Gambling in esports: Faze Clan CEO Banks reveals involvement
Popular with many die-hard fans, frowned upon by outsiders: Not only do betting platforms make big money in classic sports, but in esports as well. But is it necessary for teams and tournament organizers to rely on such partners?
Sports events and betting go hand in hand. Modern gambling institutions were established as early as the 19th century. What began as a sideshow for wealthy gentlemen at horseraces mostly, has become a popular activity in its own right in the last decades, promising its players excitement and profits. This is also the case in esports, where the outcome of any games remains unpredictable.
However, due to the availability of skins – especially in the shooter Counter-Strike: Global Offensive –an additional market enters the stage in gaming and esports. Cosmetic items are distributed randomly, with small chances to win anything valuable.
Gambling with skins in CS:GO
Betting and gambling are addictive as many studies have proven. Especially for minors, the largest group of esports consumers, early exposure to gambling can lead to an addiction and have other negative effects. At the same time, esports teams are caught between a rock and a hard place, as they profit from lucrative collaborations with gambling platforms.
The moral issue of this matter has received much attention lately after FaZe Clan co-owner Richard “Banks” Bengston unveiled his involvement in gambling. On Monday, he admitted to running a gambling platform for CS:GO skins four years ago. Back then, the FaZe founders Nordan “Rain” Shat and Banks were accused of operating the betting website “CS:GO Wild”.
Banks explained the significance of skin traders in CS:GO in a podcast with BADNWZ. “Some of these skins go up $10,000 on the open market. With that people started creating these gambling sites and it was kind of like gray area because it’s a skin in a game and there is no actual value. The government puts absolutely no value to it.” The now 28-year-old received the license for his website from an unnamed business associate on the Caribbean island Antigua.
Although randomly generated skins can be bought on the steam community market, prices can vary drastically. Many players rather buy skins there, as chances to find a valuable weapon from a dropped chest are marginal. As a result, marketplaces and gambling platforms increasingly gain popularity, suggesting better chances to win coveted items.
In reality, it doesn’t work like that as a case from 2016 proves: The YouTubers Trevor “TmarTn” Martin and Thomas “ProSyndicate” Cassell exploited the trust of their fans for prizes. On their live stream, the US-Americans showed how they won considerable prizes on a gambling platform. None of their viewers knew, the streamers owned the website and were able to manipulate their chances.
Up to $200,000 a day: FaZe bought CS:GO team with gambling money
Running a gambling platform was legal on Antigua as Banks claimed. For this reason, he applied for a license there. “My motivation for doing it at the time was that we were not making enough money to buy a CS:GO team all-in,” Banks said. “We were making like $200,000 a day.”
The website was shut down after a couple of months, after they made enough cash to buy the CS:GO team. The estimated costs were around $1 million – a profitable investment as Banks suspected a larger price tag in the near future: “We got to figure out how make enough money to buy this team now.” According to him, many organizations make money with this method to this day.
With the money from this legally questionable gambling platform, FaZe Clan was able to acquire the CS:GO top team from G2.Kinguin in January 2016. The only member left from the original star line-up four years ago is the Norwegian Håvard “rain” Nygaard. FaZe Clan is still one of the ten best teams in the world. Due to its prominent roster, the scene sometimes dubs it the “Real Madrid” of Counter-Strike. The revelations of CEO Banks add an ugly stain to the early days of the team.
Esports as a stage for gambling ads
Betting platforms and marketplaces for skins have been established in the CS:GO scene for years. In addition, there are trading sites which are external platforms offering skins for sale. Rare knives in the four digit range are no rarity. Accordingly, gambling websites which offer the chance to win a valuable virtual item with just a bit of luck, have grown in popularity.
CS:GO scene sites and YouTube content creators rely on ads from betting websites, too. Even professional teams have partnered with them. The Danish top team Astralis is sponsored by CS Money and Unibet, their rival Fnatic teamed up with Rivalry – another gambling platform.
US-American orgs such as Team Liquid and Cloud9 do not have any deals with betting websites. Instead they are backed by global players such as SAP, Honda, BMW, Red Bull, and Microsoft. In addition to that, sports wagers are illegal in some US states. This renders the collaboration between teams and gambling providers more problematic than in Europe. However, organizer BLAST Premier, with outlets in both the USA and Europe, has contracts with betway and CS Money.
Gambling’s influence on minors
Gambling is in kind of a gray area – legally and morally. On the one hand, these revenues pay the expenses of pro teams. On the other hand, these providers support gambling addiction and fraud like the case of the YouTubers TmarTn and ProSyndicate shows. Users who bet excessively on esports matches are not simply at risk becoming addicted. Some of them even issued threats to players and other agents in case of losses.
Banks admitting to making $200,000/day from running CS:GO Wild is bittersweet
It was the first thing I investigated as a journalist and talked with @RLewisReports repeatedly about.
What we knew was true for years is now public. No one will care that they lied though, sadly.
— DeKay (@dekay) May 11, 2020
Studies by The Gamer suggest British minors are more likely to get in touch with gambling due to lootboxes. Between 2016 and 2018 the rate of minors with gambling experience increased from 0.4 percent to 1.7. This growing market also plays into this. Last week, publisher EA reported they generated $2.2 billion over the last year, primarily with online sales in FIFA 20 and Apex Legends.
While lootboxes have repeatedly been accused of intentional fraud due to their unregulated randomness, legal, classic gambling platforms face a different problem. Some professionals got involved in betting scandals, manipulating the outcome of matches they played.
The 2014 scandal surrounding the American CS:GO team iBUYPOWER is one of the most disgraceful incidents in esports history. Four of their players placed bets against themselves, losing their match against netcode guys deliberately. After the manipulation was made public, all four players were banned from participating in tournaments and the team disbanded. Whether Banks’ statements about his former involvement in the gambling industry will have legal consequences is, as yet, unknown.
Should organizations and tournament runners stop working with gambling sites or do they need them? Share your opinion on Discord!