The 2016 CS:GO Skin Gambling Scandal: TmarTn, ProSyndicate and the FTC

Trevor “TmarTn” Martin (Stream) and Tom “ProSyndicate” Cassell (Stream) are two popular YouTubers, who, in late 2015, came up with an incredible scheme to make them rich. (Stream) They were going to run a classic casino scam. (Stream) Specifically, they were going to get people hooked on a CS:GO gambling site that they owned but not tell anybody that they owned it. "We found this new site, called CS:GO Lotto." It had all the makings of a great scam. "Dude you could just swing for the fences with one bet, and just come way up five grand." The only problem was that CS:GO gambling was a massive underground industry that chugged along in the dark alleys beneath the squeaky clean exterior of CS:GO esports. And these two dinguses managed to explode and expose one of gaming's biggest grey markets with just a few simple videos. (Stream) It all started in December 2015, when TmarTn incorporated CSGO Lotto, a CS:GO skin gambling site. Now, while the trend has died down a little, CS:GO skin gambling was all the rage just a few years ago. See, every skin is bought and sold on the steam marketplace which gives it a real world value. Now if you sold a skin on the steam marketplace right now you'd get steam credit but, there are plenty of ways to turn those skins into cold hard cash. There were two primary ways to gamble with skins. You could either bet on the results of an esports match, or play a game, like roulette. (Stream) But cashing out through these gambling sites and steam bots, only gave you the value you won in skins. The real game came in the skin grey market, websites that let you trade your skins to someone else in exchange for money through say, PayPal. It was just like a real casino. Well... almost. Basically you turn your real human Earth money into skins. Either by buying them in the steam marketplace, or buying keys to open crates that contain them. You took your skins to the gambling site of your choice, traded them to their bots for a new, fake currency that was roughly equivalent to US dollars, which they were your casino chips. You then bet that money with that currency on either matches or roulette spins to win more money. Which you then turned back into skins. And finally, you sold those skins to someone through another site to get back real human Earth money. And now that you understand how skin gambling works, you might be asking to yourself, "How was all this legal?" Well, it wasn't. At least, not technically. See, a lot of these sites skirted around gambling regulations by arguing that technically, you weren’t gambling with money. You were gambling with a virtual item. And while it had real-world value, you could technically get it through a random crate or a drop. And then, you weren’t winning money, just skins. And yes, skins do have real world value, but Valve didn’t let you get that money natively through Steam. We’ll be coming back to the legality of all this later on, but for now remember that CS:GO, a game with a massive underage audience had a powerful and prevalent underground gambling scene. So TmarTn and his associates, including another popular YouTuber, ProSyndicate, Started CS:GO Lotto.com. A skin-gambling site to profit off of the craze. But they took it one step further. You don’t make money if no one is gambling at your casino, but advertising is expensive. And CS:GO Lotto had plenty of competition. Meanwhile ProSyndicate and TmarTn had massive YouTube channels. Each with millions of subscribers. If they could get the word about CS:GO Lotto to their huge audiences, they were guaranteed to see at least some success. (Stream) But, more importantly neither YouTuber mentioned the fact they were part-owners of CS:GO Lotto.com. They just kept making videos. Winning money and losing money on roulette spins and coin flips just like they were anybody else and not part-owners of the website. (Stream) But someone noticed. A YouTuber called HonorTheCall released a video on June 27, 2016 that first made the allegations that Tmartn and ProSyndicate were part-owners of CS:GO Lotto.com "Hold onto your pants it's about to go down, this may be the biggest scandal in CoD community which has nothing to do with Call of Duty." "Let me be clear here, I'm not accusing anyone, I found some info and I want to show it to my viewers." "So TmarTn and ProSyndicate visit a CS:GO gambling site called CS:GO Lotto.com. I did some digging into this and holy sh*t balls." "This site was registered as a business in Orlando Florida, I thought it's just a coincidence since TmarTn also lives in Orlando. But no it wasn't, Trevor Martin, aka TmarTn is the director of this site, he f***ing owns the damn site." He also accused the pair of faking their reactions to their big wins and losses in their YouTube videos. "These two on the website CS:GO Lotto.com and they allegedly do fake gambling and pretend to win thousands of dollars and also sometimes pretend to lose it too." Those claims were further backed up by popular YouTube channel H3H3 Productions, who released a video going over HonorTheCall’s allegations and pointed out that whether or not TmarTn and ProSyndicate were manipulating the results, the fact that they could just wasn't a good look. "So here he fairy tale story, you