range in value between 1-cent and $4000, while playing at CS:GOLotto. That would not be illegal, but the Martin and Cassel own the gambling site.
Pro Syndicate (Tom Cassel) and TmarTn (Trevor Martin) post videos on popular YouTube channels which encourage people to gamble on CSGO Lotto. These videos have titles like "How to Win $13,000 in 5 Minutes", and imply people who gamble on CSGO Lotto can win thousands of dollars in cash in a few minutes of play.
Exposed by Honor The Call
A little-know YouTube named "Honor The Call" exposed the scam. Honor researched the registry of the company and found that TmarTn is the President of CSGO Lotto, while Pro Syndicate is the Vice President of the site. Furthermore, despite posting dozens of these YouTube advertisements, they do not disclose their connections in the videos or their descriptions. These men have access to the backend of the site, meaning they can fix the bets.
Trevor Martin originally posted a video implying that he had found CSGO Lotto by chance, and he might get a sponsorship with the company. After the scandal broke, Martin posted a video defending his actions, saying he was not an owner at the time of that video. The people at h3h3Productions researched public records to learn that Trevor Martin was the owner from Day 1, and that he filed the paperwork to create CSGO Lotto.
$2.3 Billion Industry
People might think this is much ado about small-time businesses, but gambling on CSGO skins is a billion dollar industry. Bloomberg News reported earlier this year that the virtual gaming sites inside CS:GO do $2.3 billion in betting per year. What's more, players as young as 13-years old can gamble in these virtual casinos.
Counter Strike: Global Offensive is a first-person shooter game, like countless others down through the years. One popular aspect of the game is the ability to collect unique guns and other items (called "skins"). To acquire skins, players must by virtual keys to virtual crates. Once the crate is opened, the skins are revealed. Most skins are common, but some are rare -- and quite valuable in real world value.
Viral Video by h3h3Productions
The expose at h3h3Productions pointed out that results are determined in the skin game is almost exactly like an online slot. Valve, the designer of the CS:GO, claims their method is not gambling, because you cannot win money in the skins game.
The problem is, a gambling market for those skins has blossomed on the Internet. Dozens of websites exist where players can gamble skins against other real world players, and CS:GOLotto is one of them. The two sides put up items, and the gambling site has a virtual coin toss. The winner takes both items.
Valve Lawsuit
Valve is now being sued in a class-action lawsuit involving the company's connection to this online gray market. Parents of children who lost money on gambling sites like CSGO Lotto filed a class-action lawsuit against Valve, saying it contributed to an unregulated gambling market which targeted their teenagers.
The lawsuit's filing reads, "Defendant Valve knowingly allowed, supported, and/or sponsored illegal gambling by allowing millions of Americans to link their individual Steam accounts to third-party websites, such as CSGO Lounge ("Lounge"), CSGO Diamonds ("Diamonds"), and OPSkins (collective, "unnamed co-conspirators")."
A later part of the filing said, "Because Valve has helped to create an unregulated, international gambling concern with no oversight that targets teenagers, Plaintiffs and the class have been damaged."
The suit filed goes on to note that this gambling market is "ripe for scams and fraud", which the CSGO Lotto scandal certainly underscores.
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