Update:

Valve has now issued a response to the Washington State Gambling Commission's call for action on the matter of CS:GO skin gambling, saying that it does not "facilitate" gambling through Steam, and that "there is no factual or legal support for these accusations." The company said it is "surprised and disappointed" that the WSGC has chosen to pursue the matter publicly, but added that it has taken steps to discourage skin gambling on third-party websites, and is "open to further cooperation with the Commission."

In the firm but amicable letter, Valve's legal counsel notes that the company has no business relationship with gambling sites, does not promote them, and does not earn any revenues through them. These sites take advantage of two well-used Steam services in order to operate: the ability to purchase and trade skins, and the "ubiquitous" OpenID system of authentication that "allows a Steam customer to identify himself on a third-party website by association with his Steam account, without having to give his Steam credentials to the third party site."

"We do not want to turn off the Steam services, described above, that skin gambling sites have taken advantage of," Valve's response letter says. "In-game items, Steam trading, and OpenID have substantial benefits for Steam customers and Steam game-making partners. We do not believe it is the Commission’s intention, nor is it within the Commission's authority, to turn off lawful commercial and communication services that are not directed to gambling in Washington."

Despite expressing doubt that it is in fact breaking any laws in the first place—"If there is a specific criminal statute or regulation you believe Valve is violating, please provide a citation," the letter says—Valve points out that it has already taken action against more than 40 skin gambling sites so far, first with cease-and-desist letters, and then by shutting down their Steam accounts. In the eyes of Valve's lawyer, though, it isn't realistic to expect Valve to hunt down every item-trading bot created by these websites. "Cleverly designed bots can be indistinguishable from real users," reads the response, "and their methods and techniques are constantly evolving."

"Valve can enforce its user agreements against the Steam accounts of skins gambling sites, where we can identify the site and identify the corresponding account. In fact, we would be happy to cooperate with the Commission, if it is able to identity more skins gambling sites that are illegal in Washington and the Steam accounts through which [they] operate," the letter says. "We welcome the change for further communication with the Commission, if it would like to clarify the legal allegations against Valve, or alternatively to work with Valve to identify offending Steam accounts of gambling sites."

It is in many ways a bold response, although if the commission hasn't identified which laws Valve has broken after 18 months of talks, Valve is probably in a strong position within Washington State. But it also lays bare the complexities of the matter: Can Valve he held responsible for Steam users "cashing out" on third-party sites? Can it be held accountable for the actions of those third-party sites, whether or not it is actively "facilitating" them? Is Valve's sluggishness to police skin gambling an issue? To my non-lawyerly eyes, it would seem unlikely, but that 18 month stretch of negotiations works both ways: The WSGC clearly thinks it has some basis for complaint.

On an unrelated but interesting note, the letter also confirms that Valve's employee headcount is "approximately 360." This is the first updated measure of Valve's size that we've seen in years: Wikipedia lists it as having about 330 employees, but that's based on data from 2013.

Original story:

A couple of weeks ago, the Washington State Gambling Commission gave Valve until October 14 "to respond and explain" how Steam, and specifically the role it plays in skin gambling, is in compliance with the state's gambling laws. Failure to do so, it warned, could lead to "civil or criminal action" begin taken against the company. This was from an official state agency, so unlike our weekly cat gif email, the request could not be ignored. But this is also Valve we're talking about, and so naturally, the response did not arrive on time.

"At the close of business on October 14, 2016, a representative of Valve Corporation notified Commission staff that the company is still working on a reply to the Commission's Letter and a reply will be provided Monday, October 17, 2016," the WSGC said in a press release put out today.

It almost feels like a gag, doesn't it? Valve can't even respond to an inquiry from a powerful state regulator on time. But unless there are some shenanigans afoot that go beyond even the most elaborate Freeman-based hoax, this is all entirely legit: The link to the release is front-and-center on the official WSGC website.

"I am disappointed that Valve Corporation missed Friday's deadline, but encouraged that they have committed to responding today," WSGC director David Trujillo said. "I look forward to reviewing their response in detail."

Protip for Dave: I look forward to playing Half-Life 3 someday, but I'm not penciling anything in on my calendar. You may have legislative clout on your side, but you can't change the tides. All you can do is learn to swim.

I've reached out to Valve for more information and will update if and when I receive a reply.

Thanks, PvPLive.