WEBVTT - Even Drake Is Crypto Gambling on Twitch

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<v Speaker 1>This is Bloomberg Crypto, a daily Bloomberg I Heart podcast,

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<v Speaker 1>and I'm Stacy Marie Ishmel, Managing editor of Crypto for

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<v Speaker 1>Bloomberg News. It's Thursday, September. You might not have heard

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<v Speaker 1>of Twitch, but it's one of the most popular places

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<v Speaker 1>on the Internet, and it's owned by a company you've

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<v Speaker 1>definitely heard of Amazon. Millions of people every day use

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<v Speaker 1>Twitch to watch their favorite live streamers. And what did

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<v Speaker 1>those live streamers do? Everything from playing video games to

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<v Speaker 1>applying makeup to solving math problems in real time. Video

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<v Speaker 1>games are still the biggest category of live streams and

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<v Speaker 1>people tune into on Twitch, and the biggest games like

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<v Speaker 1>Grand Theft, Auto Five, Fortnits, and League of Legends absolutely

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<v Speaker 1>dominate time spent on the platform. But there's a new

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<v Speaker 1>addition to that top ten, and it's crypto gambling. Crypto

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<v Speaker 1>gambling is the seventh most popular content category on Twitch

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<v Speaker 1>right now. Many streamers are being paid very handsomely by

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<v Speaker 1>the companies involved to take part in this activity. But

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<v Speaker 1>why and where is this all coming from? And what

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<v Speaker 1>are the risks of encouraging a whole new generation of

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<v Speaker 1>people to gamble? Joining me now is Bloomberg Video Game

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<v Speaker 1>reporta Cecilia Denastasio, one streamer who is actually the most

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<v Speaker 1>popular streamer on twitched lost a hundred and sixty four

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<v Speaker 1>thousand dollars in literally a hundred thirty nine seconds, to

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<v Speaker 1>talk about the tool of this growing trend. Cecilia, welcome

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<v Speaker 1>back to the podcast. Thank you for having me. Let's

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<v Speaker 1>start with the big question, which is people have probably

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<v Speaker 1>heard of TikTok, They've probably they've definitely heard of YouTube.

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<v Speaker 1>At this point, they know what Netflix is, they know

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<v Speaker 1>what Hulu is. Where does Twitch fits into that video ecosystem.

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<v Speaker 1>Twitch is a platform for live streaming video games and

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<v Speaker 1>other forms of content, ranging from putting makeup onto performing music,

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<v Speaker 1>or doing art. It's kind of become the default live

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<v Speaker 1>streaming service on the Internet, but it was started to

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<v Speaker 1>live stream people playing video games. And the live streaming

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<v Speaker 1>elements is you know, there's like very little post production.

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<v Speaker 1>You like, stick a camera in your face. It might

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<v Speaker 1>be a fancy camera in your face, might be well

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<v Speaker 1>made up, but the idea is that people are getting

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<v Speaker 1>like an in the moment of the moment, real time experience. Yeah, totally.

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<v Speaker 1>It's emergent, it's spontaneous, and also notably the chat. Um

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<v Speaker 1>They're called the chat, but actually it's users typing in

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<v Speaker 1>a chat will communicate live with the Twitch streamer, who

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<v Speaker 1>is encouraged to interact with them. It creates these sort

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<v Speaker 1>of paras social relationships that um really have uh launched

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<v Speaker 1>a lot of people's careers into kind of Internet stardom.

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<v Speaker 1>He's one of the most popular stars on Twitch, with

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<v Speaker 1>more than a million followers. Meat Iron Mouse Iron Mouse

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<v Speaker 1>broke records, recently becoming the most subscribed to woman on

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<v Speaker 1>Twitch and the most popular vituber on Twitch. Vitubing has

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<v Speaker 1>become a sensation over the last couple of years, with

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<v Speaker 1>an over four hundred and sixty seven increase between two

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<v Speaker 1>thousand twenty and two thousand twenty one. A while ago,

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<v Speaker 1>there was a leak of some Twitch financials, and one

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<v Speaker 1>of the things that came out of the it's is

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<v Speaker 1>that some of their top streamers um from video games

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<v Speaker 1>and tabletop games, are making tens of millions of dollars

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<v Speaker 1>a year on this platform. Absolutely, Twitch streamers make a

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<v Speaker 1>lot of money. Um if you're in that top like

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<v Speaker 1>point five to one percent. A lot of people who

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<v Speaker 1>live stream on Twitch are just kind of average people

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<v Speaker 1>who want to play a little Minecraft hang out like one, two,

