The streamer James Varga, better known as Phantoml0rd, was suspended from Twitch in 2016. Now, he's suing the streaming giant in the Californian courts – and the lawsuit gives a fascinating insight into the world of esports and partnered streamers.
Here's the background. In July 2016 Varga was suspended from Twitch over his association with a Counter-Strike: Global Offensive skin gambling site called CSGOShuffle. This followed stories by eSports journalist Richard Lewis which claimed that email exchanges between Varga and CSGOShuffle coder Duhau Joris "heavily suggest, almost to a degree of certainty" that Varga actually owned the site. If this is true, Varga didn't disclose it in streams where he used and promoted the site, and was essentially gambling with the house's chips.
That would be in violation of FTC and Valve rules, as well as the Twitch terms of service, and in the wake of these allegations Varga's channel was suspended.
Varga's lawsuit can be read in full here, but we've picked out and transcribed some of its key claims. It says that Twitch improperly suspended his account based on "untrue" allegations, and seeks not only exemplary damages but an injunction against Twitch. The suit also names Richard Lewis, author of the stories about Varga and CSGOShuffle, and claims those stories were untrue. Lewis has subsequently responded to this in a YouTube video, and as we go along we'll include some of the key points of his rebuttal.
One of the suit's core points is that Varga was a partnered streamer with Twitch. This means he wasn't just using the site, but actually had a contract with the company – and it's this that the lawsuit is saying was breached. In fact, as the lawsuit explains early on, Varga had been sought out by the company.
18. In 2012, Twitch recruited Varga to become a content provider on twitch.tv. Jason "Opie" Babo, a former Own3D.tv employee who had been recruited to join Twitch, contacted Varga as part of Twitch's recruitment efforts (and later became Varga's Twitch manager).
Jason Babo's name will keep coming up, as he was Varga's main point of contact with Twitch. The suit also details certain terms of Varga's contract.
21. The Contract was for a term of two years, at which time, the Contract automatically renewed for a period of one year unless one party gave notice of non-renewal 90 days before the expiration of the term; however, on April 1, 214, the parties entered into an Amendment and Extension ("Amendment") that extended the contract for an additional two years, and incorporated by reference the one-year automatic renewal.
23. Other than by expiration and non-renewal, the Contract can only be terminated for breach or bankruptcy of either party.
The suit goes on to explain that "non-gaming content" was not prohibited by the contract, and in this context the quoted phrase is including gambling – as in CS:GO skin gambling. It then adds some juicy detail, which is essentially that Varga's Twitch manager Babo told him that streaming this content was fine as long as it was done for less than 30 minutes. The typos are reproduced from the lawsuit.
40. For example, on May 27, 2016, Varga's Twitch manager Babo stated:
hey phantom. I was told to letyou know again that you have been streaming cs go gamling for longer than 30 minutes. remember what I said last time.
don't do the cs:go gambling as the main focus of your stream. don't let it go 30 minutes at a time. play some, then do a bit if you want. Just not he focus of your stream.
41. Days later, Babo told Varga,
You have been reported again because of the whole CS:GO gambling for longer 30 minutes situation.
You shouldn't be doing it longer than a few minutes just to play it safe, honestly... it's a clusterf---. this entire rule is confusing as hell haha... so time it, do what you think is correct, I just wouldn't risk it honestly.
I have gone ahead and emailed internally to get you a proper answer for your good questions which im sure can be used for other partnmers who ask the same thing cause honestly this whole longer than 30 is just odd to me. why you can do it for 30 but not longer hah
is it 30 in 1 sitting, is it 30 cooldown 30 not even i know.
This certainly looks like Twitch was fine with Varga streaming CS:GO gambling, though as Babo implies above the streamer continued to push for an answer on what was and was not acceptable – because his stream kept getting flagged for it. All of this matters because, the suit claims, Twitch would later say that streaming gambling was one of the reasons for Varga's account suspension.
Of course, there's more to it than that.
The lawsuit goes on to say that on July 19th 2016 "without any notice or warning, Twitch suspended Varga's Twitch.tv account "indefinitely" without any explanation, prior written notice, or any opportunity for Varga to cure any perceived violation of his obligations." The contract does say Varga should have 30 days to respond to issues, but it also contains termination clauses in the event of a breach. What had happened was that Richard Lewis's stories about Varga and CSGOShuffle had been published.
52. Twitch also later alleged that Varga had violated the Twitch terms of service based on unsubstantiated allegations that had been levelled against him by Richard Lewis, a Breitbart e-sports reporter who accused Varga of cheating on game-related gambling sites. Lewis published his allegations on July 16 and 18, 2016 – clearly timed to generate maximum traffic, and maximum harm, while Varga was participating in the ESL One event in Germany.
Worth noting an inaccuracy here. Richard Lewis did in the past work as a Breitbart reporter, but was not working for that outlet at the time of the stories about Varga.
