How Live Streaming is Boosting Illegal Betting
By James Porteous, Research Head, ARF Council on Anti-Illegal Betting & Related Financial Crime
As young people and even children spend more and more time on technology platforms baffling to parents, they are being targeted there by unregulated betting operators – a practice evidently so lucrative that some betting operators have even set up rival tech platforms seemingly to avoid advertising bans. The Licensed & Regulated betting industry is always constrained by how it can market its product, and consequently how to compete effectively with illegal betting operators who have no constraints or scruples when it comes to promoting their product in any way they can.
This has been exacerbated by the rapid pace of new technologies which open up novel channels for accessing and engaging in illegal betting.
Platforms created for gaming, communication and entertainment – Discord, TikTok, and Twitch to name just three – are quickly and increasingly exploited by illegal betting operators to promote their product.
This raises concerns about consumer protection and harm, especially for the younger demographics active on these platforms. Meanwhile, the pace of technological development means the regulator will almost always be playing catch-up to unscrupulous betting operators incentivised by huge potential financial gain to exploit any new angle to promote their product.
This article focuses on one particular strand of this phenomenon, the exploitation of live-streaming platforms to promote cryptocurrency betting sites, and the novel way one such betting site evaded a ban on gambling adverts – by setting up its own rival live-streaming platform.
What is live-streaming ?
Live-streaming allows people to broadcast video of themselves live over the internet, similar to a TV show but through websites and apps.
One of the most popular forms of live-streamed content is people broadcasting themselves playing video games, and by far the most popular platform for this is Twitch.tv, launched in 2011 and purchased in 2014 by Amazon.
Streamers host sessions of themselves playing video games; viewers can watch and interact in real-time and support streamers by subscribing to their channels or purchasing virtual goods. Top streamers have millions of followers and can make millions per year.
The appeal of this may baffle older demographics, but there are on average 2.5 million people watching Twitch streams at any given time, and 7 million people streaming each month.[1]More than 75% of users are aged 18-34 according to Twitch,[2]and around 20% aged 16-24.[3]
Live-streaming and gambling
Given this, Twitch and platforms like it are obviously potentially potent marketing tools, especially to sought-after younger demographics. This is amplified by the community aspects of the platforms – users feel a personal connection with streamers and want to actively support them by spending on products or services they recommend.[4]Among those quick to see the potential in this were crypto gambling sites, some of whose founders were young, digital native, live-streamers themselves.
Beginning around 2018-19 (exact dates unclear), some Under-regulated and Unregulated betting operators began using live-streaming to market to these massive audiences, including partnering with some of the most popular streamers, even though their websites were unlicensed in the jurisdictions where most of the audience was based (if licensed at all).
Twitch streamers promoted these sites either in text chats running alongside their video game streams, or by streaming themselves gambling live, often on digital slots or similar casino games but also on sports.
Prominent operators following this strategy were several cryptocurrency bookmakers, some of which were Licensed but Under-regulated in the offshore betting haven of Curacao, whose regulatory structure provides no actual oversight.
Streamers were paid at least tens of thousands of dollars an hour by these websites to stream gambling live. According to technology magazine WIRED in a July 2021 article, 64 of the top 1,000 most popular Twitch streamers had streamed crypto gambling or otherwise advertised deals from crypto gambling websites.[5]
One reportedly offered top gambling streamer Adin Ross between USD 1.4 million and USD 1.6 million a month to stream digital slots.[6] Another leading streamer, Trainwreckstv, claimed in October 2022 he had “been paid USD 360 million for 16 months of gambling” (equivalent to USD 22.5 million per month) although this seemingly incredible sum cannot be verified.[7]
Whatever the actual amounts, it is clear streamers were receiving large sums of money to promote gambling, implying the return on investment for the betting operators must have been significantly larger still.
None of the websites were licensed in the United States where most Twitch users are based, while the moral implications of promoting high-frequency addictive gambling products like digital slots on a platform where a large percentage of users are teenagers naturally attracted criticism of Twitch.
In October 2022, these factors, capped by a major controversy involving a streamer accused of scamming users and other content creators out of hundreds of thousands of dollars to fuel a gambling addiction, finally prompted Twitch to act.
Twitch did not outright ban the promotion of gambling, but banned several specific operators which it said “aren’t licensed either in the US or in other jurisdictions that provide sufficient consumer protection” (the company did not list jurisdictions or define sufficient consumer protection).[8]
Phase two – if you can’t beat them …
This ban might have seemed a major blow to these Unregulated and Under-regulated operators. Luckily, a rival live-streaming platform appeared just three months later (in January 2023), which offered essentially the same functionality as Twitch but with no restriction on promoting gambling.
