In the race to protect players, the iGaming industry has spent years refining responsible gambling tools within the boundaries of regulation. But what happens when the most at-risk users, Gen-Z players engaging with loot boxes, skin casinos, and grey-market ecosystems, are developing gambling habits outside those boundaries? This is adding pressure for the industry to adopt a more adaptive model: dynamic responsible gambling.
In an exclusive SIGMA News interview, Kris Galloway, lead iGaming fraud and compliance strategist at Sumsub, sees it clearly.
“Dynamic responsible gambling can absolutely help protect players, but only if it’s deployed where the problems actually start. And that isn’t always on the casino floor anymore.”
The real hurdle? Regulation is evolving, and operators need to evolve with it.
The term “skin casino” might still feel fringe to some. However, these platforms, which enable players to wager virtual in-game items (or “skins”) with real-world value, now operate in a pseudo-regulated grey area. They often sidestep basic KYC, dodge age gates, and rely on Valve’s Steam platform as their trading backbone.
“They’re violating Valve’s terms of service,” Galloway explains, “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.”
It’s not just about revenue. It’s about reach and audience.
“Skin casinos look like games, feel like games, and that’s precisely the danger,” he says. “They’re designed for digital natives. For many Gen-Z users, gambling isn’t a taboo they enter in adulthood; it’s just another layer of a game they already know.”
Kris is quick to point out that the iGaming industry has become more dynamic in its approach to harm prevention, particularly in regulated markets such as the UK. But he’s also blunt:
“Operators may say they want dynamic responsible gambling, but most don’t actually want to invest in it unless regulation forces them.”
Skin casinos, of course, are even less inclined. The incentive structure is broken: innovation is driven by user engagement, not safety. And for regulators? “They’ve got the desire, but not the know-how,” says Galloway.
“Meanwhile, operators have the know-how, but no desire.”
This creates the worst possible landscape: an innovation void that leaves the most vulnerable players at risk.
Galloway believes there’s a genuine opportunity for behavioural AI to spot risk before it escalates. This is especially important for gaming ecosystems that feature loot boxes, case battles, or randomised drops — mechanics that mimic gambling without being labelled as such.
“Chasing losses is still one of the clearest signals,” he says. “You can see it in how often a player opens more UT packs after a bad run in FC26, or an escalation to opening more expensive cases following some bad pulls in CS2. Essentially, instances where players re-buy loot boxes after poor results, and deposit again after draining in-game wallets, or play late at night with escalating spend.”
Sumsub already uses transactional and behavioural patterns to flag high-risk users in gambling and fintech. Could that same tech apply to Steam, Xbox, or mobile games? “Absolutely,” says Galloway. “The challenge is access. If platforms were willing to partner, we could build an early-warning framework that protects users before they ever reach a casino.”
This focus on smarter, data-led safeguards echoes a wider industry shift, with AI in responsible gambling now a boardroom priority across regulated markets.
Yet cooperation isn’t guaranteed. Steam, Xbox, mobile ecosystems — each platform has its own commercial incentives and regulatory posture. Building unified safeguards across these silos may be ideal, but Galloway acknowledges it’s far from straightforward. Each ecosystem responds to different laws, values, and revenue models. But early prototypes could show what’s possible. This kind of technology could lay the groundwork for truly dynamic responsible gambling if platforms and regulators are willing to engage.
“Some will move faster than others,” Kris admits. “But if we can show the risk and the opportunity, the pressure builds.”
Kris doesn’t just criticise — he sketches the solution.
If an unregulated skin casino were willing to try dynamic responsible gambling, Galloway says the process would be “easy to build — no excuses.” His framework looks like this:
Still, the use of behavioural surveillance raises valid questions. While Galloway argues these systems remain invisible until needed, the broader ethical challenge remains: how do we balance early detection with digital privacy in communities already wary of oversight?
“Players shouldn’t feel watched. The best systems are invisible until they’re needed,” he says. “And you can A/B test everything — down to what friction is acceptable.”
Even well-intentioned systems must walk a tightrope, using real-time signals without crossing into overreach. Transparency, opt-ins, and robust privacy safeguards must sit alongside the tech.
One of Galloway’s sharpest observations is reserved for regulators struggling to grasp the subtle mechanics of Gen-Z design. Take XP systems: most games offer faster rewards at the start, then slow progression later to mimic mastery. But that progression curve, when tied to real-money gambling, can easily tip into manipulation. “If operators can hire gamers to design sticky ecosystems, why can’t regulators hire the same to test and review RG suitability?” he asks.
He’s got a point. From coin rain mechanics to “battle passes,” today’s game-based incentives are crafted with psychological hooks. Yet many of these mechanics escape scrutiny in skin casinos and hybrid betting games because regulators lack the expertise to effectively interrogate them. This blind spot matters: Gen-Z and millennial users are already fuelling a surge in gambling activity across the US, highlighting how quickly youth-driven markets can expand without adequate oversight.
“RG isn’t just a checkbox anymore. It’s design literacy,” says Galloway. Still, it’s easier said than done. Most regulators don’t lack the will. They lack the tools. Bureaucracy, budget constraints, and political pressure often mean they are years behind the very systems they’re meant to oversee.
“If gambling reform is to work, we need regulators who understand game design,” Galloway adds.
Steam, owned by Valve, is the world’s largest PC gaming platform and the source of almost all tradable skins used by these casinos. Its terms forbid gambling. But enforcement is spotty, and as Galloway puts it, “Valve can already see everything — logins, trades, friends, inventories. They have full visibility.”
So why hasn’t it stopped?
“We understand it is confusing and there are seemingly conflicting interests between commercial gain and regulatory clarity”, says Galloway. “So, more collaboration is needed between policymakers, gaming platforms and verification experts like us, to help shape clearer frameworks.”
Even countries like Belgium and the Netherlands, which forced Valve to restrict loot boxes, have seen their measures sidestepped by VPNs. The UK has encouraged parental controls and transparency tools, but Galloway believes we need more:
“Let’s not pretend kids don’t know how VPNs work. If we want to protect underage players, regulators will need to go beyond ISP blocks.”
He argues for collaborative frameworks, where publishers like Valve could use Sumsub-style monitoring and device-level checks to quietly detect high-risk patterns without disrupting gameplay for regular users.
Final thought: So, who leads this change, and will they act before harm becomes the default? Can we rely on operators, especially those in the grey market, to lead on harm prevention? Or will regulators need to force a new era of embedded RG?
“Honestly, it’s not just about gambling anymore,” says Galloway. “These risks are now embedded in the wider digital ecosystem. And we need dynamic, responsive solutions that work across gaming, fintech, iGaming and beyond.”
The industry’s more forward-looking players might see this as an opportunity. Gen-Z consumers favour brands that lead with transparency and ethics, even in gaming. “Operators that move first here won’t just dodge risk,” Galloway argues. “They’ll own the trust of the next generation.”
One thing is clear: if dynamic responsible gambling doesn’t evolve fast enough to reach Gen-Z users where they play, before they ever hit a licensed site, we’ll be chasing harm long after it’s already been done.
So, where’s the incentive for grey market platforms to change? Currently, there isn’t one, unless regulations tighten or user expectations shift. Galloway believes operators can’t ignore this forever.
“Eventually, reputation will matter,” he says. “Especially when bad actors start getting named and blocked. That’s when smart platforms will pivot to protection.”
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