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<v Speaker 1>three or four viewers. And then there are these behemoth

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<v Speaker 1>channels that have you know, seventy thousand, a hundred thousand

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<v Speaker 1>people watching them stream live. And in addition to streamers

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<v Speaker 1>making money UM based on subscriptions that those viewers pay

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<v Speaker 1>for their content, which is like five dollars a month

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<v Speaker 1>or something like that. UM viewers can also donate money

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<v Speaker 1>UM to Twitch streamers through twitch itself using this currency

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<v Speaker 1>called bits. So it's like they're in house almost like

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<v Speaker 1>a cryptocurrency, one could say. Now on that topic, because

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<v Speaker 1>we are on a show about about crypto. In your

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<v Speaker 1>recent story, you wrote about the fact that you know,

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<v Speaker 1>you've got these beheam of games that you mentioned, the Fortnits,

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<v Speaker 1>the League of Legends, the Grand Theft Auto five and

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<v Speaker 1>kind of creeping into that top ten of you know,

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<v Speaker 1>time spent in terms of viewers is crypto gambling? Yeah,

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<v Speaker 1>it feels totally random in some ways, right, because you're

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<v Speaker 1>just like, why why are the same people who like

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<v Speaker 1>watching competitive League of Legends also watching someone just click

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<v Speaker 1>their mouths like eight hundred thousand times and playing online slots.

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<v Speaker 1>But it's interesting because there's a bit of a heritage

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<v Speaker 1>with gambling on Twitch that actually didn't come from Crypto.

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<v Speaker 1>It came from something a little obscure called counter Strike skins.

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<v Speaker 1>So there's this video game called counter Strike. It's the

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<v Speaker 1>first person shooter by this company, Valve, extremely popular, and

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<v Speaker 1>one thing people love to do in that game is

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<v Speaker 1>dress up their guns with what are called skins. They're

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<v Speaker 1>basically just like costumes and your guns or your guns, right,

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<v Speaker 1>And UM, what people found out is that, you know,

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<v Speaker 1>there's a really lucrative marketplace for these People were selling

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<v Speaker 1>them for hundreds even thousands of dollars. People love to

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<v Speaker 1>show off their cool rare like a K forty seven,

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<v Speaker 1>like army, you know style. I just want to know

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<v Speaker 1>that this is a wild series of sentences, but please

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<v Speaker 1>carry that's gaming for you. Basically though, Um, there are

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<v Speaker 1>these websites that cropped up several years ago for skin gambling,

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<v Speaker 1>so people would play roulette to earn these skins, um,

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<v Speaker 1>and it was something that was very lucrative. There were

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<v Speaker 1>very very large and um well off companies that were

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<v Speaker 1>doing this and um importantly, a lot of people who

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<v Speaker 1>were under eighteen also participated in this and which is

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<v Speaker 1>a problem by legal standards. It is a problem by

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<v Speaker 1>legal standards, allegedly. Um, I'm not a lawyer. There were

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<v Speaker 1>a lot of lawsuits around this. When did when did

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<v Speaker 1>cryptogambling on Twitch become popular? Because obviously the council strike

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<v Speaker 1>legacy is long well established, you know, been around for

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<v Speaker 1>a while. Has seemed to me to have fallen out

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<v Speaker 1>of favor as much in the past couple of years.

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<v Speaker 1>But then you know, over the course of the pandemic,

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<v Speaker 1>you had this up surge in crypto gambling. What does

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<v Speaker 1>that look like, What are the mechanics exactly, and is

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<v Speaker 1>it the same kind of population that's playing totally. There

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<v Speaker 1>were some skin gambling sites that even did transition to

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<v Speaker 1>crypto gambling sites, so they definitely know their audience. Crypto

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<v Speaker 1>gambling is a pretty interesting phenomenon. It's not um legalized

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<v Speaker 1>anywhere in the US. It's kind of an opt in situation,

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<v Speaker 1>so there's no blanket loss and you can't gamble with

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<v Speaker 1>crypto in the U S. It's kind of a state

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<v Speaker 1>by state thing, and no states have deemed it legal yet.

