Faced With Criminal Charges, Valve Denies Facilitating Illegal Counter-Strike Gambling

A few months ago, Valve finally got around to cracking down on Counter-Strike skin gambling, a sketchy secondary market potentially worth billions of dollars. The saga, however, is far from over. Valve is now facing potential criminal charges from the Washington State Gambling Commission.

A couple weeks ago, the Washington State Gambling Commission said that Valve had until October 14 to "respond and explain" how Steam, despite all the recent gambling controversy, is now in compliance with state gambling laws.

After missing their initial deadline to respond, Valve has issued a lengthy letter against assertions that skin betting — which led to an unregulated gambling market where minors were able to participate with little hassle — was in any way their doing.

Valve begins the letter by saying they do not engage in or promote gambling in any way, nor do they "facilitate" it. "There is no factual or legal support for these accusations," they add, noting that they're "surprised and disappointed" that the Commission decided to go public with all of this.

They go on to isolate two features that might appear to aid gamblers in seeking their illicit thrills: skin trading and OpenID. The first is swapping of in-game items, often via Steam's built-in community market.

The second "allows a Steam customer to identify himself on a third-party website by association with his Steam account, without having to give his Steam credentials to the third party site."

According to Valve, those services are not inherently illegal and, as a result, should not be shut down.

"We do not want to turn off the Steam services, described above, that skin gambling sites have taken advantage of," reads Valve's letter. "In-game items, Steam trading, and OpenID have substantial benefits for Steam customers and Steam game-making partners. We do not believe it is the Commission's intention, nor is it within the Commission's authority, to turn off lawful commercial and communication services that are not directed to gambling in Washington."

"If there is a specific criminal statute or regulation you believe Valve is violating, please provide a citation," they add.

Valve goes on to point out that they have already taken action against more than 40 skin betting sites so far, and they hope to cooperate with the Commission in bringing down more. They note, however, that there are limits to what they can do.

"We do not know all the skins gambling sites that may exist or may be newly created, and we are not always able to identify the 'bot' accounts that particular skins gambling sites may use to try to effectuate Steam trades," write Valve.

"Cleverly designed bots can be indistinguishable from from real users performing legitimate trades and their methods and techniques are constantly evolving. A bot account that is blocked can easily be recreated with a new identity almost immediately."

That all sounds fairly reasonable, given where things presently stand. Still, questions remain. It sure seems like Valve could've taken a stand against CSGO gambling sooner, especially after users began "cashing out" to turn real profits. Something like this doesn't grow into a multi-billion dollar secondary market over night, and even if Valve didn't directly "facilitate" it, you could argue that they benefited from inaction via cuts of item sales and growth of CSGO's eSports scene.

Does failure to act swiftly and decisively mean that Valve is legally responsible for what users and third-party companies did with Steam features that aren't illegal, though? Tough to say. If the Commission can't cite specific laws Valve broke at this point, the answer is likely "no." We'll see, I suppose, when the Commission responds.


    My bank would cancel my stolen credit card if notified my stolen credit card was being used illegally to do legal things. Sometimes banks are a bit too quick off the mark, too.

    Banks do this because they want to avoid the potential of being challenged or accused of wrong-doing at a later date.

    So yes, it's completely fair game to say Valve holds responsibility here.

    Services like Steam hold goods. They are goods I can purchase, or at least rent a license off of Valve for use. They are 'mine.'

    Valve absolutely fostered an unregulated gambling market by allowing services - not goods - under the umbrella of Steam to reach their logical end-point (ie to make on-going money from me per an agreement).

    The Diablo 3 Auction House walked this tight-rope a few years back. Diablo 3 as a product was a shitty service for real money transactions, it turns out.

    I have played poker games where we used match-sticks as chips. $10 or something to buy in, winner takes all.

    Does this mean someone can take Swedish Match to court for facilitating gambling?

      Yes... if the prices of the matches on the open market were inflated to same $10 for all consumers.

      In your game its a token agreement in a closed group... in CSGO the real dollar value is an open market price. (Also in some US states hosting a poker game like that is also illegal)

      The thing is Valve takes a cut from all trades, on items that were priced in part due to their value not only ingame... but also in the gambling market. If the gambling added market value... ans Valve takes a cut, they are receiving indirect profits from gambling

        If the gambling added market value... ans Valve takes a cut, they are receiving indirect profits from gambling

        I mean, the skins were never intended to be used for gambling, and Valve really shouldn't be held accountable for their product being used in a different way. The closest analogy I can think of is pseudoephadrine - it was being used by criminals to cook meth, but you could hardly hold Codral accountable for that. The problem was recognized and remedied without having to blame an innocent party for the problem occurring in the first place.