Not coincidentally, the platform has close ties to a major cryptocurrency bookmaker licensed out of Curacao: the co-founder of both the betting site and the live-streaming site is a 27-year-old who was a keen streamer on Twitch himself.[9]He is reported to have become, in the last couple of years, one of the richest people in Australia,worth AUD2 billion thanks to the betting site.[10][11]
The new streaming platform has made a major splash since launch, offering streamers much better revenue share deals than Twitch, and luring away major streamers with huge contracts (including the aforementioned Adin Ross and Trainwreckstv, who had been making millions streaming gambling on Twitch).[12]
In June 2023, it signed streamer xQc (known to his parents as Felix Lengyel) to a two-year USD 100 million deal – a similar sized contract to that of basketball superstar LeBron James.[13]
Drake, the Canadian rapper who is one of the most popular musicians in the world by any metric, also joined the platform[14] and regularly streams himself playing slots and roulette online, and promoting million-dollar-plus “giveaways” to fans.[15]
Clearly all of this is very expensive, and some doubt whether the new streaming platform is a viable alternative to Twitch from a purely business perspective, or exists solely as a means to promote one offshore Under-regulated crypto gambling website. The co-founder insists there is no relationship between his betting site and his live-streaming platform which promotes it.[16]
Implications for racing, other sports and licensed and regulated betting
The legality of promoting gambling on live-streaming platforms is unclear and untested, and none of the individuals or websites mentioned here are accused of breaking the law.
But the proliferation of Under-regulated and Unregulated gambling promotions across new tech platforms popular with youth raises moral, ethical and practical concerns. This article focuses on one specific mode of promotion, but other new technologies, apps and social media sites are also being widely used by unscrupulous operators as backdoors to market Unregulated betting unchecked to massive audiences, including vulnerable minors.
The ARF Council has previously reported on the ubiquity of illegal betting promotion and agent recruitment on social media platforms such as WhatsApp, Instagram and Facebook, which is incentivised by the high commissions paid by illegal betting operators, and continues to be widespread (and is also used by many crypto bookmakers).
Discord, a chat app popular with video gamers and crypto enthusiasts, hosts many channels which promote illegal betting websites, despite promotion of gambling being expressly against its “brand partnership guidelines”.[17]Some Discord channels are devoted to guiding users on how to evade local restrictions to access bookmakers unlicensed in their jurisdiction.[18]
Telegram, the anonymous messaging app, is now one of the leading means of promoting illegal betting in Asia; for example, almost all of the Telegram groups in the category ‘Sport’ targeting the China market, are in fact actually recruitment agents for illegal sports betting platforms, according to one Telegram group ranking website.[19]
Of particular concern is the potential for young people, including those not of legal age to bet, being attracted to Under-regulated and Unregulated gambling platforms with no responsible gambling safeguards or age restrictions. Extensive research has shown that adolescents are more vulnerable to developing problematic gambling behaviours compared to adults because teenage brains are still developing decision-making capacities related to risk assessment and impulse control.
The impact of gambling marketing via the specific mode of live-streaming is an area for further academic study, but seems likely to be significant, given the high engagement of streaming fans noted above.
Licensed & Regulated betting operators should consider refraining from such practices. An example of why comes from Australia, where TikTok has allowed one licensed operator to advertise gambling as part of a controlled trial (contrary to TikTok’s policies in other jurisdictions).
This has led to repeated and sustained criticism from anti-gambling campaigners, of not only the particular betting operator, but the entire Licensed & Regulated gambling sector, including accusations of promoting under-age gambling.
This draws the focus of key stakeholders away from Under-regulated and Unregulated operators who pose a far greater threat to society than Licensed & Regulated, responsible sports wagering. Regulated operators should hold themselves to higher standards in order to differentiate themselves – and also explain to stakeholders why maintaining this higher standard can put them at a competitive disadvantage versus the illegal market.
Racing and other sports should also consider the merits of associations with such platforms and operators. Some major sports teams in football, motor sport, mixed martial arts and elsewhere have signed lucrative sponsorship deals with operators in the crypto gambling and live-streaming spaces.[20] One major football team promotes both the specific live-streaming platform discussed above, and its associated crypto bookmaker, displaying both logos on its shirt to hundreds of millions each week.
Although such deals are no doubt valuable from a financial perspective, and important in a commercial environment where sponsorships are difficult to secure, they may leave partner sports and teams open to reputational impact and even question marks over integrity. Chelsea FC rejected a shirt sponsorship deal from a crypto bookmaker in July 2023in response to fan criticism, for example.[21]
More generally, it is important that there is public discussion understanding and discussion of the reasons for the boom in cryptocurrency gambling, which some reports state has gone from strength to strength despite the overall crypto market deflating.
[1] 'TwitchAds', Twitch, (2023), <https://twitchadvertising.tv/audience/>, accessed3 October 2023.
