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.