Counter-Strike Casino
April 22, 2016 6:46 AM   Subscribe

 
The best part (for Valve) is the value changing hands never leaves their ecosystem. Imagine a casino that never lets you cash out your chips.
posted by Mr.Encyclopedia at 6:51 AM on April 22, 2016 [6 favorites]


Mr.Encyclopedia: Imagine a casino that never lets you cash out your chips.

It sounds like what makes this interesting is that skins can be traded for real money, though. How is the money being kept inside the Valve ecosystem?
posted by clawsoon at 7:13 AM on April 22, 2016


Well, it's possible to cash out, but it's not easy and it violates Steam's ToS. I honestly thought the article was a bit too flippant about the difficulties of translating skins into real money.
posted by clorox at 7:14 AM on April 22, 2016 [1 favorite]


Maybe I fail at reading comprehension, but does the Bloomberg article ever explain how "there’s a liquid market to convert each gun or knife back into cash"? That's the part of the system that leads to problematic gambling, but Valve has no part of it.

There's a similar economic system in Eve Online, but it's remarkably difficult to convert game currency back into real currency and the publisher works hard to shut down third parties facilities doing that.

(Another reason CS:GO has become so popular is there's a robust professional tournament circuit and lots of good streams to watch. Although maybe that's a symptom of gambling? League of Legends is even more popular, and that has almost no gambling in North America.)
posted by Nelson at 7:18 AM on April 22, 2016


I guess the more accurate metaphor would be a casino where you have to take your chips outside to a back alley to cash out. Valve's ideal is you never cash out.
posted by Mr.Encyclopedia at 7:19 AM on April 22, 2016 [1 favorite]


Yeah, back alley is a good description. This is the site the article's author mentions on Twitter in response to this very question, SkinXchange is another.
posted by clorox at 7:21 AM on April 22, 2016


I guess the more accurate metaphor would be a casino where you have to take your chips outside to a back alley to cash out.

So a pachinko parlor pretty much?
posted by griphus at 7:22 AM on April 22, 2016 [7 favorites]


The risk with cashing out is you can't do it via Steam; you can only get funds in your SteamWallet that way; which stay in Steam. So instead you need to find a buyer, get them to give you money via PayPal, and gift them the item in Steam. Plenty of room for scams there, despite the ecosystem of vouching and escrow services. It works to a degree, but plenty of dumb kids get scammed.
posted by kithrater at 7:30 AM on April 22, 2016


I craft ten paper cranes, my friend crafts ten paper cranes and we notionally value them at $1000 each.

We play 1000 games of rock-paper-scissors and, on average, we have about the same wins and losses, so we end up with ten paper cranes each.

Have we just bet 2 million dollars?

A week later, my far too rich uncle actually buys one of my cranes for $1000 for a bit of fun.

So, now did my friend and I just bet 2 million dollars?
posted by Static Vagabond at 7:32 AM on April 22, 2016 [5 favorites]


I understand in theory how there can be a black market for cashing out Steam items. Is there anything written about it? How big is it? How trustworthy? Who runs it? Is it centralized to a couple of trusted partners or is it a million shady sites?

Also the black marketeers must be taking the virtual goods and re-selling them via Steam for a profit. Is Valve aware of that activity? They must be; a Steam account that never plays games but gets 1000s of skins sent to them a week must be obvious to them. Or does it work some other way?
posted by Nelson at 7:34 AM on April 22, 2016


Have we just bet 2 million dollars?

It depends on how many friends you have. If I get a piece of paper and write BLACK LOTUS on it, I can't sell it for $27,000. If I get a piece of paper and write BLACK LOTUS on it and convince over the course of many years and many thousands of my friends it is somehow worth that much, then it becomes worth that much.
posted by griphus at 7:37 AM on April 22, 2016 [3 favorites]


There's a big enough market that hackers often look to steal your Steam account NOT to steal your credit card (although let me say, never save your CC info to Steam, never never never) but instead steal your account to empty your inventory of virtual trading cards and gun skins. Presumably they are doing this for profit and not LOLZ.

Man, there is so much weird fucking shit built up around games beyond "enjoy the moment to moment experience of playing the game" that I sometimes feel like I can't even see the game.
posted by selfnoise at 7:43 AM on April 22, 2016 [3 favorites]


It's not a black market. I use to scrim with a guy known as The Collector. He was well named. He had a couple of dozen accounts he used to organise his collection and conduct his business. There was nothing clandestine about what he was trying to do.

SteamRep is the biggest reputational service, and subreddits is where most of the cashout business gets conducted. The Steam marketplace sees a fair amount of activity from those people whoare just trading for pennies or to buy a game or two. I don't remember ever seeing any giod writeup of the scale of it all.
posted by kithrater at 7:49 AM on April 22, 2016 [1 favorite]


Demand x Scarcity = Value
posted by rocket88 at 8:05 AM on April 22, 2016


A few months ago my son asked me for $20 to buy a hat in TF2. I thought, the hat is only 99 cents and he's trying to pocket the rest. Nope, the hat was $20.
posted by Brocktoon at 8:06 AM on April 22, 2016 [1 favorite]


The gambling sites run multiple tradebot accounts and have Valve's tacit approval. Valve has reportedly even offered technical help to the largest betting site. What the betting sites do with their fortune of virtual guns, other than holding a reserve for payouts, is left to the imagination.

