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Gaming's gambling problem is out of hand | This Week in Business

People Make Games report on CS:GO underscores how difficult it will be for the industry to kick the habit

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If it seems like just last month we talked about gambling in this space, well, it was actually about a month and a half ago. But we're back talking about it this week because People Make Games released a report on gambling in Valve's long-running free-to-play hit Counter-Strike: Global Offensive.

Much like the YouTube channel's report on the exploitative design of Roblox from last year, its report on CS:GO gambling is an illuminating look at something lots of people already knew was going on and expressed little concern over, but laid out in such a thorough, clear, and coherent way as to make the bigger picture as impactfully horrifying as it deserves to be.

It's an excellent piece, and it verifies much of what was abundantly clear about Valve with quotes from former employees. Valve embraces a libertarian culture and philosophy. It wants to automate or outsource work to others wherever possible. It does not want to make decisions based in any way on morality, which is an impossible task right up there with making a AAA first-person shooter that is not political.

Valve does not want to make decisions based in any way on morality, which is an impossible task...

Despite this, Valve does take action on occasion.

For example, in 2016 when a pair of prominent YouTubers were found to be behind one of the CS:GO gambling sites and promoting it heavily on their own channels without disclosing that ownership stake, Valve reacted to the scandal (and a lawsuit) by making everyone think they'd be laying down the law.

QUOTE | "Using the OpenID API and making the same web calls as Steam users to run a gambling business is not allowed by our API nor our user agreements. We are going to start sending notices to these sites requesting they cease operations through Steam, and further pursue the matter as necessary." – Valve's Erik Johnson, a week after the YouTube gambling site scandal broke in 2016.

The phrase "as necessary" has some tremendous ambiguity there. At the time a reasonable observer might believe Valve was operating in good faith and understood the phrase to mean that the company would further pursue the matter "as necessary until the businesses stop using Steam for gambling."

Given the slew of active CS:GO gambling sites featured in the People Make Games report, in retrospect Johnson clearly meant Valve would pursue the matter "as necessary until people stop bugging us about this and the problem goes away."

In another instance of public shaming working on Valve at least a little bit, Steam's forums and user groups were a horrid repository of toxicity for years, but Steam steadfastly refused to moderate them to anything approaching an acceptable standard, with one exception.

Whenever press accounts highlighted specific wildly unacceptable groups and user names (something that happened with a frequency that could be described as alarming), those would reliably be deleted in a hurry.

It seemed as if the company was hoping that outsourcing moderation duties to the press would be a scalable solution. And for all that value we provided them, we didn't even get so much as a thank you, or even a "We'll do better in the future."

STAT | 0 – The number of responses Valve gave to reporters for the features linked in the paragraph above.

And of course, there was the time Valve very reluctantly pulled down the Steam store page for Rape Day not because there was anything abhorrent about making it financially viable to sell games where players are told to "Verbally harass, kill, and rape women as you choose to progress the story," but because doing so "poses unknown costs and risks."

QUOTE | "We respect developers' desire to express themselves, and the purpose of Steam is to help developers find an audience, but this developer has chosen content matter and a way of representing it that makes it very difficult for us to help them do that." – Johnson again, making it painfully clear how much Steam really, really wanted to help Rape Day find an audience and take a 30% cut of the proceeds.

I'm skeptical the yelling from the peanut gallery was ever the deciding factor in Valve taking significant action

The tempting conclusion here is that we all just need to yell at Valve loudly enough and it will quickly cave in the name of expediency. But I'm skeptical the yelling from the peanut gallery was ever the deciding factor in Valve taking significant action. Yelling might have addressed the issue temporarily, as it moved Valve to act on gambling in CS:GO and racism on its platform. But this week's column would be about something else if Valve had truly addressed the gambling, and there's no indication the media spotlight on Steam bigots got it to take moderation of the platform more seriously either.

STAT – 41 – The total number of Steam Community Moderators on that page in 2017 when we first highlighted how few people were responsible for cleaning up a community with (at the time) 12.9 million users online at any one time.

