Three years ago, Chabot began regularly watching Felix “xQc” Lengyel, a former professional Overwatch player, when he played various video games on Amazon.com Inc.’s live streaming website Twitch with audiences of up to 25,000 viewers. In 2021, in the course of certain streams, Lengyel started playing something else–online blackjack.
Chabot, who is a Quebec resident and works in accounting at the hospital, was enthralled. “I thought it was pretty entertaining,” he said.
Chabot was able to see the promo code that Lengyel had for a site known as Stake.com, which is a site that advertises itself as the world’s most reputable online crypto casino. Users can use Stake and similar sites to exchange money for cryptocurrencies. They can also bet on various games, including blackjack, roulette, and slots. Chabot took the offer and joined the Stake slot world. At first, he enjoyed placing bets regularly for $1. However, things started to get more difficult.
Chabot said, “I just started losing and winning,”
Chabot says he put aside his savings for about $40,000. Chabot says he took two $20,000 loans from banks and used the funds. Chabot declared bankruptcy at some point.
Although Chabot’s decision to stay betting was his, he said that watching Twitch streamers festively gambling on the website “gave me a reason to go on Stake, like I was part of what they were doing,” told Bloomberg in an interview.
He’s one of many to go all in. Nowadays, “slots” is the seventh most popular genre of content on Twitch and is ahead of the video game Fortnite. Many streamers are paid handsomely to take part in this game. One streamer with a huge following said he earns “much more” than $1 million a month due to his partnership with Stake to crypto gamble in front of live viewers on Twitch.
Lengyel claimed he could generate $119 million in stake bets as of May 2022. Lengyel has since stated during live streams that $119 million is the amount he wagered in total on the website at the time. Bloomberg was unable to confirm the amount with Stake.
Stake says it operates under a gaming license in Curacao and is among the top companies pouring sponsorship dollars to the Twitch community. The address Stake gives as the registered address for Curacao appears to be an uninhabitable shack on Google Earth. Stake says that most of its staff is based in Europe.
According to Frank DiGiacomo (an attorney who heads the gaming law group at Duane Morris LLP in Philadelphia), gambling with crypto is illegal in the US. However, it is allowed in other countries. Canada allows crypto players who could explain why streamers are moving to Canada.
It is possible to bet on Stakes from the US by using a virtual network that hides the user’s location, and cryptocurrency, however.
A Stake spokesperson says it has implemented “stringent compliance processes” which prevent VPN users from transferring funds to countries where it is not permitted. Stake states that it “uses various strategies to curb at-risk gambling,” including free gambling-blocking software for its users. “Stake is a firm believer in its regulatory obligations very seriously and adheres to all applicable laws.”
Gambling may not be a feature on Twitch for a long time. Twitch spokesperson said that the company is currently “in the middle” of a thorough investigation into gambling behavior on Twitch. The spokesperson said this was done to “address the dangers of gambling and scams associated with gambling sites that are not trustworthy.”
The spokesperson said that they take potential damage to the community seriously. “While gambling content represents only a small portion of the content streamed on Twitch, We monitor it carefully to ensure that our approach mitigates potential harm to our community in general.” The company claims information for those suffering from gambling addiction is available in Twitch’s Safety Center.
Lengyel is back after a long absence. Lengyel is a Canadian Twitch celebrity with over 11 million fans. About 70,000 people watched him click the digital slot machine button over and over in July. Part of the fun of watching is that the stakes will likely be extremely high. In only 139 seconds, Lengyel had lost $164,000 in cryptocurrency in a stream that he had recently watched. Lengyel did not respond to Bloomberg’s request for comment.
It’s not just gamers getting into the action. In May, rapper Drake, who is also Canadian, signed an agreement with Stake to gamble live on Twitch under the username StakeDrake. Drake began with $9 million in stakes and made single roulette bets of up to $1,000,000, with $300,000. Fifty-six thousand viewers watched. Drake’s agreement with Stake was kept secret. Drake’s spokespersons didn’t respond to a request for comment.
