Ongoing class action case offers glimpse at scale of CS:GO skin gambling

by Josh Bury Feb 3 2017
Thumbnail image courtesy of theScore esports / Valve

An ongoing class-action lawsuit against Valve Corporation in the U.S. District Court for the Western District of Washington has revealed some of Valve's own estimates regarding the scale of Counter-Strike: Global Offensive skin gambling, including the disclosure that millions of accounts worldwide traded with bots owned by a single third-party gambling site.

The suit's plaintiffs are a group of parents who allege that Valve is responsible for illegally luring their teenage children into gambling. Their complaint also alleges that Valve has set up "an illegal online gambling system, which targets and harms teenagers and kids," and notes that they profit from every sale of a skin on the Steam marketplace.

In order to prove that the issue should remain before a federal court under the Class Action Fairness Act, Valve had to prove that the "amount of controversy" in the case is over $5 million.

In a declaration filed in the case to support Valve's assertion that the amount warranted federal jurisdiction under CAFA, Valve economist Kristian Miller noted that exact numbers on skin trading are difficult to provide because Valve first needs to identify the automated bot accounts used by third-party gambling websites.

However, Valve claim that they have located the bot accounts associated with CSGOLounge. Miller queried Valve's sales database to find CS:GO skin trading transaction data between those bot accounts and Steam subscribers in the United States. His search went back to the beginning of the CS:GO economy in August 2013.

What he found was that 381,010 U.S. Steam subscribers traded at least one skin to one of CSGOLounge's bot accounts during that time. Miller noted that U.S. accounts composed only 10 percent of accounts that had at least one transaction with the CSGO Lounge bots. Extrapolating from his numbers, it means approximately 3.8 million accounts worldwide traded with one of Lounge's automated accounts.

Taking the 381,010 number and using an average value of $9.75 per skin (the amount alleged by the plaintiffs in the complaint) while noting that at least half of the bets would have resulted in losses, Miller claimed that the total amount of gambling losses were over $1.85 million ($1,857,423.75). It appears that Miller then tripled that number, based on his understanding that the plaintiffs were seeking "treble damages," to come to a total of $5,572,271.25.

His statement describes the probable damages as "most likely higher than these estimates." His numbers in the declaration assume a 50 percent winrate for gamblers, and only address the amounts gambled on one site.

Miller also calculated an alternative cost for the amount of controversy, using the plaintiffs' allegation that $33 million was gambled on CSGOLounge. Arguing that U.S. accounts made up 10 percent of trades with the bots, and that there is no reason to think that U.S. accounts lost more frequently, he arrived at a $3.3 million figure. He again tripled it to reach $9.9 million.

CSGOLounge is only one of the numerous gambling sites that offered CS:GO skin gambling. Valve took steps in July 2016 to curb the use of its API for gambling purposes, issuing shutdown notices to 23 gambling websites, including all of the sites referenced in the plaintiffs' complaint in this new lawsuit. Valve claimed that the use of their API for gambling purposes violated their terms of service, as did creating automated accounts for the purpose of transferring skins. Several sites shut down operations after receiving the letter.

The class action lawsuit is ongoing. Valve had previously moved to compel arbitration with the plaintiffs, arguing that they agreed to arbitration when they accepted the Steam subscriber agreement. Both parties have since agreed to set aside the motion to compel arbitration until it becomes clear which level of court will hear the case.

G.G. et al v. Valve Corporation, Case 2:16-cv-01941-JCC

Josh "Gauntlet" Bury is a news editor for theScore esports. You can find him on Twitter.