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Valve says gambling websites misusing Steam API, plans to send shutdown notices

by Josh Bury Jul 13
Thumbnail image courtesy of Valve

The controversy over CS:GO skin gambling has hit fever pitch, and now Valve is starting to take action.

In a statement published on Steam, Valve's Erik Johnson has responded to claims that Valve benefits directly from CS:GO gambling, stating that Valve has "no business relationships with any of these sites" and has "never received any revenue from them."

Johnson further claims that such gambling sites are using Steam's API in ways that violate its terms of service agreement, and says the company will begin sending them cease-and-desist notices.

Skin betting and other forms of esports gambling have been gaining attention in both mainstream and esports media, with articles in Bloomberg News, ESPN and Fortune. Much of the attention came after two class-action lawsuits filed against Valve in June and early July for allegedly supporting esports gambling sites. Allegations also arose last week that two popular YouTubers, Trevor "Tmartn" Martin and Tom "ProSyndicate" Cassel, were co-owners of a CS:GO gambling site that they had promoted on their channels without disclosing their interest. It was later discovered Tmartn owns a minority stake in Team EnVyUs.

In Valve's statement, Johnson says in order to acquire and sell skins, gambling sites create automated Steam accounts that masquerade as human users, which is not allowed by Steam's API or user agreement. He does not name specific companies or other sites, but says that Valve will begin sending notices out to prevent this activity and will "further pursue the matter as necessary."

The claim that Valve earns a cut of revenue from skin betting was most vocally made in a class-action lawsuit filed June 23 by amateur CS:GO player Michael John McLeod. In the suit, McLeod not only alleges that Valve "knowingly allowed, supported, and/or sponsored illegal gambling" by allowing third-party gambling sites and skin marketplaces to use its API, but claims that Valve "profits directly and indirectly through the online gambling websites." McLeod names betting sites CS:GOLounge and CS:GO Diamonds, as well as skins marketplace OPSkins, as being supported by Valve.

However, the connection between gambling sites using Valve's API and Valve profiting from CS:GO gambling is fuzzy at best. According to Johnson, Valve has no monetary interest in these sites, and does not receive fees or a cut of bets made.

He also notes that there is no way to convert in-game items into real-world currency using the Steam platform, since Steam's in-game trading marketplace deals in Steam currency only, and Steam Wallet funds cannot be withdrawn or transferred. Rather, skins are generally converted into real-world cash using outside sites, either by selling skins for cash on marketplaces like OPSkins, or by using Steam funds to buy game keys and sell them for cash on key marketplaces. It is not clear whether Valve also intends to take action against sites like OPSkins for misusing its API, or limit its actions to sites where gambling occurs.

Bloomberg estimates that $2.3 billion worth of skins were gambled by players in 2015, much of it by underage players. Lawyer and co-founder of the Esports Integrity Coalition Bryce Blum estimates that upwards of 90% of esports bets are made with skins, rather than real cash. He says that unlike real-cash betting, the skin betting marketplace remains unregulated, and does not generally use identity verification software to ensure that gamblers are of age or track suspicious bets that may indicate match-fixing.

Josh "Gauntlet" Bury isn't a betting man; he's a betting machine. You can find him on Twitter.

Jeff Fraser is a supervising editor at theScore esports.

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