know, 50 dollars up to thousands." "In a thirteen minute video." "Terrific stuff here guys." (Stream) "Do you think it's possible he faked his reaction and faked the actul results of the bet?" "It's possible, it's very possible." "I don't know if he did but it's possible, and that's why you don't gamble on your own site." "It doesn't need to be sent, it's just, it's obscene." So with all the allegations out there, how did TmarTn and ProSyndicate react? Well Syndicate took the high ground and apologized and promised to be more transparent in the future but he's been in trouble for doing things like this before, so it remains to be seen how genuine that was. But TmarTn doubled down. "What's going on guys, TmarT here and I hope you guys having a fantastic Monday I just wanted to make a quick little vlog to talk to you guys and to kinda lay everything out on the line. Give you guys the full true story straight from the source. Because unfortunately, and I really, I don't understand kind of where it's coming from but threre is gonna be a little bit of a sh*tstorm headed this way and some of the drama channels are gonna pick up on it. I'm sure a lot of the hater channels are gonna pick up on it. But I wanted you guys to know exactly what's going on so you guys can make your own well-informed decisions. So basically what's breaking news now, is that myself and a few other people including Tom or ProSyndicate own CS:GO Lotto. And this is something that has never been a secret. I don't understand why this is big breaking news now because it's never been under wraps. It's never been a secret." The problem is that it was a secret. At least to his viewers. And that caught the attention of the United States Federal Trade Commission, who didn't take kindly to the whole situation. And launched and investigation into both TmarTn and ProSyndicate. A few days after that. Tmartn released an apology video that he quickly took down, Probably because the FTC was already after him. "Cooper I have no idea how I'm gonna record this video dude." "Now my connection to CS:GO Lotto has been a matter of public record since the company was first organized in December of 2015." "However I do feel like I owe you guys an apology. I am sorry to each and every one of you who felt like that was not made clear enough to you." The FTC taking interest in two YouTubers sparked headlines that made some people noticed that Valve appeared to be enabling underage gambling. Which led some people to file class-action lawsuits against Valve. See, there’s no way of knowing for sure, but it seems like Valve had to have known that people were using CS:GO skins as gambling chips. It seems there's pretty much no way for them not have known. Plus, some people at the time argued that the growth of CS:GO gambling was in turn, good for the growth of Valve. Though Valve has denied that. (Stream) For one, it meant more people were playing CS:GO. Which is good for Valve. but more importantly, Valve takes a 15 percent cut on every sale in the Steam marketplace. So every skin bought is money in Valve's pocket too. And when so many players were rapidly cashing skins in with bots then cashing them out to turn their liquid asset to a solid one, Valve was theoretically raking in cash. But even Valve can’t stand up to US gambling laws, and eventually they sent out cease and desist letters to 23 CS:GO skin gambling sites. Including CS:GO lotto. The problem is that allegations about Valve’s involvement with skin gambling ran deeper than that. According to the letter Valve sent out, the sites were violating the Steam Subscriber Agreement by using Steam accounts for commercial gain. However, you have to think that Valve knew about this. It wasn’t a secret, just ignored. (Stream) Back to our intrepid scam artists. TmarTn and ProSyndicate managed to avoid any jail time and didn't even get fined. The FTC let them off with a slap on the wrist. Despite having been found to have paid other YouTubers and Twitch streamers between $2,500 and $55,000 to promote CS:GO Lotto without disclosing that relationship. All they had to do was admit they were in the wrong. And they have to disclose any relationship like this in the future. But how did TmarTn and ProSyndicate get away with it? Well, there was this weird loophole. Speaking to Polygon, TmarTn and ProSyndicate’s lawyer Coleman Watson explained that CS:GO Lotto wasn’t technically gambling. See, if you looked closely at the terms of use, CS:GO Lotto said that by using the site, you are acknowledging that you could at any point ask for an alternative method of entry to any game on the site. That's right. You didn't have to pay. If you just read the fine print, you would know that CS:GO Lotto would let you play for free as many times as you wanted. (Stream) It’s not like CS:GO’s gambling underground would have lasted that much longer without all this publcity. TmarTn and ProSyndicate didn't single handedly tank it. This was a massive unregulated, gambling industry that people were going to notice eventually. But their dumb scam is why people noticed it when they did. But while they were driving off into the sunset, the CS:GO gambling industry was blowing up behind them. They may have burned down the casino, but they still got out of it with all their ill-gotten gains.