STAT – 26 – The total number of volunteers and Valve employees listed on the Steam Community Moderators page earlier this year, just before Valve scrubbed that information from the page, according to the Internet Wayback Machine.

QUOTE | "The Steam platform is among the growing list of virtual spaces where one can encounter extremist activity. Steam is of specific concern now when considering that the online games where Americans experienced the most harassment, according to ADL's survey, were Defense of the Ancients 2 or DOTA 2 (79%) and Counterstrike: Global Offensive (75%)." - A 2020 ADL report specifically dedicated to extermism on Valve's storefront found it "disturbingly easy" to find white supremacists, Nazis, and extremist beliefs and ideologies on Steam.

And as Johnson explained in booting Rape Day from the platform, it was the "unknown costs and risks" that motivated Valve's rationale. They must have known the game would get backlash on social media and in the press, but those costs and risks are well known, a sort of background noise for any kind of work in this industry.

Far less known are the costs and risks of mainstream AAA publishers pulling their games from Steam because they weren't happy with them being sold next to sexual assault fantasies, of retailers like Walmart halting sales of the Steam gift cards that help kids gamble without credit cards, of employees leaving to work for companies that actually pretend to have lines they won't cross in the name of money. Those are the kinds of costs and risks that can prompt meaningful action from a company philosophically opposed to meaningful action of any kind.

And this is why I'm skeptical that Valve will be pressured to make changes by anything short of legislative action, no matter how transparently it is facilitating unregulated gambling by children.

Most publishers and developers in this industry don't make products that look anything like Rape Day. But a whole lot of them make products that look like gambling.

Everyone draws the line of acceptability in a different place, and there will always be incentive to push it further

As People Make Games pointed out, Valve's loot boxes already resemble gambling so much that betting sites are straight-up copying them for their own gambling mechanics.

This is also why I increasingly believe the games industry is incapable of self-regulation on loot boxes and gambling. Because everyone draws the line of acceptability in a different place, and there will always be a monetary incentive to push that line just a little bit further, to do what others won't.

Are loot boxes ok? Is turning gambling into a bigger spectator sport than Fortnite ok? Is having a betting sponsor for your major mainstream esports tournament ok? Are social mechanics where players are pressured to spend money so as not to let their team down ok? Is dynamically changing the difficulty of a game to push people toward making purchases ok? Is creating an economy where brands sell limited digital items for $20,000 in your game where half the players are pre-teens or younger ok? Are NFTs ok?

Those last few examples aren't even about gambling, not directly. But they speak to the same willingness to resort to psychological manipulation of children and the ongoing financialization of gaming spaces, taking virtual worlds where we could create whatever kind of hierarchy and values we so choose, and ignoring that to instead replicate the exact same pecking order and conspicuous consumption of the real world. And that's to say nothing of how the combination of scarce, tradeable items and dangling real-world dollar values in front of players invites them to think of these games not as entertainment but as a money-making opportunity, effectively encouraging gambling in and around the game.

Major companies seem to disagree on how distasteful each of these tactics is. And to be sure, plenty of developers and players do, too.

Without a unified condemnation, we can safely assume individual companies will continue to embrace and innovate on all of these gambling and gambling-adjacent tactics. The successful ones will then spawn plentiful imitators and iterators, because if Big Game A is already doing something rotten and getting away with it, there's not much reason for others to be shy about it, either.

Without a unified condemnation, we can safely assume individual companies will continue to embrace and innovate on all of these gambling and gambling-adjacent tactics

(That's another concerning aspect here. Consider for a moment how far the industry advances through iteration, and then think about how much better it has gotten at extracting money from gambling-like mechanics and manipulation over the years, and how much better it will get in the years to come.)

The games industry has developed the same addiction to gambling as many of its players. And normally with an addiction, the really bad end point isn't too difficult to see coming from a mile away.

But it's different in this case because the house always wins (especially when it pays out in infinitely reproduceable digital content) and the damage of the industry's addiction is carried by the players, who can be blamed for making bad choices with money even though that was the goal of manipulating them in the first place.

