Even Drake Is Crypto Gambling on Twitch

applying makeup to solving math problems in real time. Video games are still the biggest category of live streams and people tune into on Twitch, and the biggest games like Grand Theft, Auto Five, Fortnits, and League of Legends absolutely dominate time spent on the platform. But there's a new addition to that top ten, and it's crypto gambling. Crypto gambling is the seventh most popular content category on Twitch right now. Many streamers are being paid very handsomely by

the companies involved to take part in this activity. But why and where is this all coming from? And what are the risks of encouraging a whole new generation of people to gamble? Joining me now is Bloomberg Video Game reporta Cecilia Denastasio, one streamer who is actually the most popular streamer on twitched lost a hundred and sixty four thousand dollars in literally a hundred thirty nine seconds, to talk about the tool of this growing trend. Cecilia, welcome

back to the podcast. Thank you for having me. Let's start with the big question, which is people have probably heard of TikTok, They've probably they've definitely heard of YouTube. At this point, they know what Netflix is, they know what Hulu is. Where does Twitch fits into that video ecosystem. Twitch is a platform for live streaming video games and other forms of content, ranging from putting makeup onto performing music,

or doing art. It's kind of become the default live streaming service on the Internet, but it was started to live stream people playing video games. And the live streaming elements is you know, there's like very little post production. You like, stick a camera in your face. It might be a fancy camera in your face, might be well made up, but the idea is that people are getting like an in the moment of the moment, real time experience. Yeah, totally.

It's emergent, it's spontaneous, and also notably the chat. Um They're called the chat, but actually it's users typing in a chat will communicate live with the Twitch streamer, who is encouraged to interact with them. It creates these sort of paras social relationships that um really have uh launched a lot of people's careers into kind of Internet stardom. He's one of the most popular stars on Twitch, with

more than a million followers. Meat Iron Mouse Iron Mouse broke records, recently becoming the most subscribed to woman on Twitch and the most popular vituber on Twitch. Vitubing has become a sensation over the last couple of years, with an over four hundred and sixty seven increase between two

thousand twenty and two thousand twenty one. A while ago, there was a leak of some Twitch financials, and one of the things that came out of the it's is that some of their top streamers um from video games and tabletop games, are making tens of millions of dollars a year on this platform. Absolutely, Twitch streamers make a lot of money. Um if you're in that top like

point five to one percent. A lot of people who live stream on Twitch are just kind of average people who want to play a little Minecraft hang out like one, two, three or four viewers. And then there are these behemoth channels that have you know, seventy thousand, a hundred thousand people watching them stream live. And in addition to streamers making money UM based on subscriptions that those viewers pay for their content, which is like five dollars a month

or something like that. UM viewers can also donate money UM to Twitch streamers through twitch itself using this currency called bits. So it's like they're in house almost like a cryptocurrency, one could say. Now on that topic, because

we are on a show about about crypto. In your recent story, you wrote about the fact that you know, you've got these beheam of games that you mentioned, the Fortnits, the League of Legends, the Grand Theft Auto five and kind of creeping into that top ten of you know,

time spent in terms of viewers is crypto gambling? Yeah, it feels totally random in some ways, right, because you're just like, why why are the same people who like watching competitive League of Legends also watching someone just click their mouths like eight hundred thousand times and playing online slots. But it's interesting because there's a bit of a heritage with gambling on Twitch that actually didn't come from Crypto. It came from something a little obscure called counter Strike skins.

