On 25th September, the UK government released a report on the rising trend of skins gambling.
The report, titled A Rapid Evidence Review Of Skins Gambling, explores the practice of betting video game skins online. The report was conducted by the Department For Media, Culture & Sport.
Skins betting is just one of the virtual gambling phenomena that have arisen in the last five years. Also popular with gamers and online users is trading and betting with NFTs and cryptocurrency, which has become a staple in online casinos.
The industry of skins betting has arisen because of the increase in online collectibles in video games. In popular games like Call of Duty and Fortnite, players can buy skins, which are customiseable outfits and covers for their guns. Usually, skins gambling is conducted on third-party sites. Here, players’ skins are used to bet on the outcome of matches, often on e-sports sites.
But what is the impact of this rising form of betting, and what impact does it have on betting?
What Is The Purpose Of The Report?
The purpose of the report is to explore the idea of skins gambling and to highlight the arising problems with it. The report identifies several concerns with the practice, such as the possible exposure to underage gambling, the lack of regulation, and suggests ways to combat the issue as skins gambling continues to grow.
What Findings Did The Report Have?
We won’t go through the entire report, but it had some interesting key findings.
One interesting thing to note is that skins gambling is not technically legal in the UK. The UKGC actively works to block the sites and does not condone them. However, skins gambling is widespread in the UK still, with over 50 gambling sites identified as places where players can conduct skins gambling.
The UK made up 3.93% of global skins gambling traffic online, and some of the top skins gambling sites had more traffic than major betting operators, signifying the rise in skins gambling.
Most of those who would gamble would use different sites.
Skins Gambling Audiences And Potential Harms
Among those who engage in skins gambling, the largest audience is young men between the ages of 11 and 24. From this data, the report concluded that skins gambling may increase the risk of underage gambling. Furthermore, engaging in skins gambling has been heavily linked to problematic gambling habits in the report. However, the report acknowledged that those who engage in skins gambling already engage in gambling behaviour in-game, playing games with gambling features and spending money and trialling loot boxes.
Loot boxes are boxes in video games, like treasure chests, that give players random rewards. They can get power-ups, weapons, or upgrades from them, and they can be purchased with real money.
Additionally, those who gamble with skins in-game are more likely to show problematic gambling habits than those who use skins to gamble on e-sports games. The report says that this is regardless of age or race, and is prevalent when playing chance-based games.
With this point, they conclude that skins gambling and the link between harmful gambling remain strong, even when other forms of gambling are taken into account.
The Similarities of Skins and Traditional Gambling
An interesting conclusion from the report states that skins gambling is more similar to traditional gambling than first thought. Why they remain so popular is that skins gambling games resemble those of traditional casino games. Traditional elements are mixed in there, such as loot boxes, which mimic slot machines, and double games, which are similar to roulette.
For those wondering, double games are a type of betting game where players place bets with skins. These games use a wheel, a bar, or a colour, and a symbol system. Players bet on a side or a symbol they think will win, kind of like the red and black in roulette, and if their choice wins, they double their bet.
The report also lists harmful mechanics that mimic features previously used in casino games, such as near-miss mechanics and losses disguised as wins.
Adding to the illusion of control, there is the idea that these games have in-game features to make players think they are in control, even though outcomes are random, like any slot machine. Player-versus-player games are also common in skins gambling, and these encourage players to compete with each other for skins and are considered risky.
Future Policy and Regulation
However, the popularity of skins gambling is not considered to be an issue due to a lack of regulations. Rather, it is harder to enforce laws that ban or minimise skins gambling. However, the report notes that skins gambling counts as gambling due to the betting of in-game items, so it should be regulated accordingly.
Where the problem arises in enforcing regulations on skins gambling sites is that they operate out of the UK jurisdiction, which means they function illegally, but are hard to ban. But the challenge in regulating these sites is their ability to change their branding and geographical location quickly.
There is also no verification process for skins gambling sites or safety checks, which significantly decreases the level of consumer protection that players have.
Finally, the report makes several recommendations for policies to combat the unregulated nature of skins gambling:
- There should be cross-wide regulation for skins gambling, and it should be classified as a normal form of gambling.
- These sites should have compulsory age verification checks, responsible gambling, and fair play procedures in place.
- Game developers should be called out over gambling-like mechanics in skins gambling games, and they should prioritise protecting young people from gambling.
In the future, recommendations are made for what research should be conducted to stop skins gambling from becoming a black market betting hotspot. One suggestion made in the report is to study the long-term psychological and behavioural impacts of skins gambling on children and teens.
The government also wants future research to explore how skins gambling influences gambling behaviour and find ways to reduce the prospect of harm through skins gambling.
Most importantly, they emphasise that there must be discussions on the challenges of cross-border regulation in gambling, particularly with skins gambling, so solutions can be found to regulate the practice worldwide.
If all of this is done, the report believes the risk to children will be significantly decreased, and any legal loopholes will be stopped through correct regulation.
The Future Of Skins Gambling
A report of this magnitude could help change the unregulated nature of skins gambling. Even though it is considered illegal in the UK, the fact that it is so popular suggests people will still engage with it regardless of what this report says. However, the government releasing this report helps raise awareness of the potential harms of skins gambling, with the biggest one being the idea of underage gambling.
This is less of an issue in online casinos due to strict age verification processes, as well as the recent introduction of the Online Safety Act, which strengthens the protection of children through rigorous ID checks and age-verification requirements on social media and 18+ websites.
In the UK iGaming industry, the report could be significant in changing regulation laws and enabling worldwide regulation of skins gambling, but only time will tell.
