Several lawsuits against Valve over CS:GO skin-gambling have been tossed or sent to arbitration.
A lawsuit filed by the families of teenagers against the Valve Corporation, the creator of Counter Strike: Global Offensive (CS:GO), was thrown out this week by a U.S. District Court judge. The suit was booted out of court and now goes to adjudication by an arbitrator.
Many in the gaming media believed the CS:GO lawsuit would settle law involving eSports. Such a decision might not be forthcoming for months or years now. The case concerned whether Valve Corporation was aiding and abetting third-party gambling websites with their policies involving in-game purchases.
Washington Judge Sends Case to Arbitrator
Because the U.S. District Court for the Western District of Washington sent the case to an arbitrator outside the judicial system, any decision should have little effect on the broader eSports community.
Wagering on eSports is illegal in the United States at present, but illegal wagering happens. Non-gambling game purveyors like Valve Corporation make money from selling in-game add-ons. In the case of Counter Strike: Global Offensive, those add-ons were “skins” — virtual weaponry. The more expensive the skin, the more high-powered or useful it is in the game.
CS:GO Skins on Steam Website
Skins can be acquired through in-game play and leveling up, but it is easier to buy them through CS:GO interface. The sell of virtual weapons was criticized, though, because it created a black market among third-party skin purveyors.
Third-Party Skin-Gambling Websites
Players could go to these third-party websites to gamble skins. Both sides would put up a skin, which has a real world value, and a virtual coin toss would happen using a random number generators. The skins-gambling site would collect a fee on every wager, much like a poker site collects a rake or a daily fantasy sports site collects a fee.
These skin-gambling sites were completely unregulated, so no form of age verification technology was used to screen for underage gamblers. Eventually, it was proven that children as young as 13 were gambling for skins on these sites — and might have developed gambling addiction from it.
Lawsuits over Skin-Gambling Sites
When parents of some of these underage teen gamblers learned their credit cards were being used for gambling purposes, they filed a lawsuit against Valve Corporation. Lawyers for the plaintiffs accused Valve of aiding and abetting third-party gambling sites by allowing the sale of skins in their games.
Last fall, the Washington Gaming Commission called for Valve Corporation to stop the third-party sales of skins. Valve sent 22 cease-and-desist letters to third-party gambling sites, while complaining that they were not affiliated with those sites in any way. Valve did not stop the money-for-skins purchases on their own site, which would have ended the gambling activities. Now, a Washington state judge has thrown out the case, or at least sent it to adjudication.
How the Federal Arbitration Act Works
In sending the case to arbitration, the judge cited the Federal Arbitration Act. The act compels arbitrated when a valid arbitration agreement exists and the case in dispute falls under the sway of that agreement. The district court judge ruled that was so in the CS:GO case.
The court ruled that the plaintiffs had to have seen the arbitration agreement upon first setting up their account on Steam, the gaming community owned by Valve which allows CS:GO gaming. The judge ruled that the agreement was conspicuous and each party had the opportunity to understand the terms. Presumably, the teens who were suing Valve agreed to the terms when creating their Steam accounts.
