Wednesday, October 19, 2016

Valve Responds To The Washington State Gambling Commission

The ongoing drama involving skins gambling involving CS:GO continued Monday when Valve responded to the Washington State Gambling Commission's demand to explain what the game maker intends to do to stop vacilitating gambling. The WSGC published the 3-page letter yesterday. Due to the format of the file, I have to do some typing, but pages 2 and 3 are below:

Your letter demands that Valve "stop facillitating the use of 'skins' for gambling activities through its Steam Platform." In-game items, such as virtual weapons, music packs, or decorative stickers, are common features in computer games. CS:GO customers can purchase skins, or receive them as random drops during game play. They are part of the game.

There are two Steam servfices that skins gambling sites appear to use. First is the exchange of skins. Steam allows exchange of various virtual items on Steam, by Steam users for the entertainment of Steam customers. They can take items that they have purchased or acquired via gameplay and trade them with Steam users for other items that they may enjoy more, or sell them for Steam Wallet funds to spend on other Steam purchases. Valve enables the exchange of skins on Steam in one of two ways: through the Steam Marketplace where Steam customers offer Steam Wallet funds to purchase a skin from other customers, or through Steam trading where a Steam customer makes an offer of trade for in-game items directly to another Steam customer. Valve makes receives a small transaction fee in Steam Wallet funds for Marketplace transactions, but Valve does not receive any compensation for trading. Impoertantly, Valve does not allow Steam customers to cash out skins or Steam Wallet fund for real world money. Valve does not charge any fees for user to user trades of skins.

Second is authentication of Steam users. Steam offers authentication using an open internet standard known as OpenID. OpenID 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. OpenID services are ubiquitous on the internet, as many other internet services, such as Google and Facebook, offer OpenID for their customers as well.

None of these activities are illegal in Washington or any other jurisdiction, and we do not believe the Commission contends to the contrary.

WHAT VALVE HAS DONE AND CAN DO

The Commission's letter publicly threatens Valve with criminal prosecution for gambling on third party sites. We do not understand the legal or factual reasoning supporting this position, from the Commission's letter or from our conversations with the Commission. We are also unsure of how you propose we do this. If there is a specific criminal statute or regulation you believe Valve is violating, please provide a citation. We are not aware of any such law that Steam or our games are violating.

The Commissions main argument seemed to be "Valve could stop this, so it should." We do not want to turn off the Steam services, described above, that skin gambling sites have taken advantage of. 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.

Steam does, however, provide warnings to customers about using Steam trading and OpenID. Furthermore, Valve has taken action itself against skins gambling. As the Commission knows, in July 2016, Valve announced its intent to disable the Steam accounts of skins gambling sites for breach of Steam user agreements. http://store.steampowered.com/news/22883/. We followed this announcement with cease and desist letters of our own to over forty skins gambling sites that we were able to identify, and we shut down the Steam accounts of these sites. However, we do not know all the skins gambling sites that may exist or may be newly created, and we are not always able to identify the "bot" accounts that particular skins gambling sites may use to try to effectuate Steam trades. Cleverly designed bots can be indistinguishable from real users performing legitimate trades and their methods and techniques are constantly evolving. A bot account that is blocked can easily be recreated with a new identity almost immediately.

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 identify more skins gambling sites that are illegal in Washington and the Steam accounts through which operate. We welcome the chance 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.
TL,DR. We haven't done anything wrong. We are not currently doing anything wrong. Prove us wrong or go away.

The more I look into skins gambling, especially the circus surrounding CS:GO, the more I become convinced that if Valve had just enforced its own terms of service from the beginning, the situation would never have reached this point. Instead, Valve allows a website, OPSkins.com, to operate, converting virtual items into real life cash. I believe the WSGC looks at that relationship as the reason it states Valve "facilitates" gambling. Close up the RMT shop, and the issue probably becomes less problematic. But without skins gambling, the CS:GO eSports scene isn't as popular and skin sales go down.

Looks like the story won't go away anytime soon. I wonder what the WSGC will do next.

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