Festively gambling live streamers luring people into crypto casinos

QUEBEC • Mr Enneric Chabot did not start gambling until he saw his favourite gamers doing it online.

Three years ago, Mr Chabot began regularly watching Mr Felix "xQc" Lengyel, a former professional Overwatch player, as he competed in various video games on Amazon.com's live-streaming site Twitch for audiences of up to 25,000 viewers.

In 2021, during some of his live streams, Mr Lengyel started playing something else - online blackjack. Mr Chabot, who lives in Quebec and does accounting for a hospital, was intrigued. "I thought it was pretty entertaining," he said.

At one point, Mr Chabot, 26, saw Mr Lengyel post a promotional code for a site called Stake.com - which bills itself as a "leading online crypto casino".

On Stake, and sites like it, users can exchange money for cryptocurrencies, which they can then use to wager on various games of chance, including slots, blackjack and roulette.

Mr Chabot redeemed the offer and dove into the slots scene on Stake. At first, he enjoyed making bets repeatedly for the equivalent of US$1. Then things went downhill. "I just started losing and losing," Mr Chabot recalled. After a couple of months, Mr Chabot said, he had drained his life savings of about US$40,000 (S$55,600). Then, he said, he took out two US$20,000 bank loans and burned through that money too. Eventually, he declared bankruptcy.

While Mr Chabot's decision to keep betting was his own, he said that watching the Twitch streamers festively gambling on the site "gave me a reason to go on Stake, like I was a part of what they were doing", he told Bloomberg in an interview.

He is not the only one to go all in. These days, slots is the seventh most popular content category on Twitch, ahead of the video game Fortnite.

Many streamers are paid handsomely to take part in the activity. One popular streamer said he makes "much more" than US$1 million a month as part of his sponsorship with Stake to crypto gamble in front of live audiences on Twitch.

Earlier this year, several publications reported that, according to Mr Lengyel, as at May this year he had been able to generate US$119 million in bets for Stake. Mr Lengyel subsequently said during live streams that the US$119 million figure was how much he had personally wagered in total on the site at the time.

Bloomberg was unable to confirm the amount with Stake.

Stake, which says it operates under a gaming licence in Curacao, a Caribbean island, is one of the top companies pouring sponsorship riches into the Twitch community. The location Stake gives as its registered address in Curacao appears to be a run-down shack on Google Earth.

The company says most of its employees are based in Europe. Crypto gambling is illegal in the US, although it is permitted in other countries, according to Mr Frank DiGiacomo, an attorney who leads the gaming law group at Duane Morris in Philadelphia.

Canada has been welcoming to crypto operators, potentially contributing to why some streamers moved there. However, it is still possible to place bets on Stake from the United States using a virtual private network (VPN), which disguises the location of the user, and crypto currency.

A Stake spokesman says it has implemented "stringent compliance processes" that prevent people using VPNs from depositing funds in countries where it is not allowed. Stake adds that it "uses a number of measures to address at-risk gambling behaviour", including free gambling-blocking software for its users.

Gambling may not be a feature on Twitch forever. A Twitch spokesman says the company is "currently in the midst of a deep-dive look into gambling behaviour on Twitch".

Since Mr Lengyel and others included links last year, the company has decided not to allow sharing links or referral codes for gambling companies, which the spokesman says was done "to address scams and other harms associated with questionable gaming sites".

Resources for anyone suffering from a gambling addiction are available in Twitch's safety centre, the company says.

After taking a year-long break, Mr Lengyel, a Canadian who is among the most popular Twitch celebrities with 11 million followers, is once again gambling routinely on his Twitch streams. In late July, some 70,000 viewers watched him click a digital slot machine button over and over again.

Part of the fun of watching is that the stakes tend to be absurdly high. During one recent stream, Mr Lengyel lost US$164,000 in crypto within just 139 seconds. He did not respond to Bloomberg's request for comment.

For years, offshore gambling has been a thorn in the side of regulators in the US. Offshore casinos typically have sophisticated methods for obfuscating ownership, and that goes doubly for the crypto space, which lawmakers are still struggling to understand.

Streamers believe it is Twitch's responsibility to stop providing a platform for promoting offshore crypto gambling sites. As long as Twitch allows it, they say, streamers are likely to keep accepting enormous sums of money to promote sites like Stake.

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