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Twitch counters popular CS:GO streamer’s lawsuit, demands compensation

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Twitch calls streamer’s alleged damages ‘imaginary’

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James Varga
James “Phantoml0rd” Varga.
Phantoml0rd/YouTube

After nearly three months of silence, Twitch is responding to streamer James “Phantoml0rd” Varga’s lawsuit against the company.

Varga filed the lawsuit in February, nearly 600 days after he was first banned from the platform for allegedly promoting an off-platform Counter-Strike: Global Offensive gambling site that he was tied to, CSGO Shuffle. The lawsuit claims his ban was mishandled, breaking a contract he signed with the company. Varga is seeking financial retribution, alleging that Twitch’s ban led to his character being misrepresented. A further inability to generate revenue from streaming, a former full-time job, has supposedly caused irreparable damages.

In Twitch’s counter-complaint filed on May 2 and first reported by journalist Richard Lewis, however, the company says it handled Varga’s ban properly, and demands “an award of compensatory damages” for harm Varga brought upon the company and Twitch users. The company is also arguing that any supposed damages alluded to in Varga’s lawsuit are “vague, uncertain, imaginary, and speculative.”

Twitch’s code of conduct states that streams showcasing content that promotes “illegal activity, mail fraud, pyramid schemes or investment opportunities or advice not permitted by applicable law” are strictly prohibited. The company is arguing that those rules were in place when Varga signed his contract, and that he was therefore expected to abide by the rules in question.

Valve and Twitch addressed the CS:GO skins gambling problem in July 2016, and according to Twitch’s counter-complaint, Varga was contractually obliged to adhere to both Twitch’s and Valve’s rules. Twitch stated at the time:

Today Valve released an announcement clarifying the intended use of Steam’s trading system and OpenID API. Valve specifically notes that using “the OpenID API and making the same web calls as Steam users to run a gambling business is not allowed by our API nor our user agreements.”

As a reminder, per Twitch’s Terms of Service, broadcasters are not permitted to stream content that breaks the terms of service or user agreements of third-parties. As such, content in which the broadcaster uses or promotes services that violate Valve’s stated restrictions is prohibited on Twitch. Our Rules of Conduct lists other examples such as playing pirated games and playing on unauthorized private servers.

Twitch’s counter-complaint argues that the service’s Rules of Conduct that were in effect between Nov. 20, 2015, and Dec. 31, 2016, declare that “all content that is neither gaming related nor permitted under the rules for Twitch Creative Content is prohibited from broadcast.” Twitch’s response specifically states that “CS:GO skin gambling content is not considered ‘gaming’ or creative content, and therefore users and partners, like Mr. Varga, were prohibited from broadcasting it on Twitch.”

The counter-complaint doesn’t address arguments made by Varga in the original lawsuit, in which Varga claimed that Twitch representatives told him he was “permitted to broadcast the very content that [Twitch] later used as an excuse to illegally terminate his contract” as a Twitch Partner. Documents submitted by Twitch, however, allege that Varga’s complaint is “barred, in whole or in part, by [Varga’s] waiver.”

The company further states that Varga was warned and received penalties approximately a year in advance “for streaming content that violated his contract with Twitch, Twitch’s Terms of Service and its Rules of Conduct.” Varga received his first warning on Sept. 25, 2015, and was notified again in April and May of 2016, according to Twitch. The company says it terminated Varga’s account on June 22, 2016, after recording his ninth violation “in the span of two months.”

Twitch’s rebuttal doesn’t suggest how much the company is looking for in redresses, adding that a full amount will be addressed at the trial. The company is asking for compensatory damages and full coverage of legal fees throughout the duration of the case. You can read the full counter-complaint below.