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<v Speaker 1>Despite that, there are these offshore companies um like Steak,

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<v Speaker 1>which is incorporated in curasou um that offer you know, roulette,

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<v Speaker 1>they offer slots, they offer blackjack um where you instead

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<v Speaker 1>of playing with real money, you play online with crypto

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<v Speaker 1>And it kind of continues this lineage of counterstrike skin

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<v Speaker 1>gambling just because it's this kind of there's this idea like, oh,

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<v Speaker 1>it's not real money. Oh it's so accessible. Oh I

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<v Speaker 1>can do this even if I'm eighteen, even if it's

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<v Speaker 1>technically illegal. It feels a little like, I don't know

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<v Speaker 1>totally and like a little like gritty and cool to

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<v Speaker 1>some people. What are the sums even if it's not,

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<v Speaker 1>as you see quotes unquote real money, but like, what

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<v Speaker 1>kind of sums are we talking and what are the

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<v Speaker 1>types of tokens that people are using to engage in

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<v Speaker 1>crypto gambling? Yeah, just your typical ethereum, your typical bitcoin um.

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<v Speaker 1>The sum of the people are gambling are huge though.

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<v Speaker 1>So the rapper Drake Um is a partner with steak

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<v Speaker 1>dot com and when he was gambling there um a

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<v Speaker 1>couple of months ago, he he started with this nine

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<v Speaker 1>million dollar balance I forget which coin he was using,

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<v Speaker 1>and every single bet he made on roulette was between

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<v Speaker 1>three hundred thousand and a million dollars. You mentioned, you know, roulette,

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<v Speaker 1>you mentioned blackjack, like things that are sound fairly typical.

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<v Speaker 1>So it's not that the crypto gambling is that people

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<v Speaker 1>are like gambling in the metaverse in this particular instance,

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<v Speaker 1>or that they're playing like crypto games. Is that they're

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<v Speaker 1>playing very traditional gambling games, but the steaks are denominated

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<v Speaker 1>in different cryptocurrencies exactly. There is a however, gambling in

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<v Speaker 1>the metaverse too. Yes, well, it depends on who you

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<v Speaker 1>are and whether you think there is a metaverse, but

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<v Speaker 1>there are some companies that have branded their virtual worlds

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<v Speaker 1>as metaverses and um. The Central Land in particular is

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<v Speaker 1>one where a lot of the user base is there

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<v Speaker 1>to gamble with cryptocurrency. Like at any given point, most

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<v Speaker 1>of the people in the Central Land are there to

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<v Speaker 1>play what's called ice poker. What is it frosty maybe

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<v Speaker 1>for your wallet the chill of crypto winter. Ice poker

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<v Speaker 1>exists in this legally gray area in that there are

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<v Speaker 1>a lot of steps and hoops to jump through that

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<v Speaker 1>they've set up. It's like there are so many um

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<v Speaker 1>steps you have to take between real money going in

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<v Speaker 1>in real money going out with ice poker into centraland

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<v Speaker 1>that some lawyers have said it is legal, and other

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<v Speaker 1>lawyers have said, I don't really understand this, but it

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<v Speaker 1>could be gray. We'll be right back with more from

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<v Speaker 1>Cecilia Donastagio on the companies behind these games. You know,

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<v Speaker 1>the Internet is everywhere, and that is kind of a

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<v Speaker 1>challenging proposition. So how how are folks planning to decide? Well,

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<v Speaker 1>it looks like this person is signed up in a

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<v Speaker 1>state that doesn't allow online gambling, and if you know,

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<v Speaker 1>crypto gambling ever becomes regulated, what are we're just gonna

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<v Speaker 1>like block people in New York or you know whatever

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<v Speaker 1>that might be. Like, what are some of the mechanics

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<v Speaker 1>that play here? Yeah, it's interesting because crypto gambling isn't

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<v Speaker 1>really on um congress Is radar. It's barely on the

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<v Speaker 1>American Gaming Association's radar because the most important thing right

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<v Speaker 1>now they're trying to tackle with illegal gaming is illegal

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<v Speaker 1>sports betting. That's huge. Crypto gambling is also quite big. Um.

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<v Speaker 1>I'm not able to compare them because again, we just

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<v Speaker 1>don't have statistics on this kind of thing, but um,

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<v Speaker 1>it's really flying under the radar for a lot of legislators.

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<v Speaker 1>You know, you only mentioned the US context. Stake also

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<v Speaker 1>has a UK entity that is, you know, registered on

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<v Speaker 1>the Isle of Man in terms of the laws internationally.

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<v Speaker 1>Is this like another area of complexity that these global

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<v Speaker 1>platforms have to contend with, Like how are they just

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<v Speaker 1>handling the idea that in addition to state by state regulations,

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<v Speaker 1>they may also having to be making decisions on countries.

