Online Gambling

Overzealous Washington State Gambling Regulators Target Popular Video Game Developer

Valve's Steam platform's been used by players to facilitate games of chance, and the company is in hot water with regulators who want their skim as a result.

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Valve is best known as the developer of popular games like Counter-Strike: Global Offensive and its Steam gaming platform. But to Washington state regulators, the company is a rogue outfit, enabling illegal games of chance through the nefarious means of… well… making its software user-friendly.

As in many American states, gambling is legal in Washington if overseen by politicians' friends and if the house—the government—gets its cut. The state hosts tribal casinos, raffles, card rooms, bingo, fund-raising casino nights, amusement games, and a state lottery. But state residents can't legally wager online because "Internet gambling has never been authorized and is illegal in Washington State," according to the Washington State Gambling Commission.

Strictly speaking, regulators aren't accusing Valve of actually operating games of chance. They're not even accused of offering a venue for gaming. Instead, the company is allegedly "guilty," if that's the right word, of letting players exchange in-game items—known as "skins"—with one another. This is somehow a violation because players and third-party companies working independently of Valve found a way of using those skins as markers in betting on other platforms that have nothing to do with Valve.

Basically, players discovered they could use the neato stuff they acquired in the game as poker chips.

"The Gambling Commission expects Valve to take whatever actions are necessary 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," according to a press release issued October 5. The Commission was quite cross that skins continued to be used in gambling months after it first "contacted Valve Corporation in February 2016" about the issue.

Actually, the Gambling Commission was a bit late to the issue—Valve itself was there first.

"In 2011, we added a feature to Steam that enabled users to trade in-game items as a way to make it easier for people to get the items they wanted in games featuring in-game economies. Since then a number of gambling sites started leveraging the Steam trading system, and there's been some false assumptions about our involvement with these sites. We'd like to clarify that we have no business relationships with any of these sites," the company noted in July 2013. "Using the OpenID API and making the same web calls as Steam users to run a gambling business is not allowed by our API nor our user agreements. We are going to start sending notices to these sites requesting they cease operations through Steam, and further pursue the matter as necessary."

And Valve did just that. But as the Seattle Times reported, some of the gambling companies "found a workaround: They began taking bets in virtual coins, which could be traded for skins, which could then be traded for cash, adding a layer of abstraction while allowing the basic activity to carry on."

So the Washington State Gambling Commission is essentially complaining that Valve has been no more successful than playing card manufacturers in preventing the use of its products in ways that violate stupid and presumptuous local laws. The company acted, but it couldn't predict the innovative ways players and gambling sites would react to keep their fun going.

"The Washington State Gambling Commission has notified Valve Corporation that it must immediately stop allowing the transfer of virtual weapons known as 'skins' for gambling activities through the company's Steam Platform," the October press release adds, though it offers no ideas for how to do that promising greater success than the company's prior efforts.

Eliminating unapproved games of chance has proven an elusive goal for the Washington State Gambling Commission itself, which is why it can continue to announce raids on poker games decades after its creation. But in its diligent efforts, it has frequently picked unlikely targets for threats and enforcement actions.

At the end of 2013, it ordered a group of regulars to discontinue their penny-ante card games at the Snohomish Senior Center. There was an $11 pot in the games, which had been going on for 25 years.

And in 2008, the Commission hit PR Web with a cease and desist order forbidding the company to distribute press releases promoting online gambling sites.

The Commission even shut down a web site that reviewed Internet casinos—and threatened the Seattle Times for running a poker column.

But it's not that state regulators are inherently opposed to gambling. The Commission regularly issues press releases touting the contributions tribal gaming makes to communities and the similar wonders of licensed card rooms. "Commercial card rooms employ over 6,000 people," one release trumpeted, though you might wonder how many other jobs are at risk if the Commission seriously puts the screws to Valve, and how many it has already killed at unapproved gaming operations.

Invariably, these releases boast about money channeled to government coffers and approved causes (Up to 2% of table game net receipts are paid to governmental agencies impacted by Casinos! Gambling Taxes Paid to Local Jurisdictions: $29.4 million, Business & Occupation (B&O) Tax: $3.2 million, Problem Gambling Tax: $280,000!). Which is to say, the government is happy so long as it has a say and gets its skim. And established players in the gambling industry are willing to pay that protection money to regulators who watch their backs and drive competitors out of state—or at least underground.

Even if those competitors are a few old friends playing penny ante in a senior center.

And even if those competitors are video game companies whose products have incidentally become popular for use in games of chance.

