Three years ago, Chabot began regularly watching Felix “xQc” Lengyel, a former professional Overwatch player who competed in different video games on Amazon.com Inc.’s live streaming platform Twitch for audiences up to 25,000. In 2021, during one of his streams, Lengyel started playing something else–online blackjack.
Chabot, who lives in Quebec and does accounting for a hospital, was fascinated. “I found it to be pretty entertaining,” he said.
At one point, Chabot saw Lengyel post promo codes for a website named Stake.com which describes it as a “leading online crypto casino.” With Stake and similar sites, players can trade currency for cryptocurrency and bet on different games of luck, including blackjack, slots, and roulette. Chabot redeemed the deal and plunged into the slot scene on Stake. He was enthralled by placing bets for one dollar at first. Then, things began to fall apart.
“I was just beginning to lose weight and losing,” Chabot recalled.
Chabot says he saved his entire life savings of approximately $40,000. Chabot says he obtained two loans of $20,000 from banks and used the funds. Chabot declared bankruptcy at some point.
Chabot decided to continue betting, but he said that watching Twitch streamers play on the site gave him a reason to go to Stake. Chabot spoke with Bloomberg during an interview.
The game is one of many that go all-in. Today, “slots” is the seventh most watched genre of content on Twitch, ahead of the game of video Fortnite. Many streamers receive handsome salaries for participating in this game. One streamer claims he earns “much over” $1 million monthly from his partnership through Stake. He uses the opportunity to gamble on cryptocurrencies in front of live viewers on Twitch.
In the past year, several reports stated that, as per Lengyel, as of May 2022, he had successfully generated $119 million from bets on Stake. Lengyel said later during live streams that the $119 million figure was the total amount he wagered on the site. Bloomberg could not confirm the amount to Stake.
Stake says it operates within Curacao with a gaming license. The Stake is among the most prominent companies contributing sponsorship dollars to the Twitch community. Stake’s Curacao registered address is believed to be a rundown Google Earth shack. The company says most of its staff are located in Europe.
Crypto gambling is illegal in the US. However, it is legal in some other countries, as per Frank DiGiacomo, an attorney who leads the gaming law department at Duane Morris LLP in Philadelphia. Canada has welcomed crypto-related operators, which could be why some streamers relocated to Canada.
It is still possible to place bets on Stake from the US using a virtual private network that conceals the place of residence of the user and the cryptocurrency, however.
A Stake spokesperson claims that it has instituted “stringent conformity procedures” that prevent people using VPNs from transferring funds to countries where it isn’t permitted. Stake adds that it “uses several measures to address at-risk gambling behavior,” including free gambling-blocking software available to its users. “Stake takes its regulatory obligations seriously and complies with all applicable laws.”
Twitch will no longer allow gambling to be featured. Twitch spokesperson said that the company was currently “in the midst” of a deep-dive into the gambling habits on Twitch. The spokesperson explained that the move was made to “address the dangers of gambling and scams associated with gambling sites that are not trustworthy.”
The spokesperson said that they consider potential negative effects on the community seriously. “While gambling content makes up just a tiny fraction of content streaming on Twitch, We monitor it carefully to ensure that our approach mitigates potential harm to our global community.” The company says the resources for those suffering from gambling addiction are available in Twitch’s Safety Center.
Lengyel is back after a break of a year. He is a Canadian Twitch celebrity with over 11 million followers. In late July, some 70k viewers watched him press the digital slot machine repeatedly. Part of the fun of watching is that the stakes can be extremely high. Lengyel lost $164,000 in crypto in one stream in only 139 seconds. Lengyel did not reply to Bloomberg’s request for comment.
Not only gamers are getting into the action. Drake, a Canadian rapper, signed a partnership with Stake in May to play roulette live on Twitch. He was known by the name StakeDrake. Beginning with a $9 million balance, Drake placed single roulette bets of $300,000 up to $1 million as 56,000 viewers watched. Drake’s terms of collaboration with Stake were kept private. Spokespeople for Drake did not respond to a request to respond.
