UPDATE - We have received word from Doug Lombardi at Valve:

Back in July we posted about third-party gambling sites (http://store.steampowered.com/news/22883/). Our position has not changed and so far we’ve sent cease and desist notices to over 40 sites. On a somewhat related note, a federal judge in Washington recently dismissed a case associated with this subject where Valve was named as a defendant (https://www.law360.com/classaction/articles/848361/game-platform-beats-suit-over-teenage-gambling-).

The original article continues below.

In a press release this morning that was reported on by Esports Betting Report, the Washington State Gambling commission notified Valve that they must "immediately stop the transfer of virtual weapons known as 'skins' for gambling activities through the company's Steam platform." While you can't use skins to gamble directly through the Steam API, many third party services use the transfer of skins to set up their own gambling systems. This has been a weird legal gray area for a while, but it seems that the gambling commission is finally going to step in. This was not the first time Valve has been contacted by the commission either. They were contacted in February with what was essentially a warning to take steps to stop gambling with Counter-Strike: Global Offensive skins. They were also sent a letter by the commission last month requesting access to information to determine any wrongdoing on Valve's part.

"Valve corporation has until October 14th, 2016 to respond and explain how it is in full compliance with Washington's gambling laws or it will risk having the gambling commission take additional civil or criminal action against the company." In the press release, Chris Stearns, the gambling commissioner, states "In Washington, and everywhere else in the United States, skins betting on esports remains a large, unregulated black market for gambling. And that carries great risk for the players who remain wholly unprotected in an unregulated environment. We are also required to pay attention to and investigate the risk of underage gambling which is especially heightened in the esports world. It is our sincere hope that Valve will not only comply but also take proactive steps to work with the commission on future measures that will benefit the public and protect consumers."

This demand doesn't come apropos of nothing. Earlier this year there was a huge gambling scandal with CS:GO Lotto rigging their betting odds to make more cash and being promoted by the owners of the company on their YouTube channels without any disclosure that they were involved in the company in any way, which we covered here.

Quick Take

Gambling has been a problem in Counter-Strike: Global Offensive for some time now. I don't disagree with anything the commission offered as their reasoning for the move. Skin gambling is completely unregulated and we've already seen some major scams and scandals as a result of that, and a lot of people have gotten burned. Children using it to gamble is also a huge problem as they pointed out. However, their solution to the problem seems overbearing at best. There are ways to choke out the illegal gambling market without taking a huge bite out of Valve's profit margin as well. I have trouble mustering sympathy, though. When you don't self-regulate the government will come in and use the biggest hammer for the smallest nail, and while it may seem overbearing, it's time to take some steps that others aren't taking themselves.