The sponsored streams and celebrity endorsements are working, driving Twitch users toward the cryptocurrency casinos. Vaibhav Kumar, who is 25 years old and a native of India, started gambling with crypto in 2020 after watching the girlfriend of his favorite League of Legends streamer making bets on Twitch. He’s now on Stake four to five times a week and places bets from $20 to $200.
Kumar watched for a while streamers that were sponsored by Stake. Then, he explained, it dawned on him that lucrative promotional deals offset the loss of Stake. In contrast, his losses were not offset by anything.
He stated, “once the initial excitement of watching someone play with such large sums wore off, it was most unsettling. It made me sick to watch it.” The show also created false impressions for viewers of winning or losing.
“Sites use celebrities as well as platforms targeted at younger people.”
A few young gamers believe the path to cryptocurrency casinos directly results from an alternative form of gambling well-liked by Twitch users and others. It was the usage of virtual goods from Counter-Strike: Global Offensive. As part of this vibrant, billion-dollar market, celebrity gamers were launching websites where players could gamble by betting on digital weapons from the video game. Some were worth hundreds or even thousands of dollars. Youngsters under 18 weren’t allowed to play the game.
Jakub, who asked not to reveal his last name for fear of repercussions to his career, claims that he won $200 a knife from one of these websites at the age of thirteen. The young man was not old enough to cash out the money and promptly gambled the money away.
The website Jakub was playing on eventually became a crypto casino. At 16, Jakub discovered a Twitch streamer promoting Stake and shifted his online gambling habit there. The Czech Republic resident claims that he plays Stake often throughout the day and bets on a series of $50 buy-ins. You can purchase computer parts and even shoes if he wins huge. He says he mostly loses in the range of $1000 to $1,500 a month.
Although crypto-gambling has been a major topic on Twitch for over a year, it’s now drawing greater attention and controversy than ever before.
Matthew “Mizkif” Rinaudo, another popular Twitch personality who became known through his entertaining World of Warcraft live streams, claims he’s received $19 million per year in an offer to gamble live on Twitch in front of a huge audience. Rinaudo was a gambler on Twitch, but now he thinks it’s morally unjust. The year before, Rinaudo saw one of his fans, who was fourteen at the time, bet on a website he had advertised.
“I stopped because I felt genuinely bad,” Rinaudo told Bloomberg.
Lengyel is among the most popular video game streamers. He has said that he’s an “addict” and has shifted his gambling habits to hours when he’s not in front of an audience. He admitted in May that he had lost $ 1.8 million in the month before gambling.
“I go out of the way to warn you not to do it,” he said during one live stream. “I do it because it is affordable, and I like the experience. I also believe it’s great content.”
Another popular streamer, Tyler “Trainwrecks” Niknam, reported in January that he’d lost $12.9 million in gambling, according to Dexerto, a video game news site. Niknam did not respond 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 take action against illegal offshore gambling websites operating within the US without authorization. Alex Costello is the vice head of government relations for the American Gaming Association. This trade group represents casinos and states that lawmakers are focused on regulating and closing the largest illegal gambling sites. Crypto gaming is low on the list. Offshore casinos usually have sophisticated methods for obfuscating ownership. This is true, especially for crypto, which lawmakers still need help understanding gamdom.
Costello added that it’s troubling that “sites use stars and platforms targeted at younger users” to attract customers. About 75% of Twitch users are between 16 and 34 years old.
Around 6 and 9 percent of youngsters are struggling with gambling, as opposed to 1 percent of adults, according to the National Center for Responsible Gaming. More than 2,300 people have signed a Change.org petition requesting that Twitch advertisers such as Nvidia Corp. (and PepsiCo Inc.) consider rethinking advertising on the platform in light of the increasing gambling stream. The companies did not respond to our requests for comment.
Streamers such as Rinaudo think it’s the responsibility of Twitch to cease providing the platform to promote offshore crypto gambling sites. So long as Twitch permits the practice, he says streamers will likely continue accepting enormous sums of money to promote sites like Stake.