The sponsored streams and celebrity endorsements are working, driving Twitch users to crypto casinos. Vaibhav Kumar (a 25-year-old Indian native) began playing crypto in 2020 after watching his favorite League of Legends streamer making bets on Twitch. He logs onto Stake 4 to 5 times weekly and places bets ranging from $20 to $200.
In the beginning, Kumar primarily watched streamers sponsored by Stake until he says it dawned on him that lucrative promotional deals offset their losses. In contrast, his losses were not offset by anything.
“Once the excitement that came from seeing someone play with such huge amounts of money went away, it was mostly offensive and made me sick watching it,” he said. The show also made viewers feel a false sense that they were either being either winners or losers.
Sites use celebrities and platforms that target younger people.
A few young gamers believe the path to crypto casinos directly results from a different kind of gambling well-liked by Twitch users and others. It was the usage of virtual goods in Counter-Strike: Global Offensive. As part of this vibrant, billion-dollar market, celebrity gamers have launched websites where gamers can play roulette with digital video game weapons. Some of these were worth hundreds or thousands of dollars. Kids under 18 had no problem playing the game.
Jakub, who asked not to reveal his name for fear of repercussions for his career, claims that at 13 years old, he played on one of the sites and was awarded a knife worth $200. The young man was not old enough to withdraw the money and promptly gambled the money away.
The website Jakub was playing on was later transformed into a crypto casino. Jakub was 16 when he saw a Twitch streamer advertise Stake. Then, he moved his online gambling habits there. The resident of the Czech Republic says he logs onto Stake almost every day playing in a series of $50 buy-ins. If he wins, then he purchases computer parts or shoes. He estimates he’ll lose between $1,500 and $1,500 monthly.
While crypto-gambling was a prominent presence on Twitch the past year, it’s attracting more viewers and causing more controversy than ever.
Matthew “Mizkif” Rinaudo, another popular Twitch celebrity who gained fame through his entertaining World of Warcraft live streams, says he has received $19 million per year in an offer to gamble live on Twitch before the huge audience. Rinaudo used to bet on Twitch, but now he thinks it’s morally wrong. Rinaudo observed a fan aged 14 gambles on a website he had promoted earlier in the year.
“I stopped because I just felt genuinely bad,” Rinaudo told Bloomberg.
A few top streamers for video games, including Lengyel, who has said he is “addicted”– have shifted their gambling habits to hours of the day when they’re not in front of an audience. Lengyel admitted in May that he’d lost $ 1.8 million in the month before gambling.
During the live stream, he mentioned that he would go to any length to warn you about it. “I use it since it is affordable, and I love the experience. I also think it’s good content.”
Another top performer streamer, Tyler “Trainwrecks” Niknam, said in January he’d lost $12.9 million in gambling, according to Dexerto, a website that covers video games. Niknam did not reply to a request for comments.
For years offshore gambling has long been a source of contention on the side of US regulators. Twenty-eight members of Congress wrote a stern letter in June to the Department of Justice requesting that it investigate illegal offshore gambling websites operating within the US without authorization. Alex Costello, vice president of government relations at the American Gaming Association, a casino trade association, says that lawmakers are focused on regulating and closing the biggest illegal gambling sites. Crypto gambling does not make it to the top of the list. Offshore casinos usually have sophisticated methods for obfuscating ownership. She said that goes particularly for the crypto industry lawmakers are trying to comprehend gamdom.
Costello said it’s alarming that such “sites use celebrities and platforms specifically targeted towards younger audiences” to attract customers. The majority of Twitch users are between 16 to 34.
According to the National Center for Responsible Gaming the National Center for Responsible Gaming, between 6% to 9 percent of youth people have problems gambling. This is compared to just 1% for adults. Over 2,300 people have signed a Change.org petition in the last few months to ask Twitch advertisers, including Nvidia Corp. and PepsiCo Inc., to reconsider advertising on the platform due to the popularity of gambling streams. The companies did not respond to our requests for clarification.
Streamers like Rinaudo think Twitch should not provide an online platform for promoting offshore crypto gambling sites. He believes that streamers will take large amounts of money from Twitch to promote sites like Stake as long as they can.