The cashout sites function more as escrow services. I don't think they ever take possession of the skins.
posted by clorox at 8:08 AM on April 22, 2016


That's the part of the system that leads to problematic gambling, but Valve has no part of it.

Because money is being spent, any part of the system can be viewed a problematic gambling - especially since it's all black market and therefore no checks against things like minors getting in over their head.

The lack of legitimate ways to win real money without going through these channels makes this more problematic to me, not less.
posted by thecjm at 8:22 AM on April 22, 2016


I'll have to take a look at these third-party skin-reselling sites, because the cash-out sites I'm aware of (ones that deal principally in game keys of unknown provenance) are sketchy as hell. But they're still better than dealing with individual traders with horrible lowball offers and the ever-present risk they'll withhold payment or initiate a chargeback.
posted by knuckle tattoos at 8:27 AM on April 22, 2016


Brocktoon: "A few months ago my son asked me for $20 to buy a hat in TF2. I thought, the hat is only 99 cents and he's trying to pocket the rest. Nope, the hat was $20."

Please don't scrimp on your son's hatte habits. The other hatte barons will laugh at him.
posted by boo_radley at 9:11 AM on April 22, 2016 [1 favorite]


Doesn't it worsen the problem that (in theory) you can't cash out? If you lose, you lose cash, but if you win, you only get Steam funds...
posted by Drexen at 10:11 AM on April 22, 2016


Doesn't it worsen the problem that (in theory) you can't cash out? If you lose, you lose cash, but if you win, you only get Steam funds...

For a lot of people Steam funds may as well be as good as cash.
posted by Talez at 10:37 AM on April 22, 2016


I stopped playing TF2 when they introduced those hats. BTW, for those not aware, check out Mefightclub for gaming with MeFites.
posted by exogenous at 10:44 AM on April 22, 2016


The article alleges you can cash out. I've been asking here for more info on that cash-out market and so far no one's come up with a link to anything investigative / definitive. I'm not doubting it exists, but I'm really curious the extent of it. I found some evidence of it searching on Google but that's a big research project I don't have time for.

kithrater mentioned SteamRep before, here's a link to it. It looks like a site designed to make person-to-person trading safer by adding a reputation system. Steam already has safe in-client trades (with no way to cash out), so I suspect the only need for this reputation service is needed is to facilitate trades Valve doesn't approve of.

clorox says The cashout sites function more as escrow services. That's fascinating to me! So no one is holding inventory? If I want to buy a rare skin I have to find some middleman to match me with someone who has it and wants cash for it? I'd really like to understand this market more.

thecjm says Because money is being spent, any part of the system can be viewed a problematic gambling. I agree with that, but apparently we've decided in the US that game-gambling is OK as long as you can't turn it back into US dollars. I mean, League of Legends just added a whole new "Crafting" system modelled after TF2, whose real goal is to convince you to pay $1 for a chance to get a random skin that you'd otherwise have had to pay $5 for. Also a lot of the most successful iPhone games have a real money gambling component, but no cash-out. No one blinks an eye. But games that allow you to get actual hard currency back out are still considered not OK in the US. Traditionally they've been avoided because they create all sorts of problems like Chinese gold farmers, scams, and legal woes. The Bloomberg article linked here is saying Valve is profiting off this activity though and I want to know more.
posted by Nelson at 10:47 AM on April 22, 2016 [1 favorite]


I understand in theory how there can be a black market for cashing out Steam items. Is there anything written about it? How big is it? How trustworthy? Who runs it? Is it centralized to a couple of trusted partners or is it a million shady sites?

In my experience it's a lot of little people doing little "shady" (which is to say, against the ToS and definitely punishable) deals. I am actually loosely acquainted with a guy who runs a small business serving as a broker for people selling Steam goods for real cash (rare TF2 hats with valuable effects, good CS:GO knives, rare DOTA 2 stuff, sometimes spare inventory copies of games, etc.). He absorbs the risk and does a lot of the legwork and takes a cut of the sale, and since he's known to be trustworthy it works. I don't know how he got started or exactly how he finds and vets buyers, but I do know that he makes a significant amount of money doing it and he once mentioned that he would probably have lost his house if not for the income from this little venture.

