CSGO Lotto scandal: the owners, the hidden ads and the FTC's first case

In the summer of 2016 two of YouTube's biggest gaming creators were revealed as the owners of CSGO Lotto, a skin gambling site they had been promoting as if they were ordinary players. The site shut within weeks, and in 2017 the US Federal Trade Commission (FTC) used the case for its first complaint against individual social media influencers. This is what the FTC's documents and the press of the time say happened.

What CSGO Lotto was

CSGO Lotto let people gamble with Counter-Strike: Global Offensive skins, the weapon finishes that can be traded and sold for real money. According to the FTC's complaint, the company behind it, CSGOLotto, Inc., was incorporated in Florida in December 2015, and the site was running from October or November 2015. It earned its money from an 8% service fee on each skin-betting pool.

The company's president was Trevor "TmarTn" Martin and its vice president was Thomas "Syndicate" Cassell, each with a 42.5% stake. Both ran gaming channels on YouTube with millions of subscribers. The complaint adds that the company gave the two men free skins to gamble with on the site.

The owners' own videos

Between mid-November 2015 and June 2016, the FTC said, Martin posted at least 13 videos of himself gambling on CSGO Lotto, with titles such as "HOW TO WIN $13,000 IN 5 MINUTES (CS-GO Betting)". In March 2016 he tweeted that he had made "$13k in about 5 minutes on CSGO betting". According to the complaint, none of the videos, descriptions or posts said that he owned the company or that he was playing with skins it supplied.

One early video became notorious. In November 2015 Martin told viewers "we found this new site called CSGO Lotto", mentioned winning a small pot, and said the site had approached him about a possible skins sponsorship. The FTC quotes the passage in full in its complaint, which also alleges that Martin was already among the people running the site at that point.

Cassell posted at least seven such videos between January and June 2016, and they drew more than 5.7 million views. In at least five of them, the FTC said, the only disclosure was a line in the description box saying the video was "sponsored by CSGO Lotto", placed below the fold, where a viewer would only see it after clicking and perhaps scrolling. He never disclosed that he was an officer and part-owner.

Paying other creators

The complaint also describes an "influencer program". Other gaming creators were paid between $2,500 and $55,000, in dollars, skins credits or both, to post about the site, and their contracts barred them from saying anything that would damage its name or reputation. According to the FTC, many of the resulting tweets carried no sponsorship disclosure at all, and many of the videos mentioned the deal only below the fold, if anywhere. The tweets quoted in the complaint are mostly screenshots of large wins tagged with the site's account.

How it came out

The ownership surfaced at the end of June 2016. A YouTuber called HonorTheCall found the company's incorporation papers, which listed Martin as president and Cassell as vice president, the BBC reported. The FTC's complaint says only that in late June 2016 it "became publicly known" who ran the company.

Both men pushed back at first. In his June video Martin described the arrangement as the site paying his own company for promotion, adding "that's just how it works", according to Polygon. Cassell apologised "to anyone who feels misled regarding the ownership" while insisting the site had never scammed or stolen from players. Polygon later reported that a third streamer, Josh "JoshOG" Beaver, said on stream that he too held an equity stake.

For a short time, logging in to CSGO Lotto through Steam showed a warning that the address had been blocked. Valve then lifted the block, saying a volunteer moderator had added it by mistake.

The fallout

The scandal fed straight into the wider reckoning over skin gambling. Valve published its first statement on gambling sites on 13 July 2016 and a week later sent cease-and-desist letters to 23 of them; CSGO Lotto was on the list, though by then it had already been offline for almost two weeks. Valve's 2016 crackdown covers those letters, the class actions filed that summer and the Washington State regulator's demand. The federal case against the two owners came a year later.

The FTC settlement

On 7 September 2017 the FTC announced that Martin, Cassell and CSGOLotto, Inc. had settled its charges. The complaint alleged that their videos and posts presented the owners and the paid creators as independent, impartial users, and that they failed to disclose the owners' stake and the creators' payments. The three neither admitted nor denied the allegations.

The order, made final on 29 November 2017, requires them to:

• never misrepresent that an endorser is an independent user or ordinary consumer;
• disclose, clearly and right next to the endorsement, any connection with an endorser that viewers wouldn't expect;
• give anyone endorsing a product for them a written statement of those duties, monitor their posts, and stop paying those who don't disclose;
• file compliance reports and keep records, under an order that runs for 20 years.

Acting Chairman Maureen Ohlhausen described the case as "the FTC's first against individual influencers". There was no fine. Answering public comments that objected to this, the FTC explained that it cannot collect fines for these violations of the FTC Act; breaking the order, though, would expose them to civil penalties of up to $40,000 per violation. On the same day the agency sent warning letters to 21 Instagram influencers and updated its guidance on endorsements.

What to take from it

The order spells out what a real disclosure looks like: it has to be hard to miss, easy to understand and close to the endorsement itself, and a disclosure reached through a link or pop-up doesn't count as close. A sponsorship line hidden below the fold of a description box is the kind of disclosure the FTC found inadequate here.

For players the lesson is simpler. A creator winning big on a gambling site is advertising, sometimes with stakes the site supplied, and the wins on screen tell you nothing about your own odds; those are set by each game's house edge. Before trusting a site a creator recommends, find out who operates it and how it makes money: how to check a CS2 gambling site walks through the company, licence and terms, and the history of CS:GO gambling places CSGO Lotto among the other events of that era.

Sources

• CSGO Lotto Owners Settle FTC's First-Ever Complaint Against Individual Social Media Influencers — FTC
• Complaint, In the Matter of CSGOLotto, Inc., Trevor Martin and Thomas Cassell — FTC
• Agreement Containing Consent Order and Decision and Order — FTC
• FTC Approves Final Consent Order against Owners of CSGO Lotto Website — FTC
• Counter-Strike YouTubers revealed as owners of gambling site they promoted — Polygon
• YouTube gamers caught in gambling row — BBC News
• Letters to commenters, CSGOLotto matter — FTC
• Valve gives 23 gambling sites 10 days to shut down or face deletion — Polygon