Given that Valve never set out to be a gambling company and the use of its skins for wagers is an unintended third-party innovation, it's hard to see how the company can ever satisfy the regulators. Will it have to cripple its offerings, removing popular features to keep them satisfied?

Or maybe the company should admit it's playing a rigged game and give regulators the stuffed envelopes they so obviously covet if they'll just let the good times continue.

NEXT: Philippine President Defends Killing of Children in Drug War—Says They're 'Collateral Damage'

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  1. I remember back when freedom still meant freedom (lolz), the sacred year of 2000. I sold Wurmslayers in Everquest for $400 a pop on Ebay. I was 15 and my parents thought I was doing something nefarious. The fact the government agrees with my parents 16 years later is beyond fucking embarrassing.

    1. I think selling the game items is fine. People do it all the time. Using it as a marker for gambling is when it magically becomes illegal.

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      2. I beg to differ. Was sales-tax collected on any of those sold game items? Gotcha! – some bureaucrat, probably

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    2. I remember back when freedom still meant freedom

      But you don’t remember actual freedom. Gambling is much more free in the US than it has been in, well, a very long time.

    3. The poopsock is strong with this one.

    1. No shit, but the GOP establishment didn’t want him any more than Trump. They wanted Jeb or his younger Cuban doppleganger.

      1. It’s fine to say the GOPe didn’t want him, but ultimately the blame lies with the poor turnout in primary elections?

      2. And I remember how much shit Rand took from not only Reason staff, but most of the commentariat, about his lack of libertarian ‘purity’. All you fuckwads picking him apart should feel oh so proud of yourselves now.

  2. Keerist. The Mafia is so much more open and above board about what they do and why. It really makes you wonder if these guys are so steeped in burrocracy that they cannot see the hypocrisy, or if they revel in it and laugh at all the plebs who swallow it hook, line, and sinker.

    1. burrocracy. I like it. That’s a good way to describe the asses that are infesting government at every level. I think I’m going to steal it.

      Well done (or a serendipitous typo)

    2. “The Mafia is so much more open and above board about what they do and why.”

      I have always found this funny. Not only is the mafia more honest than the government about what they do, but they don’t expect you to thank them for it as well.

  3. It’s a shakedown from America’s largest criminal class – the permanent ruling fusion party. It is inevitable once you become successful, the methods may change but the motive never does.

  4. Oh, and some of those ‘betting’ platforms were recently revealed to be wholly rigged pump and dump operations. Nothing more than scams to fool the unsophisticated.

    1. Are there betting operations that are not?

      1. Some friendly games among established social groups. Or don’t they qualify as ‘operations’?

      2. Wouldn’t be much of an operation if the house wasn’t sure to come out ahead.

        Some poker sites might not count as “pump and dumps”. Serious poker players may be nuts, but they aren’t unsophisticated.

        1. My grandfather regarding casinos: “If you were gonna win they wouldn’t be there”

          1. Love it. Mine was fond of telling me that “Gambling is just a tax on people who are bad at math”.

    2. “Nothing more than scams to fool the unsophisticated.”

      Sounds like the entire practice of gambling to me.

  5. It’s been so long since Valve actually released a game that I forgot they technically are a game developer. They’ve been a game marketplace for how long now? *pretends to check steam account* a long time. (on a less relevent note, my steam account dates from around the time HalfLife 2 was released.)

    1. *stifles laughter* HL2 release dates:

      Release date(s)
      : November 16, 2004
      Microsoft Windows
      : November 16, 2004
      Xbox
      NA: November 15, 2005
      EU: November 18, 2005
      Xbox 360
      NA: October 10, 2007
      EU: October 19, 2007
      AUS: October 25, 2007
      PlayStation 3
      NA: December 11, 2007
      EU: December 14, 2007
      AUS: December 20, 2007
      OS X
      : May 26, 2010
      Linux
      : May 9, 2013
      Android
      : May 12, 2014

      Half-Life 2 for Android? How’s that control scheme work?

      1. According to the Google Play store, it requires a controller and only runs on NVIDIA SHIELD devices. So, it’s not so much that it came out for Android, it’s that it came our on some devices that nobody has ever heard of that use Android.

        1. That makes more sense than what I was trying to work out.

        2. I’ve heard of it. Once. Because it was an Nvidia cross promotion.

          1. I see the ads for it every time I update my NVIDIA GeForce 960 drivers.

      1. The only game they’ve developed in 6 years.

        1. DOTA is… of no interest to me.

          1. Neither have any of their games post-Half-Life 2 been of interest to me.

  6. “Internet gambling has never been authorized and is illegal in Washington State,”

    ANYTHING NOT MANDATORY IS FORBIDDEN.

