Twitch has managed to build a well-known brand for itself. Some may know it as a platform on which popular gamers and esports competitors stream their play for an audience. Others may know it as the place to watch US National Women’s Soccer League matches online.
Either way, chances are the majority of users don’t associate Twitch with online casinos. Twitch would like to keep it that way.
Gaming or Gambling?
Bloomberg published a report in August detailing Twitch’s ten most popular categories. Historically, huge video game brands like Grand Theft Auto, Fortnite, World of Warcraft, and Call of Duty dominate that list. This time, however, a new challenger appeared: gambling.
As of the end of July, the Slots category, which also includes other gambling content, had skyrocketed to seventh-most-popular on the platform. That put it ahead of Fortnite, a remarkable feat.
Twitch, however, isn’t delighted with the notion of becoming a hub for real-money gambling content. In a statement released on the evening of September 20, the Company said:
The gambling content on Twitch has been a big topic of discussion in the community and something we’ve been actively reviewing since our latest policy update in this area… While we prohibit sharing links or referral codes to all sites that include slots, roulette, or dice games, we’ve seen some people circumvent those rules and expose our community to potential harm.
As part of the revamp of its gambling policy, the Company added that, as of October 18, 2022, it will:
… prohibit streaming of gambling sites that include slots roulette or dice games that aren’t licenced either in the US or other jurisdictions that provide sufficient consumer protection. These sites will include Stake.com, Rollbit.com, Duelbits.com and Roobet.com [and potentially others].
The platform averages more than 31 million visitors per day, according to its Press Center. Many of these are preteens and teenagers, so Twitch’s new stance makes a lot of sense. It’ll be popular with at least some streamers, too, if a recent confrontation about gambling among live-streaming influencers is any indication.
It’s also in line with Netflix’s recent announcement that gambling, crypto and politics will be absent from its ad-supported tier. Regulators likewise take a dim view of the marketing of gambling products to underage audiences. Betway, for instance, recently received a fine for advertising on a page intended for children on the official website of the English soccer club West Ham United.
Crypto Gambling is Particularly Concerning
Regulated online gambling is hardly taboo in the US these days, at least in those states which allow it. However, some Twitch streams have been steering people toward the much dicier world of crypto gambling.
What’s crypto gambling? The games or betting lines are similar to most real money gambling sites. The key difference is that all transactions take place using cryptocurrency rather than US dollars or other fiat currency. That puts cryptocasinos in a regulatory gray area and introduces an additional layer of risk for players.
How has crypto gambling taken hold? Marketing through streaming sites like Twitch has been a big part of it. These cryptocasinos have paid influencers to inundate their followers with streams of them gambling online at such sites.
One streamer highlighted in the Bloomberg report is Tyler Faraz Niknam, or “Trainwreckstv,” from Austin, Texas. He has claimed that his cryptocasino sponsorship deals were paying him over $1 million a month. Another is Felix “xQc” Lengyel, a former professional Overwatch player from Canada who boasts 11 million followers. Lengyel didn’t reveal the terms of his deal with Stake, but as of May 2022, his promo codes had reportedly generated $119 million in bets for the site.
Cryptocasinos Hit the Mainstream
The influence of crypto gambling extends beyond the confines of the streaming world. The rapper Drake has also partnered with Stake (terms not revealed) to gamble live on Twitch as “StakeDrake.” Drake has 52.6 million followers on Instagram and 39.4 million on Twitter; such celebrity sponsorships can reach a potentially huge audience.
The allure of all this isn’t simply in watching others play online blackjack, roulette and slots, but in the amount of money the streamers are showing off. They play with huge bankrolls for extremely high stakes. The swings taking place on such streams would make a fighter pilot flinch.
For instance, “xQc” once lost $164,000 in under three minutes. Starting with $9 million in his account, Drake thrilled an audience of nearly 60,000 viewers by placing bets of between $300,000 and $1 million on roulette.
Virtual Money, Real Repercussions
That these streams gain traction shouldn’t come as a surprise. Whether on screens or in person, we love to live vicariously through others’ thrills. In many cases, that’s a good thing, but it can also lead viewers to take risks they shouldn’t.
Fortunately for the Average Joe, climbing into the cockpit of a Formula 1 car or base-jumping off of Christ the Redeemer requires more than a few keystrokes. When it comes to crypto gambling, however, a laptop and a credit card are all it takes to jump on the same financial roller coaster as these influencers.
The celebrities and influencers who put on these shows generally start with access to far more money than their followers have. At the same time, they receive handsome compensation for their play, win or lose.
The excitable player looking for a thrill doesn’t enjoy the same luxury. One anonymous player who followed these influencers into crypto gambling and from there into bankruptcy put it this way:
[Watching the stream] gave viewers a false sense of winning and losing… Once the initial excitement of seeing someone play with such huge sums wore off, it was mostly off-putting and made me sick watching it.
A Danger to Underage Audiences
Aggressive crypto gambling marketing has taken a toll on individuals who are not being compensated for playing these games. However, even the influencers themselves can end up getting stung, despite the big paychecks.
“xQc” admitted to having developed a gambling addiction and sustaining a $1.8 million loss in one month. In January 2022, “Trainwreckstv” told Dexerto that he’d endured a $22.9 million peak-to-trough loss over nine months and was “still down 12.9 million.”
These cautionary stories alone should be enough to highlight the dangers of diving into high-stakes games of chance. However, there are also a couple of legal issues at play.
The first is underage gaming. As noted above, content on Twitch is extremely popular and far-reaching, and many of its viewers aren’t old enough to gamble legally.
Regular exposure to this content glamorizes and normalizes the wild swings of high-stakes gambling. It also harkens back to the skins gambling phenomenon, which hit crisis levels not too long ago. These sites allowed gamers, including literal children, to gamble using virtual goods from popular video games, such as weapons, character outfits and vehicles.
The repercussions of this overlap between video games and gambling are not lost on the streamers themselves.
US a Black Market for Crypto Gambling
Twitch’s concerns about crypto gambling also invariably include the fact that many sites, including Stake, are neither based in the US nor allowed to operate there. Stake, for instance, operates under a gaming license in Curaçao, though its staff is based mainly in Europe.
Stake claims to prohibit players from the US because crypto gambling is illegal there and because Stake is not registered to operate an online casino in the country.
However, despite Stake’s “stringent compliance processes,” many Americans still access the site via virtual private networks (VPNs). These can disguise their identities, locations and the cryptocurrency they’re using.
That’s likely concerning to US authorities, and Twitch does not want to find itself caught in the middle of a crackdown. But although it’s showing real money casinos the door at the same time as their cryptocurrency brethren, it is willing to make an exception for those forms of gambling which involve an element of skill:
We will continue to allow websites to focus on sports betting, fantasy sports and poker.