Faced with lawsuits, tech company Valve cracks down on online gambling

Valve denied claims that it is profiting from gambling on its gaming platform and is cracking down on sites that use Steam to gamble.

Entertainment software and technology company Valve is pushing forward efforts to stop gambling on Steam, its entertainment platform where games like Valve's popular Counter Strike: Global Offensive are sold.

The charges against the company stem from a feature Valve added to Steam in 2011 that allows users to trade items. According to a statement Valve’s Erik Johnson released Wednesday, third-party gambling sites – like CSGO Lotto, CSGO Diamonds, CSGO Lounge, and OPSkins – have been leveraging the feature to let users upload their “skins” (in-game items that change the look of weapons) to a betting pool where items are traded like chips or cashed in for real-world currency, sometimes drawing hundreds of dollars for one item. 

"We have no business relationship with any of these sites," Mr. Johnson stated. "We have never received any revenue from them.”

Although Valve denies culpability, the company has been sued twice in recent weeks. One lawsuit was filed on June 23 and another was amended on July 7. The charge against Valve is that it knowingly permits and facilitates betting on Steam by providing free “skins” and “allowing millions of Americans to link their individual Steam accounts to third-party websites,” the first lawsuit, filed by the Steam game Counter-Strike player Michael McLeod, says.

The second suit alleges that "Valve owns the league, sells the casino chips for a fee, and receives a piece of the income stream through foreign websites in order to maintain the charade that Valve is not promoting and profiting from online gambling, like a modern-day Captain Renault from Casablanca." The suit says the plaintiff filed on behalf of “her minor son.” The lawsuit also includes CSGO Lotto, which it claims targets underage players, particularly because the site doesn’t require age verification.

“We are going to start sending notices to these sites requesting they cease operations through Steam, and further pursue the matter as necessary,” Valve president Johnson wrote.

"That most of the people in the CS:GO gambling economy are teenagers and under 21 makes Valve’s and the other Defendants’ actions even more unconscionable,” the second suit says.

The game is particularly harmful to minors because of the cryptic nature of the system, charge some. "Parents don't know this is going on and can't talk to their kids about it because the gambling chips are called ‘Skins’ and it seems like just another in-game purchase,” Jasper Ward, an attorney on the second case told Polygon in an email interview.

"Valve is like a bar owner who lets people set up roulette wheels and blackjack tables in the back, sells chips to teenagers on their way in the door, and then makes people cash out at the pawn shop across the street,” Mr. Ward said. “It has created a gambling ecosystem out of thin air, and its customers are getting scammed and losing money on rigged websites as a result.”

Although Valve claims it has no relations with betting sites, its history with CS:GO Lotto is unclear. In the past, the site has been temporarily blocked by Steam and then unblocked, according to Polygon, a website that covers the gaming industry.

“Valve's public silence while privately helping gambling sites operate in the Steam Marketplace is unconscionable,” Ward said.

Twitch, a game broadcasting site that recently filed its own lawsuit against bots that fake viewership, joined Valve in solidarity, issuing its own statement on Thursday saying it will also ban users who stream segments in which they gamble “skins” on Counter-Strike. This could potentially dent CS:GO’s success, as reaction videos that show the drama of gambling wins and losses are believed to promote the practice.

Valve’s statement about the charges against the company is considered groundbreaking by some in the industry, because of the long silence the company has kept about gambling on Steam.