Key Moments:
- Gen-Z players have formed gambling habits through loot boxes, skin casinos, and grey-market platforms that evade traditional regulatory measures.
- Current responsible gambling models struggle to address risks outside regulated casino environments, creating gaps in player safety.
- Kris Galloway advocates for the integration of behavioral AI and dynamic interventions to proactively detect and mitigate user risk, while raising concerns about privacy and regulatory expertise.
Changing Dynamics in Player Risk
The evolution of responsible gambling tools has long been at the forefront of the iGaming sector’s efforts to protect its users. However, a pressing challenge has emerged as Gen-Z users increasingly engage with features like loot boxes and skin casinos that operate outside conventional regulatory structures. This trend is prompting a shift toward more flexible and real-time approaches—dynamic responsible gambling.
Kris Galloway, leading fraud and compliance strategy at Sumsub, highlighted in an interview with SIGMA News that deploying dynamic responsible gambling where risks originate—beyond the casino floor—could significantly help safeguard players.
Understanding Skin Casinos and the Expanding Risk
Skin casinos allow users to wager virtual in-game items, often sidestepping basic Know Your Customer (KYC) checks and age restrictions through reliance on platforms such as Valve’s Steam. According to Galloway, “They’re violating Valve’s terms of service, but Valve indirectly benefits from the demand they generate. It’s controlled chaos. A ‘small’ operator can still be pulling in millions in net gaming revenue (NGR) monthly.”
This environment mimics traditional gaming, specifically targeting digital natives, and blurs the line between gaming and gambling for young, at-risk individuals. Traditional responsible gambling safeguards often fail to reach this audience.
Limitations of Conventional Responsible Gambling Tools
Despite advances in regulated jurisdictions, many operators shy away from investing in dynamic responsible gambling solutions unless compelled by regulation, while platforms operating in gray markets have even less motivation. “Operators may say they want dynamic responsible gambling, but most don’t actually want to invest in it unless regulation forces them.” Galloway added, “Meanwhile, operators have the know-how, but no desire.”
This dynamic creates a landscape in which innovation in harm prevention is stifled, putting vulnerable users at continued risk.
The Technology Opportunity: Behavioral AI
Galloway sees significant promise in behavioral AI to identify risk indicators—particularly within ecosystems featuring loot boxes and randomized rewards. Signals such as repeated re-purchasing of loot boxes after negative outcomes, late-night and escalating spending behaviors, and rapid redeposits are emphasized as urgent flags.
Sumsub employs transactional and behavioral monitoring to detect risk in gambling and fintech, sparking the question of whether similar protections could be implemented for platforms like Steam or Xbox. Galloway believes this is possible, conditioned by the willingness of platforms to collaborate on early-warning systems.
While interest in AI-led safeguards is growing at board level within regulated markets, fragmented platform incentives and regulatory postures create barriers to comprehensive adoption. Prototype initiatives could help demonstrate the feasibility and potential benefits if cooperation increases.
Blueprint for Dynamic Responsible Gambling in Skin Casinos
Galloway outlines a readily implementable process even for unregulated operators:
| Recommended Safeguard | Description |
|---|---|
| Seamless KYC | Blocks underage access through smooth identity checks |
| Platform Incentives | Rewards users for completing security and responsible gambling challenges |
| Core RG Tools | Provides self-exclusion, session timers, and deposit/loss limits as basic features |
| Behavioral Tracking | Identifies high-risk activity (e.g., late-night play, chasing losses) in real time |
| Dynamic Interventions | Applies graduated actions such as soft checks and timeouts based on user risk profile |
| Passive Biometrics | Activates identity verification when behavioral triggers indicate high risk |
Implementing these systems must carefully balance early detection with digital privacy. Galloway stresses that, “Players shouldn’t feel watched. The best systems are invisible until they’re needed,” emphasizing the need for transparency, opt-in features, and robust data protection alongside advanced detection tools.
Game Design, Regulatory Blind Spots, and Emerging Risks
Complex in-game mechanics such as XP curves and psychological hooks embedded in game-based incentives often fly under the radar of current regulatory scrutiny. Galloway suggests that regulators could benefit from employing gaming experts to review responsible gambling suitability, noting, “If operators can hire gamers to design sticky ecosystems, why can’t regulators hire the same to test and review RG suitability?”
Regulatory gaps and insufficient resources leave authorities trailing behind operators, particularly as Gen-Z and millennial engagement with these products increases market activity and risk exposure.
Role of Steam, Valve, and International Oversight
Platforms like Valve’s Steam, despite prohibiting gambling in their terms, are cited as having full visibility into user activities but lack stringent enforcement. Galloway urges greater collaboration among policymakers, gaming platforms, and verification experts to build clearer frameworks. Even in jurisdictions with restrictions, clever circumvention techniques undermine existing protections, requiring more proactive regulatory approaches.
Who Drives Change in Responsible Gambling?
Asking whether market operators or regulators will take the lead, Galloway highlights that these risks have become a fixture in the broader digital landscape. Dynamic, cross-sector solutions are increasingly necessary to protect both current and future users. Transparent, ethical leadership is likely to build lasting trust with Gen-Z consumers, and as negative actors are identified and excluded, platforms that prioritize safety could gain competitive advantage. “Eventually, reputation will matter,” Galloway observes. “Especially when bad actors start getting named and blocked. That’s when smart platforms will pivot to protection.”
Additional Resources
For information on responsible gambling frameworks, the UK Gambling Commission’s Safer Gambling portal provides further guidance.
- Author
Daniel Williams