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<v Speaker 1>I don't know what kind of decisions Stake itself is

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<v Speaker 1>making because frankly, it is not challenging to access from

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<v Speaker 1>the US. Other online gaming sites UM have a very

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<v Speaker 1>rigorous process for ut able to gamble on them. You

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<v Speaker 1>might have to upload your I d They might have

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<v Speaker 1>something that prevents you from using a VPN to get

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<v Speaker 1>on the site. They might you know, UM ask for

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<v Speaker 1>information from your bank. And Steak dot com UM, while

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<v Speaker 1>it does have a VPN blocker, it doesn't seem to

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<v Speaker 1>be taking quite so many pains to comply with a

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<v Speaker 1>lot of local laws. With that said, twitch streamers who

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<v Speaker 1>are taking sponsorships from Steak dot com have left the

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<v Speaker 1>US and moved to Canada, so they like move physically

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<v Speaker 1>like there's not even that their channel is redemiciles like

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<v Speaker 1>they the streamer have switched countries. Correct, that's intense. Is

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<v Speaker 1>it worth their while economically to be doing this? Oh

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<v Speaker 1>my god, yeah. I mean I talked to a streamer

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<v Speaker 1>who was offered nineteen million dollars a year to gamble

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<v Speaker 1>on steak dot com. But that's not even the highest

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<v Speaker 1>bid out there. There are people who are making several

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<v Speaker 1>million dollars a month um just because of these sponsorships.

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<v Speaker 1>But on the other side of the coin, it's kind

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<v Speaker 1>of dark because ha ha, a couple of these top

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<v Speaker 1>people are legitimately, it seems, addicted to gambling. One you know,

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<v Speaker 1>one streamer who is actually the most popular streamer un twitched,

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<v Speaker 1>lost a hundred and sixty four thousand dollars in literally

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<v Speaker 1>a hundred thirty nine seconds. There's another streamer who lost

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<v Speaker 1>twelve point nine million dollars in just one month. I'm

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<v Speaker 1>glad you mentioned the issue of gambling addiction. Like, we've

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<v Speaker 1>done an episode on this show about crypto addiction, and

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<v Speaker 1>you know, one of the things that we talked about

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<v Speaker 1>is the fact that so many of the mechanics built

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<v Speaker 1>into these apps, built into these platforms, really encourage certain

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<v Speaker 1>types of very addictive behavior. It strikes me as extremely

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<v Speaker 1>similar to you know something the two of us talked about,

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<v Speaker 1>like lootboxes in mobile gaming and the ways in which

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<v Speaker 1>these games are just like designed to extract money from you.

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<v Speaker 1>Is there any pushback at all either from consumers, from groups,

0:14:10.280 --> 0:14:13.600
<v Speaker 1>from you know, concerned parents about the fact that these

0:14:13.640 --> 0:14:16.520
<v Speaker 1>kinds of mechanics are now finding themselves and yet another

0:14:16.600 --> 0:14:20.400
<v Speaker 1>expression that is gaining in popularity. I don't know if

0:14:20.440 --> 0:14:24.000
<v Speaker 1>it's even quite so detached. This is just literally gambling.

0:14:24.240 --> 0:14:27.080
<v Speaker 1>If you go to state dot com, you can click

0:14:27.120 --> 0:14:29.360
<v Speaker 1>a button and you are in a black jack room

0:14:29.400 --> 0:14:32.320
<v Speaker 1>and there was a live human blackjack dealer who you

0:14:32.320 --> 0:14:36.280
<v Speaker 1>are literally playing blackjack with. It's just for crypto, right

0:14:36.840 --> 0:14:42.760
<v Speaker 1>and um. Despite that, despite how literally gambling it is, UM,

0:14:42.800 --> 0:14:47.120
<v Speaker 1>there isn't a lot of pushback um on these sites

0:14:48.440 --> 0:14:51.520
<v Speaker 1>outside of the Twitch community where it's become popularized on

0:14:51.760 --> 0:14:55.520
<v Speaker 1>twitch top Twitch streamers who are very concerned about their

0:14:55.520 --> 0:14:58.920
<v Speaker 1>friends becoming addicted to this and also viewers becoming addicted

0:14:59.320 --> 0:15:01.600
<v Speaker 1>have made a out of statements along these lines saying

0:15:01.640 --> 0:15:05.680
<v Speaker 1>that Twitch should ban this content or it should prevent

0:15:05.880 --> 0:15:10.480
<v Speaker 1>streamers from taking these deals. Somehow, there was a very

0:15:10.480 --> 0:15:15.760
<v Speaker 1>popular petition as well, signed by just like two thousand people,

0:15:15.760 --> 0:15:19.720
<v Speaker 1>which isn't a ton of people, but it's not insubstantial um.