That said, as far as stealing Steam accounts goes, the common wisdom (of which I have never seen any verification) is that the reason so many Steam accounts get stolen and emptied is that Russian organized crime groups are involved, and it's a serious revenue stream for them. It's a lot more volume than you would expect from just random hackers.
posted by IAmUnaware at 10:49 AM on April 22, 2016 [2 favorites]


To clarify that last remark, in this post from December explaining the new security features that they implemented, Valve claims that around 77,000 Steam accounts get "hijacked and pillaged" every month. The reselling portion of that work seems like it would take a lot of man-hours. There's definitely some kind of organization at play, I think.
posted by IAmUnaware at 10:55 AM on April 22, 2016 [1 favorite]


Nelson: I'm aware of at least one person who does big (cash) business via a semi-popular internet forum. The basic process is essentially identical to the time-honoured tradition of selling gift cards at a discount. It more or less works like this:

1) Get money into Steam Wallet via legit Steam Marketplace sales (in-game items, etc.)
2) Use Steam Wallet to purchase giftable things (games, generally)
3) Sell the giftable thing at a discount and collect payment via PayPal

So I sell a CS:GO skin for $60 Steam credit, use that to buy Fallout 4, then sell Fallout 4 to someone via PayPal for $45 and I cash out. It's a system riddled with problems and very dependent on trust and not getting exploited on both sides, so you either have to be very keenly aware of the risks and able to hustle as IAmUnaware mentions, or operating such a massive operation that you can just absorb the smaller losses while you churn large-scale profit anyhow (in the organized crime sense).
posted by majuju at 11:08 AM on April 22, 2016 [2 favorites]


The peak of our dreams is a new hat for our Dopple, a hat that doesn't exist, that's not even there; we buy shit that's not even there.
posted by benzenedream at 12:04 PM on April 22, 2016 [2 favorites]


People have been making money off online items from multiplayer gaming for at least 25 years now and every couple of years I see these articles like it's a new thing. The scale keeps ramping up, of course, so in that sense I guess it is new every couple of years. But the principle is the same.

The actually new stuff is the old-style match fixing and payoffs that are occurring in pro-gaming settings. Like the current scandal with a bunch of pro SC2 players, including possibly the greatest current player in the world, being busted for fixing matches for cash.
posted by Justinian at 12:24 PM on April 22, 2016 [3 favorites]


The Bloomberg article linked here is saying Valve is profiting off this activity though and I want to know more.
The two big ways of Valve has of making money are the fees associated with using their official marketplace, and by selling keys to open cases (which are basically slot machines). The official marketplace is the easiest way to translate skins to Steam credit, and vice versa. It is extremely active, basically the NYSE of video games. Valve takes 15% of all sales of CS items. Widespread gambling indirectly drives marketplace activity: There's no easy way to place a wager using a lot of low-cost items with the gambling sites' tradebots, so instead of placing a bet of 500 4-cent skins, which would be effectively impossible, you're much better off putting those 4-cent skins on the marketplace, letting Valve take their $3 from your sales, buying a $17 dollar item (Valve taking $2.55 from the other guy's sale), and using that $17 item to place the bet. It's also the easiest way to translate real money into skins, because you can buy Steambux (in $5 increments) using a credit card.

The slot-machine-like cases are dropped during regular gameplay (at a rate of about 2 per week), and are traded regularly on the market. But just having a case drop for you, or buying one, isn't enough to open it. You have to buy a virtual key, direct from Valve or from another player on the market, for $2.50. Both the keys and the cases are one-time use. Skins available in cases are only available this way (all knife skins are case-exclusives, for example), and the bigger jackpots can be worth three or four figures.
posted by clorox at 3:50 PM on April 22, 2016


Valve makes money off of trade in virtual goods, for sure. A very healthy one. But my understanding, they are more likely losing money if there's a cash out option. A cash-out black market implies there's a way to buy Steam stuff with real dollars that Valve doesn't get. That loses Valve money. Also the real money trade brings with it expensive problems like fraud and account theft that affect Valve's bottom line.

OTOH if the whole virtual Steam economy makes more people buy into Steam stuff, say keys, because people hope they're going to get lucky and find a $500 skin they can sell for real money then sure, Valve profits. But that requires a robust cash-out market. So far what we've discussed in this thread is much more small-time.

OTOH some organized crime outfit is stealing Steam logins from users, they must be seeing some value out of it. Is that mostly the game portfolio? Or is it stripping the account for virtual goods, like what we saw in World of Warcraft years ago?

(Clearly Valve isn't sharing any details...)
posted by Nelson at 5:02 PM on April 22, 2016


I had a lot of fun day-trading the Steam cards a couple of years ago (and made enough at it to let me buy a couple of games I wouldn't have otherwise), but thanks to the massive fraud and theft problems, Valve has thrown up a ton of barriers and other irritations and I don't really understand the Marketplace right now. If this is what it takes to have a market for your virtual goods that's not just Russian mafiosi laundering money or whatever, maybe it's not really worth it. Instead, in time-honored tech company fashion, they've soldiered on and added even more secondary features, like the gems, which I guess did let me get rid of some useless crap, but it only turned it into some other useless crap that I understand even less. (Are the gem costs of the packs tied to anything? It seems like they kind of are but I can't figure it out.)

So now I just fiddle around and mostly try to keep myself from blowing the 14 cents I made in 2013 from a pack of cards for some zombie game I don't even own on a Grim Fandango background.
posted by Copronymus at 9:54 AM on April 25, 2016


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