The UK Gambling Commission has weighed in on skin-betting, the practice of gambling with virtual in-game items, branding the third-party sites that facilitate such gambling “parasitic.”

Sarah Harrison and UKGC condemn skin gambling sites

Sarah Harrison UKGC chief exec believes that the level of exposure of young people to skin-gambling is “worrying.” The regulator secured the world’s first prosecution related to gambling with in-game items in January. (Image: The Times)

The video games industry needs to do more to counter these sites, which present “a clear and present danger to players, including kids,” said Sarah Harrison, UKGC chief-exec.

What is Skin-betting?

Skin betting, named for he colorful designer weapons in found in the video game Counter Strike: Global Offensive, grew into a multi-billion dollar industry last year.

Since skins come in varying degrees of rarity and can be traded between players, as well as transferred to third-party sites, they have attained a “real-world” value, which means they can be used by for gambling.

And since a large portion of the video-gaming public are under the legal gambling age, and third-party skin gambling sites are unlicensed and come with no regulatory checks and balances, they pose a significant threat to children, said Harrison.

“Mums and dads could be giving money to a child thinking that they are playing a computer game when in fact they are gambling and this is a real worry,” she said. “Gambling on eSports with in-game-items is growing and we need to make sure all gambling is fair, safe, crime-free and protects the young and vulnerable.”

First Convictions

In January, the regulator secured the world’s first ever prosecution for charges related to facilitating underage gambling with in-game items.

Two YouTubers and owners of gambling site FUT Galaxy were found guilty of offenses under the Gambling Act 2005, by a judge in Birmingham, UK.

Craig “NepentheZ” Douglas and Dylan Rigby were fined a total of £265,000 ($332,000), after the court was shown footage of a 12-year-old boy gambling on their site.

A Commission survey found that 8.5 percent of respondents had gambled on an e-sports event, and 90 percent of that group had done so with in-game items.

Developer Responsibility

The UKGC said that while there was no evidence of any direct commercial benefit to video games developers from the illegal gambling sites, it was ‘”reasonable to infer” there is an indirect benefit because they are acting as a “de-facto central bank”.

Thus, there are moral, legal, commercial and reputational onuses on the games developers to do more to stop their virtual items from being exploited.

“We are strongly of the view that the video games industry should not be, or perceived to be, passive to the exploitation of their player community by predatory third parties,” said the UKGC.