0:15:19.880 --> 0:15:24.240
<v Speaker 1>Asking advertisers on Twitch like Nvidia and Pepsi to reconsider

0:15:24.560 --> 0:15:27.720
<v Speaker 1>those deals in light of the popularity of crypto gambling.

0:15:28.360 --> 0:15:31.240
<v Speaker 1>You know, I've I've spoken to several people for this

0:15:31.320 --> 0:15:34.600
<v Speaker 1>story that I wrote who did become to crypto gambling

0:15:34.720 --> 0:15:38.160
<v Speaker 1>after watching Twitch streamers do it, and of course they

0:15:38.160 --> 0:15:40.640
<v Speaker 1>were they themselves chose to go to State dot com

0:15:40.760 --> 0:15:44.200
<v Speaker 1>or any of these websites and lose money in that way.

0:15:44.400 --> 0:15:47.920
<v Speaker 1>All of them of course lost a lot of money. Um.

0:15:47.960 --> 0:15:50.560
<v Speaker 1>But at the same time, you know, there is some

0:15:51.360 --> 0:15:54.720
<v Speaker 1>relationship there between watching the streamers do it and doing

0:15:54.720 --> 0:15:57.000
<v Speaker 1>it yourself. Goes back to the idea of the power

0:15:57.080 --> 0:15:59.360
<v Speaker 1>social relationship that you mentioned, where you can like you're

0:15:59.400 --> 0:16:04.280
<v Speaker 1>projecting your feelings of intimacy, engagement connection onto these folks,

0:16:04.320 --> 0:16:06.320
<v Speaker 1>which which is one of the reasons that makes endorsements

0:16:06.320 --> 0:16:12.160
<v Speaker 1>from them so powerful. Exactly, Well, heavy but important stuff.

0:16:12.160 --> 0:16:14.040
<v Speaker 1>Thank you for joining us today, Thank you for having me.

0:16:16.160 --> 0:16:18.800
<v Speaker 1>Thank you, Cecilia. You can find more of Cecilia's reporting

0:16:18.800 --> 0:16:21.320
<v Speaker 1>on the Bloomberg Terminal on Bloomberg dot com or follow

0:16:21.320 --> 0:16:25.400
<v Speaker 1>her on Twitter. She's at cc anasta. That's c E

0:16:25.680 --> 0:16:32.560
<v Speaker 1>C I A N A s t E. On the

0:16:32.600 --> 0:16:36.520
<v Speaker 1>next episode of Bloomberg Crypto. In April two, the Central

0:16:36.520 --> 0:16:39.800
<v Speaker 1>African Republic decided that El Salvador shouldn't be the only

0:16:39.840 --> 0:16:44.040
<v Speaker 1>country making headlines as crypto friendly Car made bitcoin legal

0:16:44.080 --> 0:16:47.840
<v Speaker 1>tender and followed up with attempts to mint its own token,

0:16:48.040 --> 0:16:51.200
<v Speaker 1>called the Sango Coin. We'll check in on how that's going.

0:16:54.480 --> 0:16:57.640
<v Speaker 1>This is Bloomberg Crypto, a daily podcast from Bloomberg and

0:16:57.680 --> 0:17:00.640
<v Speaker 1>I Heart Radio. For more shows from I Heart Radio,

0:17:00.880 --> 0:17:03.960
<v Speaker 1>visit the i Heart Radio app, Apple Podcasts, or wherever

0:17:04.040 --> 0:17:07.600
<v Speaker 1>you get your podcasts. Send us your comments, questions, or

0:17:07.600 --> 0:17:10.600
<v Speaker 1>suggestions for the show to Crypto at Bloomberg dot net

0:17:11.200 --> 0:17:16.199
<v Speaker 1>or find us on Twitter. We're at Crypto. The supervising

0:17:16.200 --> 0:17:20.000
<v Speaker 1>producer of Bloomberg Crypto is Vicky Verglina. Our senior producer

0:17:20.080 --> 0:17:24.040
<v Speaker 1>is Janet Babin. Our producer is Mohammed Farouk. Associate producer

0:17:24.160 --> 0:17:27.360
<v Speaker 1>is Moses on them Desta wonder At is our engineer.

0:17:27.800 --> 0:17:33.040
<v Speaker 1>Original music by Leo Sidrn. I'm Stacy Marie Schmal. We'll

0:17:33.040 --> 0:17:33.719
<v Speaker 1>be back tomorrow