Valve sends letter to Washington state regulator refuting allegations the company facilitates gambling via virtual item sales, says it tries to stop sellers
Colin Campbell / Polygon :
Context & Ripple Effects
This letter is Valve's formal answer to the cease-and-desist Washington's gambling regulator sent earlier this month, which ordered the company to stop facilitating wagering on virtual items earned in its games. It also escalates a fight that has been building since summer, when Valve promised to crack down on third-party CS:GO gambling sites while denying any business relationships with them — a denial complicated by its earlier reversal of blacklisting links to one such site run by YouTube stars who promoted it without disclosure.
What makes the state's theory plausible enough to litigate is the legal ground beneath it: an appeals court has already held that Big Fish Casino constitutes illegal online gambling under Washington law, a ruling the regulator can extend to skins betting. Valve's letter is therefore not just a denial but the opening move in defining whether virtual items are gambling stakes at all — a question New York's attorney general later took up directly by suing Valve over loot boxes as violations of state gambling law.
First-order effects
- Valve must now either negotiate with the Washington State Gambling Commission or risk enforcement against Steam's virtual-item economy, and its letter commits it on record to actively stopping sellers who use the platform for gambling.
- Third-party CS:GO gambling sites lose their ambiguity: with Valve denying business ties and pledging enforcement, sites built on Steam item transfers face direct action from the platform they depend on.
Second-order effects
- Other game publishers running item economies watch the Washington case as a template — if the state prevails using the Big Fish Casino reasoning, every publisher whose items trade for real value faces the same cease-and-desist exposure.
- Skin-trading markets and the streamers who promote them come under disclosure and liability pressure, since promotional material for gambling sites without disclosure is already part of the documented record.
Third-order effects
- If states keep treating virtual items as gambling instruments — from Washington's skins-betting order to New York's later loot-box suit — game monetization converges with gambling regulation, forcing age-gating, licensing, or redesign of loot-box and trading systems industry-wide.
- Platform operators like Valve get pushed into a gatekeeper role over what secondary markets may exist on top of their economies, shifting policing of gambling from regulators to the platforms themselves.
The trend: State regulators are progressively folding video-game virtual economies into gambling law, moving from third-party skins sites to first-party mechanics like loot boxes.