Streamer Wins Case Against Twitch Over CS:GO Gambling Ban

Posted on: April 27, 2021, 06:12h. 

Last updated on: April 27, 2021, 11:22h.

Philip Conneller @casinoorgphilc Read More
Expertise: Gaming Business, Regulation, Tribal Gaming.

A former internet celebrity booted from the Twitch platform after a Counter Strike: Global Offensive gambling scandal has successfully sued the streaming service for damages.

James Varga, Phantoml0rd
Back in 2016, James “Phantoml0rd” Varga (pictured with dog in screenshot above) promoted a skins gambling site without declaring ownership. (Image: Twitch)

James Varga, known on Twitch as “Phantoml0rd,” took legal action against Twitch in 2018, claiming loss of earnings after the company’s deletion of his account in 2016.

At the time Twitch pulled the plug, Varga boasted 1.3 million followers, with more than 16 thousand subscribers on his channel.

But he had recently been exposed as the owner of a skin gambling website called CS:GOShuffle, which he promoted to his followers by betting in real-time through the Twitch live stream.

According to a dossier of leaked emails acquired by esports journalist Richard Lewis, Varga and his associates were allegedly rigging those games for the benefit of the stream to make it appear easier to win.

When Varga sued Twitch for breach of contract, Twitch countersued, accusing Varga of violating its terms and conditions, which included not using the platform for “scams, misinformation and defrauding others.”

Legal Vacuum

In 2016, skins gambling existed in a legal vacuum under the noses of regulators. The trading and gambling of “skins” – the cosmetic digital items found in loot boxes in the video game Counter Strike: Global Offensive (CS:GO) – had quickly become a multibillion-dollar industry.

Later that year, CS:GO publisher Valve moved to shut down the unlicensed betting craze, and with it CS:GOShuffle, amid claims it was facilitating underage gambling.

Valve wrote cease-and-desist letters to the biggest operators, warning them they were violating its terms and conditions by appropriating skins for online gambling.

The legal battle between Twitch and Varga has done little to clarify the legal status of skins gambling. Ultimately, it boiled down to a contract dispute. A jury in San Francisco found Twitch liable for failing to follow proper procedures for terminating Varga’s contract following his suspension from the platform.

‘Harmful Content’

Varga’s compensation for this, $20,729, was some way short of the $35 million he had hoped for. But it was a symbolic victory for the former streamer.

In a statement, Twitch noted the relatively small award reflected the “scope of the misstep” as it related to compensation for revenue losses solely for the duration of the 30-day notice period, which the company neglected to give Varga.

While we regret the procedural failings related to Mr. Varga’s termination in 2016, he repeatedly violated Twitch’s Community Guidelines and exposed our community to harmful content,” said a Twitch spokesperson.

“We absolutely stand behind our decision to terminate his account, and he will not be allowed back onto the service.”