53. The allegations against Varga are untrue and based on unchecked speculation arising from illegally obtained electronic records; yet Twitch never asked Varga about the allegations of otherwise discussed them with him, despite the fact that Varga was among Twitch.tv's most popular and lucrative content providers. Instead, Twitch apparently accepted as true the false allegations published by an unscrupulous commentator (who also did not interview Varga or disclose the allegations to him before publishing them.)
Richard Lewis disputes this version of events, and has evidence in the form of screencaps taken at the time. Kotaku UK cannot verify the authenticity of these screencaps, but they show Lewis contacting Varga on July 13th, three days before Lewis's story is published.
Lewis tells Varga he's working on a story, but insists on providing the detail on an audio call rather than on text chat (a reasonable journalistic precaution, particularly considering the fact Lewis had originally obtained the information for his story from Skype text logs leaked from Varga). They agree to chat the next day but, though Lewis makes the call, Varga doesn't pick up.
If the screencaps provided by Lewis are accurate, he did make contact and attempt to discuss the story with Varga, but was unsuccessful in setting up that discussion over a period of three days, an amount of time Lewis describes as "well above the industry standard."
Furthermore, the claim that Lewis timed the article to be as damaging as possible by releasing it during the ESL One event in Germany appears to be factually incorrect – the date on the first publication is indeed 16 July, as stated in the lawsuit. But ESL One took place in Cologne on 8-10 July 2016. Lewis published his stories several days after Varga had returned from the event.
Lastly, Lewis points out that while the lawsuit calls his coverage of Varga "unsubstantiated allegations", it does reference the Skype logs Lewis used as the basis for his story as "illegally obtained electronic records." Lewis states that "you cannot illegally obtain something that doesn't exist" and "[Varga is] saying they're real, that those Skype logs are real... Thank you for putting that in a legal document".
One minor detail about the screencaps shared by Richard Lewis is that Varga doesn't appear to be in his Skype contact list – but the pair have exchanged messages. It appears Varga added Lewis as a contact and then, at a later time, removed him. We've asked Richard Lewis to clarify this detail, and he responded to confirm "that is indeed what happened".
But Lewis isn't the primary target here. The suit concludes by claiming that Twitch misrepresented its own guidelines to Varga and that, in later suspending him, it was acting maliciously. It also uses unusually strong language in parts ('despicable') which seems rather out of place in a suit as serious as this.
79. Twitch's intentional misrepresentations regarding its content guidelines were fraudulent. Moreover, given twitch's intimate knowledge of its own content guidelines – in light of its ability to set guidelines themselves, and to unilaterally interpret whether streaming content met those guidelines – Twitch's blatant misrepresentations to Varga were willful and malicious.
81. Twitch, by engaging in the aforementioned acts, is guilty of fraud, malice and oppression as defined in section 3294 of the California Civil Code, in that twitch and its representatives' conduct was done with the intention of depriving Varga of property, namely money, or legal rights or otherwise causing injury. Furthermore, this conduct was despicable in that it subjected Varga to a cruel and unjust hardship and conscious disregard of his rights, so as to justify an award of exemplary and punitive damages.
The lawsuit ends with exhibits of Varga text chatting to Babo that, unfortunately, are rather difficult to make out on the photocopied digital version. One part of the chat that could be transcribed shows Varga asking for clarification on the 30 minutes rule in some detail, and Babo responding that he will get an answer from Twitch. Poor old Babo :(
87. When Twitch's employee and representative, Babo, advised Varga that Varga was permitted to broadcast non-gaming content for up to 30 consecutive minutes, Babo had no reasonable basis for believing his claim to be true.
The wow moment comes when Varga's lawyers move on from requesting damages to looking for an injunction against Twitch.
97. These unlawful and unfair business practices are likely to continue and present a continuing threat to the public. Therefore, Varga requests a permanent injunction pursuant to Business and Professions Code Section 17203 to enjoin and refrain Twitch from continuing its unfair business practices, and to order Twitch to immediately lift Varga's suspension and restore his Twitch.tv account.
That section of California law is specifically about "unfair competition." This is likely to be a bit of legal willy-waving to encourage a settlement, because the implications for Twitch if things ever got that far would be enormous.
The suit is notable for what it omits. It claims Lewis's reporting is untrue, and makes hay out of "illegally obtained electronic records" – but it doesn't engage with the central claim of Lewis's reports. The suit avoids the allegation that Varga is the or an owner of CSGOShuffle. It also implies Lewis didn't give Varga a right of reply, when there's evidence to show that the journalist made contact several times pre-publication.
We expect the Twitch legal response, when it comes, to be pretty interesting – and to focus in more detail on the alleged breach of contract, and Varga's alleged connection to CSGOShuffle. We'll report on that when and if it happens.
In the meantime, this suit is a fascinating test case in a more general sense. What rights do users of a platform like Twitch have, whether partnered or not, if their income is dependent on it? What if they're involved in controversy? These questions need answering, and it's cases like this – presuming it goes to court – that will hash out some of the principles on which streaming's future depends.
Updated 3.45pm: Added a response from Richard Lewis about the Skype logs.