WSGC Cracking Down on Black-Market Gambling

by Jim Hall

Washington State Gambling CommissionValve Corp. has been ordered by the Washington State Gambling Commission to stop taking part in online gambling market.

For the very first time in United States history, a regulator of gaming is taking aim at the online gambling market by way of virtual items. Valve Corp. is a company that operates in the video gaming industry and publishes such titles as Counter-Strike: Global Offensive. The company has taken action against gambling sites over the past few months to stop virtual items from being sold online as virtual currency for online gambling.

Washington State Gambling Commission Stepping In

The gambling commission of Washington State has stepped in to try and force Valve to take even more action than they already have. Chris Sterns, Commissioner of the group, stated that in Washington state, and everywhere else in the US, skins betting on sports is a huge and unregulated black market for gambling. And that activity carries a great risk for players who are unprotected in the unregulated market.

Valve CorpDavid Trujillo, the Director of the Commission, sent a letter to Gabe Newell, the Valve Chief Executive Officer in an order to cease and desist. The letter was sent after Trujillo stated that Valve Corp did not respond to the commission’s requests for more information after a meeting back in February. If Valve chooses to not be in compliance with gambling laws of the state, the commission has the option to seize property related to the gambling activities, which they deem illegal.

Overseas Gambling

The gambling activities that the commission are referring to take place via websites that are based overseas and are considered small sites. However, Valve is operating in the US and was asked to take some form of action against the sites by the commission but apparently their approach was not enough.

Valve has encouraged players of their games to acquire items in the virtual world like weapons by making purchases via the company’s Steam platform. Players have the option to trade these items, which are called skins, and sell for cash or to place wagers at online gaming sites. Reportedly, a site known as CSGO Lounge has allowed such wagering options to take place and handled as much as $1 million in wagers during the first seven months of this year.

Valve is able to benefit from this gambling, even if it is indirectly. Since players have the ability to place wagers, there is a larger demand for skins. People will buy these skins via Valve. This keeps the company in business and business has been very good. However, for officials in Washington State, they consider the company to be helping in a way with the online gambling sites.

Now, Valve has entered hot water so to speak. Not only are they being hounded by the commission in Washington state but also have been subject to issues involving wagering rigging. Reportedly, over the spring months, two online wagering sites were accused of allowing wagering without letting bettors know their ownership stakes. The operator of another site admitted that some outcomes of games have been rigged to be of benefit to a paid sponsor of a site. A lawsuit was filed and Valve has been named as a group involved. Valve has been accused of being in violation of gambling laws and being involved in racketeering.

The case against Valve was actually dismissed their week but the plaintiffs plan on pursuing the matter in state court. Back in July, Valve took action by sending cease and desist letters to more than 20 betting sites for skins. The letters stated that such activity was in violation of the terms and service agreement. Some of the sites decided to shut down while others found a way to work around by using virtual coins for skin trading which would then be traded for cash.

Green believes that Valve needs to shut down the gambling industry involving skins by restricting access to the software of the company that will allow for trade skins to take place. Valve has yet to state how they plan on moving forward.