Valve is cracking down on video game item gambling sites after two popular players in the Counter-Strike: Global Offensive community were accused of secretly running an illegal online casino earlier this month. The company released a statement last night that denied any involvement in CSGOLotto — owned and operated by Counter-Strike players Trevor "Tmartn" Martin and Tom "Syndicate" Cassel — and similar gambling sites that use Steam's in-built trading system to exchange weapon and item skins that can later be sold for real money. Valve also made it clear that people using the trading system in this way were violating Steam's terms of service, and that it would soon start sending notices to gambling operations, "requesting they cease operations through Steam."

Valve denies that it profits from gambling sites

The revelation that Martin and Cassell produced apparently independent testimonials for a gambling site they covertly owned has focused attention on Counter-Strike's gambling subculture, but Valve was the target of lawsuits over the matter before the CSGOLotto news came to light. The company is currently the target of two separate lawsuits that allege it is complicit in allowing illegal gambling. One of the suits, filed by Counter-Strike player Michael John McLeod, says that Valve "knowingly allowed, supported, and/or sponsored illegal gambling by allowing millions of Americans to link their individual Steam accounts to third-party websites." McLeod says that Valve directly profited from the money that changed hands on sites like CSGOLotto — a claim Valve denies in its statement.

"In 2011, we added a feature to Steam that enabled users to trade in-game items as a way to make it easier for people to get the items they wanted in games featuring in-game economies," Valve's Erik Johnson said in a statement. "Since then a number of gambling sites started leveraging the Steam trading system, and there's been some false assumptions about our involvement with these sites. We'd like to clarify that we have no business relationships with any of these sites. We have never received any revenue from them. And Steam does not have a system for turning in-game items into real world currency."

Twitch has clarified that anyone who streams 'CS:GO' gambling will be banned

Johnson describes gambling sites' business model as one of two stages. First, they use Valve's OpenID API to users to prove ownership of an account, and harvest other information from public profiles or directly from the user themselves, before setting up automated Steam accounts that pretend to be actual Steam users. It's using this second stage to run a gambling business that Johnson says is specifically against the rules of both the API and Steam itself.

This crackdown has a secondary effect on the thousands of Counter-Strike players who broadcast on Twitch, many of whom regularly feature segments in which they gamble item and weapon skins on sites like CSGOLotto. The streaming site today issued its own statement clarifying that by making item gambling in CS:GO explicitly against its user agreement, any streamers broadcasting footage of themselves using such sites would face a ban from Twitch. The company also tweeted a reminder that broadcasters could not break a game's terms of service live on its platform.

Reminder: Broadcasters cannot stream themselves breaking third-party terms of service or user agreements. Read more: https://t.co/ADJr8UQeft — Twitch Support (@TwitchSupport) July 14, 2016

This could be something of a problem for some Twitch streamers who have relied on the high-stakes nature of Counter-Strike gambling to pull in viewers to their broadcasts. Reaction videos — like the ones that Martin and Cassell produced to promote their own gambling site — have grown in popularity over the past few years, as players are shown whooping with joy or howling in despair over successful or failed bets.

Valve's statement breaks a long silence for the company on the matter of gambling, and by cutting off the direct connections between Steam's automatic capabilities and the sites that use the platform to efficiently exchange items, this Counter-Strike cottage industry will have a tougher time maintaining itself. But it is possible that item gambling sites could continue operations — assuming that participants hand over items, details, and skins willingly.