FEATURE a government can engage in “ quantitative easing ” ( a fancy name for printing cash ) simply by saying , “ Let it be done .” Suddenly a hundred billion dollars materialises to buy some national debt . Game-makers now find themselves in a similar position , generating skins in the same way governments print cash .
Cryptocurrency happened because enough people with enough skills wanted ‘ money for the internet ’ that was free from government interference . The same thing is now happening within skins trading .
Freeing the market You may have heard of initial coin offerings ( ICOs ), where businesses offer tokens for sale . When people buy them , they are funding the business in the expectation that it will be a success . A crypto token is a ‘ thing ’ with a value , a representation of a contract . The token is created and the company writes up the basic rules for it : the token amount , its value and any special conditions .
For example , a casino business creates an ICO with tokens at $ 1 each to raise funds for the project . Players buy these tokens and use them in this casino . The casino is successful and , because of the finite supply of tokens , their value rises . It now costs $ 10 to buy a token to play in the casino and the person who bought the token initially for $ 1 is now $ 9 richer if they sell it in a marketplace .
A couple of the biggest igaming ICO ’ s have been with Funfair . io , which had a peak market cap of $ 791m , now a $ 125m market cap , and Betterbetting , which had a peak market cap of $ 12m and now has a market capitalisation of around $ 3.3m .
But one ICO that enables gambling on a massive scale was bigger than any of these types of offerings .
After OPskins launched the WAX platform and token its ICO had a peak market cap of $ 1.345bn , and is currently hovering around a market cap of $ 124m . OPskins is the largest of the skins-trading platforms and it didn ’ t enjoy the centralised nature of the skins ecosystem , where the likes of Valve could make a decision on trading with the potential to kill that ecosystem .
OPskins decided to launch WAX , a decentralised platform that enables anybody to run a fully functioning virtual market place without any investment in infrastructure , payment processing or security . This marketplace is designed to transact anything of value , but most notably
skins and loot boxes . It aims to facilitate the 400 million gamers globally who have skins or virtual goods of some kind . Its development of WAX ExpressTrade makes it easy for anyone or any site to trade virtual items . As a result , hundreds of trading sites have emerged already .
The genius of this exchange is that players won ’ t be trading ‘ money ’; they ’ ll be trading skins and items such as adapted guns and loot boxes . These items will have various market values because they will have degrees of rarity and interest – say , a red skin on a desirable gun in CS : GO or a loot box that will probably give out a bigger prize .
The gambling link The result is that skins trading is moving from being centralised to becoming decentralised . And here is where gambling comes in .
Let ’ s say I have a skins gambling site . A player comes onto my site with an inventory of items with a particular market value , which they exchange for credits and play casino games . The player loses and forfeits their item . Because there is an ecosystem of item exchanges , I can take that item and exchange it for money . Or a player buys virtual items , gambles them and I get my revenue through their purchase of these virtual items .
Skins roulette games typically have a house edge of around 15 %; for comparison , single-zero roulette has a house edge of 2.7 %. It ’ s a strange thing but skins gamblers love skins roulette . If I ’ m in the US , I can sell loot boxes , which I might design so the marketplace value of the average loot box is 15 % less than market value . Therefore I make a 15 % margin . In my terms and conditions I might say that a player can ’ t redeem the loot box contents or the roulette winnings for cash . But I can ’ t stop someone exchanging their items .
By now you might be thinking , “ This is interesting ; it ’ s weird , huge and in the realm of gambling …” That ’ s more or less how I feel .
However , there are wider issues to consider too and one of the nastiest is around underage gambling .
Parent Zone , an organisation that promotes sensible online activity for under 18s , recently polled an undisclosed number of children aged between 13 and 18 . About 27 % of respondents said they had heard of skins betting and 29 % saying it was a serious problem for underage individuals . In headlines , this translated as “ 400,000
UK minors to be hooked on gambling through in-play video games items ”.
There is a lack of detail here but the point is that unregulated pseudo-anonymous skins gambling will be very popular with under-18s – and assuming skins gambling takes off , governments are going to come down on skins gambling operators in a huge way unless they have proper player welfare and protection in place .
How big can crypto get ? In 2016 , Narus Advisors and Eilers & Krejcik Gaming predicted that by 2020 the skins-gambling and esports market would be about $ 19.7bn a year . Then Valve attempted to kill off skins gambling and market valuations crashed . But because of moves by the likes of OPskins , with their WAX tokens and Expresstrade marketplace , Juniper research forecasts that skins gambling will reach a $ 50bn spend by 2022 . Its growth will be rooted in ambiguous legislation , gambling without feeling like it ’ s gambling and the evergrowing gamer culture . This is the weird world of crypto gambling .
Traditional igaming businesses using cryptocurrency will grow in line with its proliferation . I think skins gambling is going to be vast but with lots of serious issues with underage gambling . For you as an affiliate , offering crypto-casinos on your websites is just another revenue stream that will carry on growing .
With skins gambling , I ’ m not quite sure how that ’ s going to play out . I think it ’ s worth keeping track of how this develops as skins gambling sites emerge and become profitable . If you can , start researching and see what affiliate deals are in place .
ABOUT THE WRITER : Nick Garner has been around igaming since 2006 , having previously worked as a marketing manager at Betfair ( Betfair PaddyPower ), then senior marketing manager at Unibet ( Kindred ). In 2012 he set up a successful igaming digital-marketing agency , which he subsequently sold to launch his crypto casino Oshi . io . He has also been a successful sports-betting affiliate .
CREDIT WHERE IT ’ S DUE : “ I wrote this article with the help of the founder of ninjaskins . com ,” says Garner . “ The successful skins-gambling operator is positioned to grow exponentially now that skins trading has become too centralised on the blockchain .” Garner is currently interested in conversations with skins gambling investors . nick . garner @ oshi . io
iGB Affiliate Issue 70 AUG / SEP 2018 29