[2] ibid
[3]Kavanagh, Duncan, 'Watch and Learn: The Meteoric Rise of Twitch', GWI, (20August 2019), <https://blog.gwi.com/chart-of-the-week/the-rise-of-twitch/>,accessed 3 October 2023.
[4] ibid
[5] Cecilia D'Anastasio, ‘Twitch Streamers Rake in Millions With a Shady Crypto Gambling Boom’, WIRED, (13 July 2021),<https://www.wired.com/story/twitch-streamers-crypto-gambling-boom/>,accessed 3 October 2023.
[6] ibid
[7] Max Miceli, ‘Trainwreck disses Hasan, Poki, and Ludwig while bragging about stunning gambling sponsorship profits’, Dot Esports, (19 October 2022),<https://dotesports.com/streaming/news/trainwreck-disses-hasan-poki-and-ludwig-while-bragging-about-stunning-gambling-sponsorship-profits>,accessed 3 October 2023.
[8]Haleluya Hadero, 'Twitch expands its ban on gambling livestreams. It also says viewership of the content is down 75%', AP News, (2 August 2023),<https://apnews.com/article/twitch-gambling-policy-ban-4db4f6a03fdc725f75133f0d920d1f9e>,accessed 3 October 2023.
[9] 'High stakes: the cryptocurrency casino king who bought the most expensive house in Victoria', The Guardian, (17 August 2022),https://www.theguardian.com/australia-news/2022/aug/17/high-stakes-the-cryptocurrency-casino-king-who-bought-the-most-expensive-house-in-victoria,accessed 3 October 2023.
[10] 'The secret Australian origins of the world’s biggest crypto casino', The Sydney Morning Herald, (8 December 2021),https://www.smh.com.au/business/markets/the-secret-australian-origins-of-the-world-s-biggest-crypto-casino-20211208-p59ftb.html,accessed 3 October 2023.
[11] AFR Rich List 2023: Australia’s 200 wealthiest people are revealed', The Australian Financial Review, (23 May 2023),https://www.afr.com/rich-list/australia-s-10-richest-people-revealed-20230523-p5dapa,accessed 3 October 2023.
[12] Liao,Shannon, 'Top Twitch creator endorses platform connected to crypto gambling site ', The Washington Post, (6 December 2022),https://www.washingtonpost.com/video-games/2022/12/06/trainwrecks-kick-gambling-stake/,accessed 3 October 2023.
[13] Kellen Browning, 'Twitch Star xQc Signs $100 Million Deal With Kick, a Rival Platform', The New York Times, (16 June 2023),https://www.nytimes.com/2023/06/16/business/twitch-kick-xqc.html, accessed 3October 2023.
[14] Shreyan Mukherjee, '"Kick is moving up fast" - Streaming community reacts as Drake hosts his first-ever broadcast on the Trainwreckstv-backed platform',Sportskeeda, (17 December 2022),<https://www.sportskeeda.com/esports/news-kick-moving-fast-streaming-community-reacts-drake-hosts-first-ever-broadcast-trainwreckstv-backed-platform>,accessed 3 October 2023.
[15] Bitcoin Chaser, ‘Drake v Stake $1 Million Giveaway on Kick.com’, Bitcoin Chaser, (2 June2023), <https://bitcoinchaser.com/drake-v-stake-1-million-giveaway-on-kick-com/>,accessed 3 October 2023.
[16] Mike Stubbs, 'How Kick Plans To Monetize Streaming In A Way Twitch Couldn’t',Forbes, (26 July 2023),<https://www.forbes.com/sites/mikestubbs/2023/07/26/how-kick-plans-to-monetize-streaming-in-a-way-twitch-couldnt/?sh=5a56b0603681>,accessed 3 October 2023.
[17] Jane Shaw, 'The Best Gambling Discord Servers Ranked for 2023', Casinos.us, (21August 2023), <https://www.casinos.us/blog/gambling-discord/>, accessed 3October 2023.
[18] Sanya Burgess, 'Inside the wild world of crypto casinos, Sky News, (3 October 2023),<https://news.sky.com/story/from-drake-to-fake-money-inside-the-wild-world-of-crypto-casinos-12964330>,accessed 3 October 2023.
[19]https://cn.tgstat.com/sport
[20]Bennett, Tess, ‘Stake.com co-founders Ed Craven and Bijan Tehrani unveil new streaming platform Kick to take on Amazon’s Twitch’, The Australian Financial Review, (31 March 2023),<https://www.afr.com/technology/local-crypto-billionaires-use-grand-prix-to-debut-new-venture-20230331-p5cx2a>,accessed 3 October 2023.
[21] Jessie Sale, 'Chelsea abandons Stake.com negotiations of front of shirt sponsorship',SBC News, (6 July 2023),<https://sbcnews.co.uk/sportsbook/2023/07/06/chelsea-abandons-stake-com-negotiations-of-front-of-shirt-sponsorship/>,accessed 3 October 2023