Not only is there no incentive to slow down, there's a clear reason not to. The more a company has leaned into dodgy-but-lucrative monetization tactics, the more it will imapct the business to back away from them.

Given how many of the major players on this front are publicly traded companies under constant pressure to grow the business come hell or highwater, it seems far more likely they will speed up.

The rest of the week in review

STAT | 35 – Roughly the number of people Kabam laid off this week, or about 7% of staff.

STAT | 3,700 – Roughly the number of people Twitter laid off this week, or about 50% of staff.

STAT | 11,000 – Roughly the number of people Meta laid off this week, or about 13% of staff.

STAT | Unknown – The number of people EA laid off this week as it shelves the developer's Project CARS series.

STAT | 2 weeks – How long it took Call of Duty: Modern Warfare 2 to nearly match the lifetime UK sales of 2021's Call of Duty: Vanguard.

STAT | 114.3 million – The total number of Switch systems sold to date, as revealed in Nintendo's latest earnings report.

STAT | 115.19 million – The total number of Wii and Wii U systems sold across both those systems' lifetimes.

STAT | 111 million – The total number of Super Nintendo and Nintendo/Famicoms sold across both those systems' lifetimes.

STAT | 118.69 million – The total number of Game Boy systems sold through that system's lifetime.

QUOTE | "[Doom Eternal executive producer] Marty [Stratton] lied about the circumstances surrounding the DOOM Eternal Soundtrack and used disinformation and innuendo to blame me entirely for its failure. Afterwards, he offered me a six-figure settlement to never speak about it. As far as I'm concerned, the truth is more important." – Doom Eternal composer Mick Gordon writes a lengthy Medium post disputing a three-year-old Reddit statement by Stratton that blamed him for the botched Doom Eternal Original Game Soundtrack offered as part of the game's collector's edition.

QUOTE | "CEO corporate scheming on one side, a toxic auteur on the other." – A source gives us their explanation of what went on with Disco Elysium developer ZA/UM, which this week said that key creative personnel were fired for misconduct, while dismissed designer Robert Kurvitz and art director Aleksander Rostov released their own statement accusing controlling shareholders of obtaining their stake in the company through fraud.

QUOTE | "There is absolutely no excuse for the level of hurting people that happens in this industry. And all of the hurting people is hidden costs. It's because instead of being like, 'It's okay to lose a bit of money, and to move this deadline', it's, 'We're just going to work everybody to hit this deadline'." – Finji CEO Rebekah Saltsman was just one of the people chipping in for our GI Academy feature on the hidden costs of indie game development.

STAT | $240 million – Unity's operating loss for its third fiscal quarter, nearly double (up 89%) its operating loss for last year's third quarter. The company has yet to post a profit in any quarter of its existence.

QUOTE | "I'm probably obnoxious only about 20% of the time now." – Unity CEO John Riccitiello tells Bloomberg he has developed a more enlightened management style as he has grown older.

QUOTE | "I was awful at taking feedback on the original project. I was super defensive. I convinced myself I was protecting the team, but it was always 'we know best'. The publisher was giving us notes and we didn't really want to hear them." – Dlala CEO Aj Grand-Scrutton explains how the studio learned after its first project with Disney in 2014. The maturation would help it secure a gig on Disney Illusion Island in 2019.

QUOTE | "Prince of Persia: The Sands of Time Remake is not cancelled." – Ubisoft attempted to reassure people in a post on its support website explaining why it cancelled all existing pre-orders for the game.

STAT | $100 million – The amount of money Nexon put into bitcoin in April of 2021, saying it "reflects a disciplined strategy for protecting shareholder value and for maintaining the purchasing power of our cash assets."

STAT | $30 million – How much that bitcoin is worth now. The company this week reported a $31 million revaluation loss on its cryptocurrency assets for the first nine months of 2022.

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Brendan Sinclair avatar
Brendan Sinclair: Brendan joined in 2012. Based in Toronto, Ontario, he was previously senior news editor at GameSpot.
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