Valve has been cracking down on gambling sites that leverage Steam's in-game trading system since July, leading to the closure or re-engineering of a number of high-profile Counter-Strike betting operations. Apparently, though, that hasn't been enough for the Washington State Gambling Commission, which last week ordered Valve to immediately prevent the transfer of skins for gambling activities through Steam and threatened to take legal steps against the company if it wasn't satisfied with its actions.
According to the WSGC announcement, Valve has until October 14 to respond and explain how it is in compliance or it will risk having the gambling commission take civil or criminal action against it. A subsequent tweet from an Esports Betting Report analyst sharing the letter sent to Valve indicates how serious those sanctions might prove to be - seizure of property, loss of corporate charter, and even criminal charges against employees. (At this stage they have not threatened to enforce the release of Half-Life 3.)
"In Washington, and everywhere else in the United States, skins betting on esports remains a large, unregulated black market for gambling," Washington State Gambling Commissioner Chris Stearns said in an accompanying statement. "And 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 world. It is our sincere hope that Valve will not only comply but also take proactive steps to work with the Commission on future measures that will benefit the public and protect consumers.”
Counter-Strike skins gambling has been a hot topic this year. At the start of the summer, investigative reporters discovered that prominent YouTubers had been making videos promoting CSGO betting sites without revealing they owned the sites in question. Leaving aside what this says about the YouTubers in question (spoiler: not great things), it was not a good look for Valve, the game, or CSGO esports, which have often been the subject of this kind of betting. Valve's crackdown in July did lead to the shutdown of several sites, but others have since relaunched using virtual currencies or real-money betting instead.