Updated: Jan 31
Online gambling platforms are often misunderstood by those who do not engage in them, particularly ones which rely on an understanding of existing gaming mechanics. The convergence of gaming and gambling in this manner provides mediums which can be used to gamble using in-game items.
Many games, particularly those considered “eSports” (electronic sports) and the communities surrounding them provide an incentive to gamble. The online communities surrounding esports have grown in popularity following the rise of online streaming platforms, such as Twitch, professionally commentated web broadcasts, and a generally more connected and international online community.  Matches, and thus bets placed on them, maybe informally between friends or on the outcomes of top-tier competitors from anywhere in the world. Indeed, many recognised wagering operators now host cash betting on the outcome of esports matches.
Something which is particularly prevalent with young people and those who are familiar with online games, however, is “skin betting”.
Skins, cosmetic game items which confer different aesthetics to in-game items, or provide different unlockable outfits for a character, are often acquired from in-game loot boxes, which provide different odds of acquiring different items. (see previous articles on simulated gambling and loot boxes). This means that on a consumer-led market, such as online “skin trading” platforms, (websites which allow the sale and purchase of other players’ unlocked items) some item prices are driven up due to a combination of their rarity, appeal, and desirability. Some gaming platforms, such as Steam, allow for the legitimate trade of items within the same platform games are published. Some items on marketplaces go for prices in the thousands, and some are very low-value.
Skin betting occurs when people stake skins, typically relatively high-value skins, on the outcome of an event. These bets may be placed informally between friends, but more high-stakes skin betting tends to occur via third-party platforms that “hold” the staked items, and “payout” the skins to the winner of the bet. Skins act in this way as a form of virtual currency, and indeed, the purchase and sale of skins have their own economy. Skins can also be considered as “tokens” for real-life currency. 
Though Steam does not allow direct conversion of skins back into currency and has limitations on purchasing in some instances, third-party programs may be used to “cash-out” of bets or purchases, allowing items to be traded for incredibly high amounts of real-world currency. These are transferred between players via a “bot”, or puppet Steam account, an automatic process coded by those who run the gambling website.
eSports betting and gambling harm
eSports bettors are a group which is vulnerable to harm. eSports bettors were found by one study to be far more likely to meet “problem gambler” criteria (64.8% of bettors) than those who engage in sports betting (17.3% of bettors). They were also significantly more likely than sports bettors to experience at least one instance of gambling harm. This may be due to the uniquely unregulated world of skin betting and eSports betting.
There is an observable rise in those self-reporting their involvement in skin betting. Engagement of youth with in-game purchases and online gambling is high. The frequency of online gambling generally has increased in 2019, with 7% of 11-16 year-olds in the UK reporting having gambled online. There is also a gender bias in these statistics, with adolescent boys being significantly more likely to gamble in this way. According to Ipsos MORI data, 44% of young people aged 11-16 who had heard of in-game items have used the money to pay for them, and 6% had said that they engaged in betting with them.  In more recent studies, rates of adolescents who had engaged in skin betting were 11% in the UK, and in one Australian study, one in seven adolescents engaged in skin betting in the past year. Adolescents are 2.5x more likely to engage in betting with skins than with cash, and there is a robust association between skin gambling, overall gambling problems, and factors such as low wellbeing.
The subcultures that youth engage in often actively encourage skin gambling with content creators and streamers advertising gambling on their media platforms, and other users in-game advertising the sites on their profile descriptions. Little research into the effects of this constant exposure has been conducted.
Regulation of eSports and online skin betting
Despite the harm caused, this method of gambling is currently exempt from many regulations, and even if regulation were to be put into place, it would be difficult to enact due to the nature of the industry. The market is largely consumer-led, and the third-party sites which facilitate the transactions can allow people to evade legislation in a particular country, which allows one to access the internet as if from a different country.  The introduction of age verification checks on these gambling websites, if made mandatory, may help with the issue of underage gambling, but there are ways for children and young people to circumvent current methods of age checks by using the identification of an older relative or friend.
Meaningful legislation and regulation may be the most effective methods of harm reduction to implicate; in several areas. First is legislation regarding gambling advertising in online spheres and on a platform level; gambling is promoted to children via social media and by game influencers. A blanket ban on advertising for skin betting in user profiles would be an achievable goal, and would likely have support from a proportion of the user base, as many are tired of seeing these adverts. Second is the requirement for online skin gambling platforms to be licensed as online gambling operators and for video game gambling to be considered a form of gambling under UK law.
Overall, it is clear that gambling in video games and gaming communities is a growing industry, and steps must be taken to further understand, prevent, and ameliorate the harms experienced.
Edge, N., 2013. Evolution of the gaming experience: live video streaming and the emergence of a new web community. Elon Journal of Undergraduate Research in Communications, 4(2). Thorhauge, A.M. and Nielsen, R.K., 2021. Epic, Steam, and the role of skin-betting in game (platform) economies. Journal of Consumer Culture, 21(1), pp.52-67.  Ipsos MORI via Gambling Commission. Gambling Commission publishes the 2019 Young People and Gambling report. (Oct 23, 2019) https://www.gamblingcommission.gov.uk/news/article/gambling-commission-publishes-the-2019-young-people-and-gambling-report McLeod, C., 2017. More Than Skin Deep: Why It's Time to Go'All-In'on Skin Gambling Regulation. Available at SSRN 3159661. Greer, N., Rockloff, M.J., Russell, A.M. and Lole, L., 2021. Are esports bettors a new generation of harmed gamblers? A comparison with sports bettors on gambling involvement, problems, and harm. Journal of Behavioral Addictions, 10(3), pp.435-446.