So there's this video game called counter Strike. It's the first person shooter by this company, Valve, extremely popular, and one thing people love to do in that game is dress up their guns with what are called skins. They're basically just like costumes and your guns or your guns, right, And UM, what people found out is that, you know, there's a really lucrative marketplace for these People were selling

them for hundreds even thousands of dollars. People love to show off their cool rare like a K forty seven, like army, you know style. I just want to know that this is a wild series of sentences, but please carry that's gaming for you. Basically though, Um, there are these websites that cropped up several years ago for skin gambling, so people would play roulette to earn these skins, um,

and it was something that was very lucrative. There were very very large and um well off companies that were doing this and um importantly, a lot of people who were under eighteen also participated in this and which is a problem by legal standards. It is a problem by legal standards, allegedly. Um, I'm not a lawyer. There were a lot of lawsuits around this. When did when did

cryptogambling on Twitch become popular? Because obviously the council strike legacy is long well established, you know, been around for a while. Has seemed to me to have fallen out of favor as much in the past couple of years. But then you know, over the course of the pandemic, you had this up surge in crypto gambling. What does that look like, What are the mechanics exactly, and is

it the same kind of population that's playing totally. There were some skin gambling sites that even did transition to crypto gambling sites, so they definitely know their audience. Crypto gambling is a pretty interesting phenomenon. It's not um legalized anywhere in the US. It's kind of an opt in situation, so there's no blanket loss and you can't gamble with crypto in the U S. It's kind of a state by state thing, and no states have deemed it legal yet.

Despite that, there are these offshore companies um like Steak, which is incorporated in curasou um that offer you know, roulette, they offer slots, they offer blackjack um where you instead of playing with real money, you play online with crypto And it kind of continues this lineage of counterstrike skin gambling just because it's this kind of there's this idea like, oh, it's not real money. Oh it's so accessible. Oh I can do this even if I'm eighteen, even if it's

technically illegal. It feels a little like, I don't know totally and like a little like gritty and cool to some people. What are the sums even if it's not, as you see quotes unquote real money, but like, what kind of sums are we talking and what are the types of tokens that people are using to engage in crypto gambling? Yeah, just your typical ethereum, your typical bitcoin um. The sum of the people are gambling are huge though.

So the rapper Drake Um is a partner with steak dot com and when he was gambling there um a couple of months ago, he he started with this nine million dollar balance I forget which coin he was using, and every single bet he made on roulette was between three hundred thousand and a million dollars. You mentioned, you know, roulette, you mentioned blackjack, like things that are sound fairly typical.

So it's not that the crypto gambling is that people are like gambling in the metaverse in this particular instance, or that they're playing like crypto games. Is that they're playing very traditional gambling games, but the steaks are denominated in different cryptocurrencies exactly. There is a however, gambling in the metaverse too. Yes, well, it depends on who you are and whether you think there is a metaverse, but there are some companies that have branded their virtual worlds

as metaverses and um. The Central Land in particular is one where a lot of the user base is there to gamble with cryptocurrency. Like at any given point, most of the people in the Central Land are there to play what's called ice poker. What is it frosty maybe for your wallet the chill of crypto winter. Ice poker exists in this legally gray area in that there are a lot of steps and hoops to jump through that

they've set up. It's like there are so many um steps you have to take between real money going in in real money going out with ice poker into centraland that some lawyers have said it is legal, and other lawyers have said, I don't really understand this, but it could be gray. We'll be right back with more from Cecilia Donastagio on the companies behind these games. You know, the Internet is everywhere, and that is kind of a

challenging proposition. So how how are folks planning to decide? Well, it looks like this person is signed up in a state that doesn't allow online gambling, and if you know, crypto gambling ever becomes regulated, what are we're just gonna like block people in New York or you know whatever that might be. Like, what are some of the mechanics that play here? Yeah, it's interesting because crypto gambling isn't

really on um congress Is radar. It's barely on the American Gaming Association's radar because the most important thing right now they're trying to tackle with illegal gaming is illegal sports betting. That's huge. Crypto gambling is also quite big. Um. I'm not able to compare them because again, we just don't have statistics on this kind of thing, but um, it's really flying under the radar for a lot of legislators.

You know, you only mentioned the US context. Stake also has a UK entity that is, you know, registered on the Isle of Man in terms of the laws internationally. Is this like another area of complexity that these global platforms have to contend with, Like how are they just handling the idea that in addition to state by state regulations, they may also having to be making decisions on countries.

