Washington Gambling Regulators Order Valve To Stop Facilitating Skin Gambling

[toc]The Washington State Gambling Commission, the acting gaming control board for the state, issued a press release this week saying it has ordered Valve to stop allowing the transfer of virtual weapons (i.e. skins) for gambling activities through its Steam platform.

This action should further support recent efforts to combat illegal gambling and the betting of skins on third party websites.

Betting with skins remains a large, unregulated industry

The news release was issued earlier this week and is in line with recent pushes to bring down CSGO skin betting websites.

The reason for this development was a number of issues arising across skin betting platforms, such as match fixing, obfuscation of ownership, and other disruptions to the websites’ operations.

Valve stepped in with the intention to limit any further negative outcomes.

Following this development, the Washington gaming authority expects Valve to do everything it can to stop third party websites from using skins for gambling through its Steam platform system, including preventing these sites from using their accounts and bots to facilitate gambling transactions.

In doing so, the state’s expressed aim is to protect the public by ensuring that gambling is legal and honest.

Skin gambling is no minor market

Esports gambling activities have risen tremendously this year, and skin betting accounts for a gigantic portion of it. In looking at just one of the most popular skin-betting websites, CSGOLounge, we can get a sense at the magnitude.

According to Will Green of  Legal Sports Report, the site had handled more than $1 billion in bets this year before closing its skin betting operation in August.

For another staggering example, the ESL One Cologne tournament this summer saw more than $1 million in bets per game.

While the esports betting industry took a hard hit due to the skin betting crackdown, many believe its growth is just starting, and there is much evidence that supports this belief.

With the underlying esports industry booming, the esports gambling market is getting more attention than ever. Companies are looking to introduce wagering tailored around competitive gaming to casinos, while some skin-betting websites are working on new, more compliant products to offer esports bettors.

Effects of Washington order could spill over to other states

The gambling industry depends on operations running smoothly, from a transactional point of view, as well as on the legal side. The lack of user protection and regulation was a major reason for the need to limit skin-betting operations.

“In Washington, and everywhere else in the United States, skins betting on esports remains a large, unregulated black market for gambling,” said Washington State Gambling Commissioner Chris Stearns.

He continued:

“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.”

Valve agreeing to comply with the state’s terms could trigger more states to follow the same path, asking the Seattle-based gaming company to put an end to skin-based gambling in their respective areas.

Valve has until Oct. 14 to respond to the order. If the company fails to comply with Washington’s gambling laws, it risks civil and criminal actions by the WSGC.