Valve Ordered to Stop Allowing Online Gambling

• First ever action taken by a U.S. regulator to crack down on online gambling involving virtual items
• Washington State had previously made placing a cash wager online a Class C felony, the only state to do so
• Valve had previously sent out cease and desist orders this past summer to skins engaging in online gambling
• Biggest Valve skin, CSGO Lounge, handled about $1 billion in bets in the first seven months of the year

The Washington State Gambling Commission has ordered Bellevue game maker Valve to stop allowing black market online gambling on its respective skins. 

This is the first action of its kind whereby a U.S. regulator has attempted to crack down on a multibillion-dollar online gambling market that trades in virtual items.  Washington State also has the noted distinction of being the first and only state to make it a Class C criminal offense for gamblers to place wagers for real money online.

“In Washington, and everywhere in the United States, skins betting on sports remains a large, unregulated black market for gambling,” Commissioner Chris Stearns said in a statement. “And that carries great risk for the players who remain wholly unprotected in an unregulated environment.”

Valve was widely criticized for failing to prevent its skins from engaging in gambling activities, some of which targeted minors.  A series of scandals over the summer resulted in the game developer sending out its own cease and desist order to skins.  A lawsuit filed against Valve earlier in the summer suggests the company’s platform enticed players of games such as Dota 2 and Counter-Strike: GO to acquire virtual items such as decorative weapons that would later be sold for cash or used for betting.

The biggest site, CSGO Lounge, handled about $1 billion in bets in the first seven months of the year, according to a report for Narus Advisors by Legal Sports Report analyst Will Green.

Failure to comply by Valve could result in the seizure of any property related to illegal gambling activities, according to the letter.