By John Vrooman Haskell
Whether an avid video gamer or not, almost anyone who’s ever played a video game has heard of the popular first person shooter, Counter-Strike. Originally produced as a mod for the popular Valve video game, Half-Life, in 1999, Valve purchased the rights to produce the game in 2000. Since 2000, there have been a multitude of new editions of the video game culminating in what is arguably its most widely played and popular edition, Counter-Strike: Global Offensive (“CS: GO”).
On August 18, 2013, Valve announced the “Arms Deal Update” (the “update”) which allowed players to buy, sell, and trade weapon decorations that can be equipped to items that the player is using in the game. Referred to as “skins,” these various decorative designs players can apply to their different in-game weapons, such as knives or guns, simply change the aesthetic look of whatever digital weapon the player is using. The skins provide no strategic advantage to any player in the game.
Since the release of the update, a number of third party websites have used the Steam Application Programming Interface (“API”), to create virtual casinos and allow players to use the skins they own to place bets on e-sports matches and other types of gambling activities. While there are a number of different methods by which bets can be placed on matches in the skin betting community, generally, when a bet is placed with a skin, the item is moved to an account owned by a third-party service the better is using. When the player wins, the winner is returned their skins they used to place the bet and any winnings from the bet (i.e. other skins). Once a player has collected skins from the bet, they may either keep the items they have won, use the items to continue to make more bets, or cash out their “winnings” and sell the skins for store credit in the steam marketplace, or to other players for real money.
On June 23rd, 2016, and July 1, 2016, two class action complaints were filed against the Valve corporation, presenting a myriad of allegations all tied to Valve’s purported involvement in the skin betting industry. Although slightly different suits, both McLeod v. Valve, No. 3:16-cv-01018-AWT, 2016 WL3449545 (D. Conn. June 23, 2016) and C.B., on Behalf of Her Minor Son, N.B. et. al v. Valve, No. 0:16-cv-61561-BB, 2016 WL356991 (S.D. Fla. July 1, 2016) allege that Valve knowingly supported and sponsored illegal gambling in conjunction with third party skin gambling sites in violation of federal prohibitions against illegal gambling businesses. A number of the gambling websites, such as one owned by two popular YouTube celebrities, have also been named as co-defendants in the actions.
Shortly after the aforementioned lawsuits were filed, Valve quickly backlashed. In a cease-and-desist letter issued July, 2016 to twenty-three separate CS: GO gambling websites, Valve claimed that these sites violated multiple terms of the Steam Subscriber and API agreements, including commercial use of Steam Services. In response to this letter, a multitude of these betting websites have closed up shop, but a number still remain active both in and out of the United States, allowing players to access their gambling sites via a Virtual Private Network (VPN).
Although a number of experts on the industry believe that the aforementioned complaints are frivolous and could potentially be dismissed, should they not be, the industry as a whole could be due for a complete overhaul. Is skin betting truly gambling? If so, what long-term regulations could be implemented to such a perpetually evolving industry, such as video games, to prevent or control gambling? Hopefully we will find out soon.
Student Bio: John is a Staff Member on the Journal of High Technology Law. He is currently a 2L at Suffolk Law. He holds a B.A. in History from Virginia Commonwealth University.
Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHTL or Suffolk University Law School.