I don't know what kind of decisions Stake itself is making because frankly, it is not challenging to access from the US. Other online gaming sites UM have a very rigorous process for ut able to gamble on them. You might have to upload your I d They might have something that prevents you from using a VPN to get on the site. They might you know, UM ask for

information from your bank. And Steak dot com UM, while it does have a VPN blocker, it doesn't seem to be taking quite so many pains to comply with a lot of local laws. With that said, twitch streamers who are taking sponsorships from Steak dot com have left the US and moved to Canada, so they like move physically like there's not even that their channel is redemiciles like they the streamer have switched countries. Correct, that's intense. Is

it worth their while economically to be doing this? Oh my god, yeah. I mean I talked to a streamer who was offered nineteen million dollars a year to gamble on steak dot com. But that's not even the highest bid out there. There are people who are making several million dollars a month um just because of these sponsorships. But on the other side of the coin, it's kind of dark because ha ha, a couple of these top

people are legitimately, it seems, addicted to gambling. One you know, one streamer who is actually the most popular streamer un twitched, lost a hundred and sixty four thousand dollars in literally a hundred thirty nine seconds. There's another streamer who lost twelve point nine million dollars in just one month. I'm

glad you mentioned the issue of gambling addiction. Like, we've done an episode on this show about crypto addiction, and you know, one of the things that we talked about is the fact that so many of the mechanics built into these apps, built into these platforms, really encourage certain

types of very addictive behavior. It strikes me as extremely similar to you know something the two of us talked about, like lootboxes in mobile gaming and the ways in which these games are just like designed to extract money from you. Is there any pushback at all either from consumers, from groups, from you know, concerned parents about the fact that these kinds of mechanics are now finding themselves and yet another expression that is gaining in popularity. I don't know if

it's even quite so detached. This is just literally gambling. If you go to state dot com, you can click a button and you are in a black jack room and there was a live human blackjack dealer who you are literally playing blackjack with. It's just for crypto, right

and um. Despite that, despite how literally gambling it is, UM, there isn't a lot of pushback um on these sites outside of the Twitch community where it's become popularized on twitch top Twitch streamers who are very concerned about their friends becoming addicted to this and also viewers becoming addicted have made a out of statements along these lines saying that Twitch should ban this content or it should prevent

streamers from taking these deals. Somehow, there was a very popular petition as well, signed by just like two thousand people, which isn't a ton of people, but it's not insubstantial um. Asking advertisers on Twitch like Nvidia and Pepsi to reconsider those deals in light of the popularity of crypto gambling.

You know, I've I've spoken to several people for this story that I wrote who did become to crypto gambling after watching Twitch streamers do it, and of course they were they themselves chose to go to State dot com or any of these websites and lose money in that way. All of them of course lost a lot of money. Um. But at the same time, you know, there is some relationship there between watching the streamers do it and doing

it yourself. Goes back to the idea of the power social relationship that you mentioned, where you can like you're projecting your feelings of intimacy, engagement connection onto these folks, which which is one of the reasons that makes endorsements from them so powerful. Exactly, Well, heavy but important stuff. Thank you for joining us today, Thank you for having me. Thank you, Cecilia. You can find more of Cecilia's reporting on the Bloomberg Terminal on Bloomberg dot com or follow

her on Twitter. She's at cc anasta. That's c E C I A N A s t E. On the next episode of Bloomberg Crypto. In April two, the Central African Republic decided that El Salvador shouldn't be the only country making headlines as crypto friendly Car made bitcoin legal tender and followed up with attempts to mint its own token, called the Sango Coin. We'll check in on how that's going. This is Bloomberg Crypto, a daily podcast from Bloomberg and

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Original music by Leo Sidrn. I'm Stacy Marie Schmal. We'll be back tomorrow