          I would akin in to an illegal bookie recommending all transactions go through a third party... while the third party claims to be oblivious to the crime, they are indirectly profiting from it from increase business, increase narket value and increase commissions.

          ... and there are a lot of laws around financial handling that if Steam could face criminal charges that are normally used to stop money laundering and racketeering.

          The pseudoephedrine example is a nice one of an evolving problem and the law taking forever to xatch up and remedy... which is to Valves advantage cause despite the illegal gambling for what counts as two or more years, all these Gambling and Fair Trade groups are only reacting now... its like they cant see how technology is changing or that virtual items have a real world value and effect.

    While Valve makes a case they only provided the tools, they did fail to police it for so long... and only responded due to controversy and legal threat which wont sit well with gambling law makers. ignorance is no excuse.

    The ACCC case was exactly like this..n they failed to respond to queries for a while, until a controversy, added and update existing policies, made a press announcement they did nothing wrong... and lost the case in court, cause updating policy doesnt undo the past errors.

    Valve needs to be proactive, but more importantly, answer the government immediately when they ask you something... you should never fail to respond to a regulator ever especially when your making excuses for delayed action and saying you will do better.

    Valve took market commissions off all ingame trades in an open market they police, that was also inflated due to gambling websites and resulted in more skins trading between accounts... they need to do a lot more than to satisfy regulators cause they have indirectly profitted from gambling the trading tools they say are innocent.

      Yeah, but indirectly profiting off of something you make being misused is not illegal. Somebody gave this example earlier
      pseudoephadrine - it was being used by criminals to cook meth, but you could hardly hold Codral accountable for that.
      The people that make Codral are making a a profit from their product being used illegally. This does not mean that Codral is facilitating the creation of meth. It's just that their product is being used in an unintended manner.

      Indirectly profiting off of something illegal isn't necessarily illegal.

        But valve allowed them to do this on their system/servers etc. Codral didn't let people cook method in their factories.

          The system was not being used as intended. The system being abused was not made for skin gambling.

        Not a great example. When it became apparent that pseudoephedrine was being used for the production of meth, a number of products that contained PSE substituted PSE with a component that couldn't be utilised for meth production and multiple nations brought forth legislation to ban or regulate the sale of products containing PSE.

        Valve's response to being made aware that their system was being used for illegal purposes was to shrug and say "what can we do about it?" while retaining all the power to do something about the situation. Their actions reflect poorly in the current scenario.

          Valve's response to being made aware that their system was being used for illegal purposes was to shrug and say "what can we do about it?"

          But they're actively taking down CS:GO gambling websites. What Valve has said makes sense. It's impossible to stay on top of these websites. You take one down, two more pop up.

      Valve took market commissions off all ingame trades in an open market they police

      I thought valve only get a cut if the item is sold on the actual marketplace, but if the items are simply traded they don't get anything? It's like blaming roads for people being able to travel to buy/sell things that could be illegal.

        They still get the cut on the cash out, and in market circulation and sales... every day they didn't do something about CSGO gambling, Valve was making extra money somewhere in their ecosystem.

        A bank can be blamed for, fined and jailed for any illegal financial transactions, even if it was customer to customer and they were just the service provider... if their service fails to comply with any State and Federal financial and legal regulations that helped aid the transaction and make it possible.

        Valve is a corporation, and bound by the many of those same state and federal financial and legal regulations, including state gambling laws.

        Steams major issue is: a) when did they know the service was used for gambling transactions? and when did they know that such gambling was open to minors?
        b) when did they take action to stop such gambling services using their services?

        If the gap between them knowing when gambling was taking place (a), and when they took action (b) is critical issue... cause every day of inaction is a question of what did Valve gain for not doing anything, and hence their liability. (we are talking a gap of possibly 2 years)

        Their lack of inaction may be major contradiction of their policies that classify the use of their services for gambling as a violation of the terms of service, cause they didn't change the policy when they booted those 40+ gambling sites... they said they were enforcing what was already in the terms, the terms they didn't enforce to protect their other customers (especially minors).

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