Twitch Bans Gambling [Finance Fridays]

And why you should care

Sep 23, 2022

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I’m sure some of you heard about this,

The content streaming Behemoth Twitch banned Gambling from their platform. Specifically, Streams can no longer stream unlicensed gambling on Twitch. This is a huge deal since this niche had become worth hundreds of million.

xQc’s sponsored streams with the now banned Stake.com resulted in over $100 million being gambled
-Source

There is a lot to look into here. Let’s get into it.

Twitch @Twitch

An update on gambling on Twitch.

Gambling content on Twitch has been a big topic of discussion in the community, and something we’ve been actively reviewing. Today, we want to update you on our plans. While we prohibit sharing links or referral codes to all sites that include slots, roulette, or dice games, we’ve seen some people circumvent those rules and expose our community to potential harm.

We’ll be making a policy update on 10/18 to prohibit streaming of gambling sites that include slots, roulette, or dice games that aren't licensed either in the U.S. or other jurisdictions that provide sufficient consumer protection. These sites will include Stake, Rollbit, Duelbits, and Roobet. However, we may identify others as we move forward.

We will continue to allow websites that focus on sports betting, fantasy sports, and poker.

We’ll share specifics on the updates to our Gambling policy soon, including the full policy language, to make sure everyone is clear on our new rules before they take effect on 10/18.

Important Points

The Background- This ban comes off the back of a giant scam that shook up Twitch. A popular Twitch streamer, Sliker, came out and admitted that he had scammed the community of over 200K to fund his gambling addiction. This led to several top creators on the platform calling for bans on the Galnling niche. Read more here
What is targeted- As mentioned in the Twitch document, any unlicensed gambling websites have been banned. To those that don’t know, we have recently had a huge uptick in websites that offer gambling that is based outside of the USA/other regulated nations. These sites have no oversight and attract a lot of minors and addicts. This has been a point of concern for people for a while.
The mechanics of the gambling- As mentioned, this was an operation worth 100s of millions. Websites like Stake.com would pay popular figures/streamers to gamble using their website. This would drive a lot of traffic to these websites. Often, these streamers were paid when their viewers lost money, creating perverse incentives. The websites would also cover any losses by the streamers, allowing them to gamble millions without risk (this part was undisclosed). These streamers were gambling 7-figures every day, and they would win millions in payouts sometime. This drove a lot of impressionable youngsters onto these gambling websites, hoping to make a quick buck. Prior to the ban, Slots was one the most popular categories on Twitch.
From Twitch’s perspective- Clearly, Twitch did this to avoid a PR nightmare. This was a huge niche on the platform, and they will lose out on a lot of revenue because of this. However, this helps the avoid the fallout, which would have been much worse. And it handles an area that has raised problems for a while. However, there is more to this than this.
Regulations can help- It is interesting that Twitch chose to ban slots, because Sliker was a sports gambling addict (which is still allowed on the platform). These slot companies have been eating into the profits of the more ‘legit’ gambling organizations. In recent times, we have seen a huge shift towards decentralized/unregulated systems of making money (a huge selling point of many cryptos). This allows you to operate quickly, save a lot of money on transaction costs, and scale up much quicker. We saw that with the many Crypto projects covered here, and we saw it in this case with the slots websites. However, such organizations also carry more risk. Their lobbies are not as strong, and they don’t have as strong a network. Even though the calls were to ban all Gambling, notice that the more ‘regulated’ variants like Fantasy Sports and Sports Betting are still allowed. Even though these are more common. This is no doubt thanks to a lot of lobbying and propaganda. When you’re choosing what direction to take your business in, it can be seductive to look at the higher returns on unregulated systems. However, remembers higher returns come with more risk. It can be helpful to throw your lot with more established areas, even if you have to move slower and reduce your margins.
A note on society- It is interesting that millions of people were spending their free time watching other people gamble on slots etc. This is a sad reality. The current society, especially in the last few years, has crashed the mental health of people. People are checking out in droves. Don’t let that be you. There is a lot of opportunity in this world, but to utilize it, you need to be in good mental condition. Take breaks, drink water, sleep a lot, exercise, and touch grass. Don’t let yourself get burnt out and end up checking out.

This event again goes to show you If you transfer money through your bank, it will be slow and you will have to pay a lot of fees. And probably do some paperwork. However, if the money is lost in the process, you are protected. With such unregulated businesses, the risk is all on you. Keep this in mind, when building or using such businesses. Far too many people jump into using financial services without understanding the full consequences.

Do you think Twitch did the right thing? Let me know.

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