Valve today sent a strongly worded riposte to the Washington State Gambling Commission, forcefully refuting allegations that the company facilitates skin gambling for its game, Counter-Strike: Global Offensive.
The letter from legal counsel Liam Lavery follows the WSGC's warning to Valve last month to "explain how it is in full compliance with Washington's gambling laws." The WSGC warned Valve that it risked civil or criminal action and demanded a response by Oct. 14.
"As we have explained on multiple occasions, Valve is not engaged in gambling or the promotion of gambling, and we do not 'facilitate gambling’," states today's response. "The operation of Steam and CS:GO is lawful under Washington law. We were surprised and disappointed that the commission chose to publicly accuse Valve of illegal activity and threaten our employees with criminal charges."
Shooting game CS:GO allows players to win or buy digital items such as weapons skins, that can then be traded with other players. Gambling sites have used this system to allow skin owners to use their digital items to bet on esports matches and on betting games. The explosion in skin gambling's popularity has generated negative publicity for Valve, because many skin gamblers are minors.
Valve's letter goes on to argue that the company has "no business relationship" with operators of gambling sites that make use of CS:GO skins, and that it neither promotes nor profits from gambling.
"We do not understand the legal of factual position supporting [the threatened lawsuit]. If there is a specific criminal statute or regulation you believe Valve is violating please provide a citation."
Valve concludes the letter by pointing out its policy of sending cease and desist letters to gambling site operators that it identifies, but concedes that operators make clever use of bots in order to disguise gambling transactions using Valve's skin trading APIs.
Valve has been sued for its involvement with gambling, with one lawyer calling the company's actions "unconscionable." However, a federal judge in Washington state recently denied a proposed class action lawsuit from players who had lost money gambling with CS:GO skins, saying that losing money on a bet did not constitute a case against Valve.
“A disappointing gambling loss after receiving what was paid for is not injury to property sufficient for [a case],” Judge John C. Coughenour wrote. “Taken together, it is clear that each time plaintiffs played they received an opportunity to win and received a benefit of their bargain." A lawyer for the plaintiffs said they would likely seek to refile in state court.
In its original letter of Oct. 5, Washington's gambling commissioner Chris Stearns said: "In Washington, and everywhere else in the United States, skins betting on esports remains a large, unregulated black market for gambling. That carries great risk for the players who remain wholly unprotected in an unregulated environment. We are also required to pay attention to and investigate the risk of underage gambling which is especially heightened in the esports."
Polygon has contacted the WSGC. We'll update this story if and when we receive a response.