The CSGO Lotto FTC Case: Owners Posing as Lucky Players

The CSGO Lotto case was the Federal Trade Commission's action against two YouTube personalities, Trevor Martin and Thomas Cassell, who promoted a skin-gambling website without telling viewers they owned it. The FTC announced a settlement on September 7, 2017, calling it its "first-ever complaint against individual social media influencers," and issued the final order on November 28, 2017. The order involved no money. It bars the two owners and their company from misrepresenting endorsers as independent and requires clear disclosure of material connections, with compliance obligations lasting years.

What the complaint alleged

The respondents were CSGOLotto, Inc., a Florida corporation incorporated in December 2015, and its two principal owners. According to the FTC's complaint (Docket No. C-4632), Trevor Martin, known online as "TmarTn," was the company's president and owned 42.5 percent of it. Thomas Cassell, known as "Syndicate," was vice president and also owned 42.5 percent. Each ran YouTube channels that, the complaint said, had millions of subscribers.

The product. Counter-Strike: Global Offensive, a game marketed by Valve, includes cosmetic items called "skins" that change the look of in-game weapons. The complaint described how skins could be bought, sold and traded for real money, which allowed them to function as a virtual currency. CSGO Lotto let users bet skins in pools and, according to the complaint, earned revenue "by charging an eight percent service fee on skin-betting pools."

The promotion. The complaint alleged that Martin posted at least 13 videos promoting CSGO Lotto between mid-November 2015 and June 2016, with titles including "HOW TO WIN $13,000 IN 5 MINUTES (CS-GO Betting)" and "$24,000 COIN FLIP (HUGE CSGO BETTING!) + Giveaway." He also tweeted, "Made $13k in about 5 minutes on CSGO betting. Absolutely insane." Cassell posted at least 7 videos between January and June 2016 that, the complaint said, "garnered more than 5.7 million views," along with posts such as a March 30, 2016, tweet reading, "Bruh.. i've won like $8,000 worth of CS:GO Skins today on @CSGOLotto I cannot even believe it!"

Neither man, the complaint alleged, disclosed in those videos, descriptions or posts that he was an owner and officer of the company. The FTC also alleged that the company gave both of them free skins to gamble with. In at least five of Cassell's videos, a line stating "This video is sponsored by CSGO Lotto!" appeared in the description box only "below the fold," out of view unless the description was expanded. Even that line did not reveal ownership.

Paid influencers. Beyond the owners, the company ran an influencer program. According to the complaint, payments to other influencers were made in U.S. dollars, skins credits or both and ranged from $2,500 to $55,000. The complaint quoted several of those influencers' posts celebrating wins on the site, again without disclosure of payment.

The owners' connection to the site became public in late June 2016, and in July 2016, according to the complaint, CSGO Lotto ceased operations.

The three counts. All three alleged deceptive practices under Section 5(a) of the FTC Act:

What the order requires

The Decision and Order, issued November 28, 2017 (FTC case page), followed the usual form of an FTC consent order. The respondents neither admitted nor denied the complaint's allegations, admitting only the facts necessary to establish jurisdiction. The FTC's September 2017 announcement reported that the Commission vote to accept the proposed settlement was 2-0.

The order's three substantive sections track the three counts.

No posing as an ordinary user. Section I bars the respondents from misrepresenting that an endorser is an independent user or ordinary consumer of a product.

Disclose unexpected material connections. Section II requires the respondents to disclose, "clearly and conspicuously, and in close proximity" to an endorsement, any "unexpected material connection" with the endorser. The order defines that term as "any relationship that might materially affect the weight or credibility of a testimonial or endorsement and that would not reasonably be expected by consumers." The definition of "clearly and conspicuously" is detailed. Among other things, it says that in interactive media the disclosure "must be unavoidable," and the order specifies that a hyperlink does not satisfy "close proximity." A sponsorship line hidden below the fold of a video description, as alleged in the complaint, would fall short of both standards.

Monitor endorsers. Section III applies when the respondents use endorsers in the future. It requires signed acknowledgments from endorsers, a system for monitoring their posts, and termination of endorsers who do not comply, along with reports.

The order also imposes record-keeping and compliance reporting. A compliance report was due one year after issuance, notices of certain changes are required for 10 years, and records must be kept for 10 years. The order terminates 20 years after issuance, on November 28, 2037.

The order contains no fine or monetary payment. Its force lies in the conduct rules themselves, which bind the company and both owners for the life of the order.

What the case changed for gambling content

It put individual influencers on notice. Before CSGO Lotto, the FTC had sent warning letters about undisclosed endorsements. Its September 2017 press release noted that staff had sent more than 90 educational letters to influencers and marketers earlier that year and was sending 21 follow-up warning letters to influencers it had contacted then. It also announced updated answers to frequently asked questions about endorsements. Acting Chairman Maureen Ohlhausen was quoted in the release: "Consumers need to know when social media influencers are being paid." The case turned those letters into a template for an order against individual creators, not only against brands.

It anticipated the current Endorsement Guides. The FTC's Guides Concerning the Use of Endorsements and Testimonials in Advertising, 16 CFR Part 255, were revised in a notice published July 26, 2023. Section 255.0 describes the Guides as "administrative interpretations of laws enforced by the Federal Trade Commission" that "provide the basis for voluntary compliance," and states that inconsistent practices "may result in corrective action by the Commission under section 5." Section 255.5(a) now reads much like the CSGO Lotto order (16 CFR §255.5, Cornell LII): a connection that "might materially affect the weight or credibility of the endorsement," and that is "not reasonably expected by the audience," "must be disclosed clearly and conspicuously." Material connections expressly include "monetary payment or the provision of free or discounted products," and disclosure is needed when "a significant minority of the audience for an endorsement does not understand or expect the connection."

The free skins in the CSGO Lotto complaint are the textbook example. A creator who gambles on stream with funds supplied by the operator, without saying so, presents wins that viewers cannot weigh accurately. The Guides also spread responsibility. Under §255.1(d), advertisers are subject to liability for failing to disclose unexpected material connections and should provide guidance to endorsers, monitor them and act on non-compliance. Under §255.1(e), endorsers themselves may be liable for their statements.

It overlapped with Valve's own crackdown. The FTC case addressed advertising, not gambling law. The gambling question surfaced separately. On July 13, 2016, Valve published an "In-Game Item Trading Update," signed by Erik Johnson, stating, "We'd like to clarify that we have no business relationships with any of these sites," and that "Steam does not have a system for turning in-game items into real world currency." The statement explained that the sites relied on Steam's OpenID API and automated accounts, and that "using the OpenID API and making the same web calls as Steam users to run a gambling business is not allowed." Valve said it would "start sending notices to these sites requesting they cease operations through Steam." CSGO Lotto shut down the same month.

The case's lasting rule for anyone producing gambling content in the United States is simple to state. If a creator owns, is paid by, or plays with money or items supplied by the operator being shown, viewers need to be told in the video itself, in plain terms, where they cannot miss it. A sponsorship line under a "show more" button, or an ownership stake left unsaid, is what the FTC alleged and ordered to stop.