Two weeks ago, the Washington State Gambling Commission warned the video game developer and digital distribution company, Valve, to "respond and explain" the role its digital distribution platform, Steam, plays in the skin gambling niche.
The deadline has passed and Valve has failed to comply with the request on October 14. Instead, Valve claimed it would have an answer ready by Monday, October 17.
The letter from the Gambling Commission was in reference to skin gambling sites like CSGO Lounge, which allow real money gamblers to bet virtual weapons and equipment used in the Counter-Strike: Global Offensive MMORPG. These virtual guns or "skins" can be found in the game or purchased through Steam.
Later, the players bet on the outcome of 50/50 coin tosses on these skins. Underage children as young as 13 are alleged to have gambled on these sites, which have no official connection to Valve or its Steam platform.
Could Face "Civil or Criminal Action"
At the time it sent the warning, the Washington State Gambling Commission warned that failure to comply could lead to "civil or criminal action".
The commission released a statement on Monday saying, "At the close of business on October 14, 2016, a representative of Valve Corporation notified Commission staff that the company is still working on a reply to the Commission's Letter and a reply will be provided Monday, October 17, 2016."
The release appeared on the WSGC website, so it was no online rumor that Valve missed its deadline. When asked about the late reply, the commssion's director expressed disappointment. Game designers should be concerned when a powerful state regulator expresses disappointment.
WSGC Director Is "Disappointed"
WSGC director David Trujillo said in a public statement, "I am disappointed that Valve Corporation missed Friday's deadline, but encouraged that they have committed to responding today. I look forward to reviewing their response in detail."
In the realm of governance, that is somewhat akin to a mob boss in a Hollywood movie expressing "disappointment". Luckily, Mr. Trujillo expressed encouragement in the same statement. Valve has a chance to give its reply without punishment, but the delay means the Washington State Gambling Commission is not going to be pleased if the report is not satisfactory.
Valve Denies Allegations
In its Monday statement, Valve claimed to the WSGC that it does not facilitate gambling through Steam. It added that "there is no factual or legal support for these allegations".
Valve added it was "surprised and disappointed" that the WSGC chose to pursue its inquiry publicly. The design company added that it had taken steps to discourage skin gambling on third-party websites and is "open to further cooperation with the Commission."
22 Cease-and-Desist Letters
The reference to discouragement likely alludes to the 22 cease-and-desist letters which Valve has sent to third-party skin gambling sites. Valve claims it sent these letters to 22 different skin gambling websites, such as CSGO Lounge, CSGO Lotto, and other offenders.
Those letters were in response to two major issues. First, Valve has been involved in a class-action lawsuit filed by the parents of underage children who gambled on CSGO Lounger.
Skin Gambling Scandal on YouTube
Second, Valve was responding to a scandal involving two YouTubers who advertised for their own skin gambing site, CSGO Lotto, without noting their affiliations. That is against YouTube's policies, as well as the FCC's advertising laws. Both men could face jail time for their actions.
The question is whether Valve has a responsibility to distance itself from the skin gambling websites. If it does, the question also remains how Valve keeps those sites from conducting gambling games on the skins.
WSGC's Control of Gaming
The jeopardy is significant for Valve, because the WSGC could take any of a variety of actions which might cause major trouble for gaming operator. They could ban skins altogether, or they could outlaw eSports in Washington, if it was found to be encouraging illegal gambling. Because Valve is located in Washington, either would have significant repercussions.
Beyond direct implications, any action taken by the WSGC might be copied by the gaming commissions and departments of justice throughout the United States. That is how one single attorney general's issues with daily fantasy sports operators DraftKings and FanDuel turned into a nationwide fight for survival, via legal and lobbying efforts.
Comments