    1. It’s more of a case of “We ganted the monopoly to These groups! How DARE You go against our decree!”

  7. “I love the smell of RICO in the morning.”

  8. Bootlegger/Baptist coalition for the win!

    Washington state should extend its policy to include any device that is capable of generating a random or near-random result that could possibly used for the purpose of gambling. Think of the gambling taxes that could be collected on cards, dice, and every computer sold in the state.

    1. Shut down Dota 2. It’s a game of chance.

    2. You mean like coins would have to have identical sides, so you can’t call “heads” or “tails?”

  9. Are we using “overzealous” to mean wildly corrupt?

  10. Wait! On line gaming is a task of skill, not luck. Ergo, ispso facto, henceforth thereunto, and a bunch of other legal-sounding crap, there is no gambling going on there. Just like poker. Or elections. (I had to get elections in).

  11. I use Federal Reserve Notes for my gambling – is Washington going after the Fed, too?

    1. Never mind gambling. Fedgove would love to eliminate currency to force all your transactions to go through banks, where they can be tracked.

      But yeah, preventing gambling would be a good excuse.

  12. You know, a lot of people use cash to gamble, so they are going to go after the federal government for printing money next, right?

    1. Damnit Jerry. Two minutes. You beat me to it by two minutes.

  13. I was reading about that $11 pinochle game you mention in the article and found this gem: “Susan Newer, spokeswoman for the state Gambling Commission, said that enforcing the law against such small-time wagering is a low priority for the agency. However, the commission must respond to every complaint received, she said.” If what she said is literally true, that the agency doesn’t seek out these small cases but also doesn’t have discretion on which complaints to respond to, then this isn’t an agency run amok, its an agency literally designed to fail. It’s like if the police had to scramble a SWAT team every time a busybody neighbor complained about loitering teenagers (not that some towns aren’t already like that).

  14. Bah, Washington state had better cool their jets, I’ve probably got a thousand bucks sunk into ownership of various games where my “possession” of that game depends on Valve being around forever, anything that threatens their finances is no bueno with me.

  15. One thing here.

    *Steam* is not a videogame developer. *Valve* owns Steam, but Valve really isn’t a game developer anymore either. They started out that way and develop the occasional game – but they’re more publisher than developer today.

  16. Or maybe the company should admit it’s playing a rigged game

    RAPE!

  17. Valve is best known as the developer of popular games like Counter-Strike: Global Offensive and its Steam gaming platform.

    This is the kind of shit that makes Gordon Freeman activate the anti-mass spectrometer.

  18. In “completely unrelated” news, Valve announces plans to relocate its HQ to Texas… /sarc

  19. So, M, cigarettes in prison, and co-eds’ bras will be the next target since they can all be used as markers in gambling, right?

  20. Way back in the early ’70’s my folks predicted that allowing States to run lotteries would result in their becoming mobs running gambling rackets.

    1. They probably weren’t the only ones. And the States crossed their fingers behind their backs and said, “Don’t worry, that’ll never happen!”

  21. Don’t you dare go after my beloved Valve. Gaben protect us from this injustice.

  22. Gambling laws are restrictions on freedom, as most laws are.

  23. I think Valve’s best solution to this scenario is for Gabe Newell to conveniently find out he’s 1/128th Native American.

    Slightly OT, but any Reasonoids here play Dota2?

  24. RE: Overzealous Washington State Gambling Regulators Target Popular Video Game Developer
    Valve’s Steam platform’s been used by players to facilitate games of chance, and the company is in hot water with regulators who want their skim as a result.

    What’s the difference between organized crime and the government?
    Organized crime doesn’t make up the rules as they go along.

  25. The more the Statists push, the sooner they will educate/motivate a critical-mass of the population to fire up the woodchippers.

    1. Yet every time I bring up euthanizing all the progtards, I am either scoffed at, or shunned. I guess all the libertarians are waiting for some other group to do the heavy lifting.

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  37. “The Washington State Gambling Commission has notified Valve Corporation that it must immediately stop allowing the transfer of virtual weapons known as ‘skins’ for gambling activities through the company’s Steam Platform” What are they doing? That’s my money and if I want to spend it for video games I would do it! This act against the trading skins in CS looks like a hunting for the witches! why not allow people to play as they want to do? Look to the gambling in Norway – http://en.casinoz.me/content/g…..y-614.html Probably the government wants the same situation in the USA, only 2 water-based casinos, no taxes from legal gambling! No trade in Video games!

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