A judge tossed out a similar lawsuit against Valve filed by CSGO players’ parents three years a go.
The Quinault Nation, a Native American tribe based in Washington, filed a lawsuit accusing Valve Software of illegal gambling. The Quinault lawsuit claims Valve benefits from unfair competition with heavily regulated land-based casinos.
Parents groups previously targeted Valve, which owns the popular gaming website Steam, over illegal gambling charges. In those cases, the lawsuits failed, but the Quinault Nation might have standing to bring a slightly different kind of lawsuit.
The tribe, which owns the Quinault Beach Resort & Casino in Ocean Shores, claims Valve used “textured digital weapons” known as skins to foster online betting on third-party websites. The lawsuit refers to the skin-betting sites created to facilitate the trade of the virtual weapons for the game Counter Strike: Global Offensive (CSGO).
The Quinault Nation alleges the skin gambling benefitted Valve, while subjecting “Washington citizens to scam, unsafe, and unfair gambling.”
In the court filing, the Quinault allege, “Valve is well aware of the skins gambling that goes on, is well aware that skins have real world cash value, which has increased their popularity and value, and actively encourages and facilitates skins gambling.”
Valve’s Cease-and-Desist Letters
Two years ago, at the urging of the Washington Gaming Commission, Valve sent cease-and-desist letters to 22 skin-gambling sites. Washington regulators let the company know it needed to police the third-party skin-gambling sites, even though they have no official connection to Valve Software.
The company told Washington regulators at the time it had made changes to skins to make it harder for customers to bet them. Prior to those actions, Counter-Strike: Global Offensive players would go on the independent sites to gamble against other players in 50/50 competitions. Essentially, players would bet on a coin toss.
2016 Valve Lawsuit
Regulators and parents groups voiced several concerns about such gambling. First, underage CSGO players as young as 13 visited the skin-gambling sites and gambled real money in skin bets. Second, some underage children gambled thousands of dollars worth of skins, running up debts on their parents’ credit card accounts.
Some parents sued Valve for allowing such activity to happen. A Washington judge dismissed a 2016 class-action lawsuit that targeted Valve over the third-party skin-gambling sites.
Skin-Gambling Is Illegal
Third, the Washington Gaming Commission determined skin-gambling was illegal. In Washington state, wagering any thing “of value” is considered gambling. Players bought skins as in-game purchases in Counter-Strike: Global Offensive, so they were considered a thing of value much like loot boxes.
Counter-Strike: Global Offensive gained popularity not only from online player-versus-player competitions, but also from popular televised ELeauge broadcasts on TBS and TNT. As eSports gained popularity, Valve’s profits rose.
The Quinault Nation lawsuit alleges illegal gambling helped Valve’s profits, so it owes legal and regulated gambling operations money. The Quinault lawyers wrote, “Valve has profited handsomely for years from illegal online gambling, and has made only token efforts to stop it.”
Rogue YouTube Operators
Fourth, a few particularly bold CSGO skin-gambling site owners advertised their sites on YouTube without revealing their connection to the business. In doing so, they violated YouTube policies and had their video streams taken down.
Police charged the streamers at first, but eventually dropped the charges. Despite the lack of legal jeopardy, the deceptive CSGO advertisements on YouTube were a black eye for the industry.
Quinault Nation Lawsuit Details
The 25-page Quinault Nation lawsuit claims Valve’s gaming platform hurts Washington casinos’ business. It also touches on the vague “thing of value” arguments used against Valve and Big Fish Games in separate lawsuits.
Whether this lawsuit has any more merit than the 2016 lawsuit is another matter. To dedicated Counter-Strike: Global Offensive players, it sounds absurd that they would be visiting casinos if they couldn’t play CSGO on Steam — or wager skins on a third-party site. A Washington judge of a certain age might not see it that clearly.
