Home Esports Match-fixing for gambling and money laundering is ‘easy’ in esports and games

Match-fixing for gambling and money laundering is ‘easy’ in esports and games

by Ben Hill

In Counter-Strike: Global Offensive, a popular video game developed by Valve, Seattle-based, players can choose to become terrorists— plant bombs and hold hostages— or soldiers who fight the bad guys.

Yet Valve itself had to fight the perpetrators in October. In a blog post, it abruptly revealed that CS: GO’s players could no longer swap “pot keys” for items in the game, such as weapons, uncommon knives or stickers or a limited edition stickers.

Valve said, “Recently, major fraud networks have moved to CS:GO keys for liquidation. “At this stage, virtually every major transaction which has actually been sold or purchased on the market is suspected to be a scam.” The revelation that money laundering and bribery has become so prevalent has come from one of the biggest video gaming companies of the world that it has “only” accounts for one of the main trading activities on the market of the industry.

Kayla Izenman, a RUSI research analyst, the Defense and Security think tank, who co-authored a recent study on money laundering on online games, says, “It’s surprising to see the vocabulary they used.

The finding by Valve revealed that offenders have been able to use the loophole of online gaming markets for more than a decade, either by gathering stolen credit card numbers or by extracting large profits from other forms of illegal activities.

Fraudsters may purchase virtual currency or a real item on the basis of the proceeds of crime and then sell it to an unhappy player, often with an obvious discount, through a number of online markets.  A year ago, an inquiry into the hit-game Fortnite from a cybersecurity researcher, Sixgill, found that V-bucks, the in-game currency of Fortnite, were sold on the dark web.

On eBay, Sixgill also found, hundreds of thousands of dollars worth of goods from Fortnite.  As their importance for gamers has grown, virtual objects have become a bigger business–and thus a larger aim for fraudsters.

While certain virtual weapons are of value, most skins simply give players the opportunity to express themselves through personal avatars in online communities.  Nonetheless, behind multiplayer multi-player games like Fortnite and CS, multi-billion-dollar companies: GO largely has defied accommodating “know your client” demands or other anti-money washing laws for payment processors.

Even as new plans for digital currencies like Facebook’s Pound face significant regulatory scrutiny, numerous game developers regularly print their own in-game currencies and generate thousands of dollars worth of digital assets without the same supervision.

“Such products are basically physical property for a customer, but something’s not self-expression for a consumer,” said Nicholas Lovell, Game Director for the Electric Square company, who wrote extensively about the free-to-play games that often use virtual items for sales.

Auto-expression is of particular relevance in a game such as Fortnite, said the players paying V-bucks in order to perform their new “emote” or victory dance, which is immediately after killing a conquered enemy. Explore our customized newsletters with key perspectives into global trade, M&A, technology and more. Players are ready to pay real money for these virtual goods— a couple of cents, sometimes much more. View our newsletters

The Steam Community site, which still allows players to exchange articles for Valve’s titles, offers hundreds of weapons for CS: GO, which cost 100 dollars each. The costliest— a flip knife “Bright Water” or a Universal Gun “Souvenir.” $1,800 each.  The perceived value of such virtual objects has created many secondary markets for players to trade in, even if game developers ban their purchases and sales in terms of their business. G2 G, PlayerAuctions and PlayerUp are included in these pages.

But Mr Lovell argues that Valve’s titles, which often depend more than others on in-game sales, are a particularly convincing target for money washers.  “Valve is at the heart of this problem because so many of its games have a commercially viable economy,” he said. “Valve is to be a warning account of what happens in a free-market economy when you let people do what they like.

Valve did not answer questions e-mailed to CS on money laundering, GO and its other titles. It turned out that bad guys took over. Epic Games, the creator of Fortnite, refused to comment.  “Giving our business a positive experience of gaming is vital to our trust in the fans we support, and disinterested third parties threaten this when abusing in-game technologies for illicit or unwanted purposes,” said a Speaker for the Entertainment Software Association, representing producers of games in the USA.

“ESA members are attentive to the illegal activity detected on their games or on their network and take a number of steps towards unauthorized actions,” the Speaker added, including the prohibition of offender accounts and the collaboration of payment service providers and legal action.

Nevertheless, Valve shutdown of core CS trading: GO suggests that game developers might do more with their networks themselves, said Mrs. Izenman of RUSI. “These platforms have so much data,” she said by gamers. By having a player account it is impossible to trade digital assets and objects can be tracked when they travel from one user to another. This information would be helpful for money laundering compliance.

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