Valve faces suit alleging role in gambling on video games

Valve, the Bellevue video-game company behind the popular “Counterstrike: Global Offensive” is being sued for its role in the multibillion-dollar gambling economy that has fueled the game’s popularity.  

Michael John McLeod, a Fairfield, Conn., man who has been gambling on “CS: GO” since 2014, filed a lawsuit Thursday in U.S. District Court in Connecticut alleging that Valve violated gambling laws and engaged in racketeering with a handful of offshore gambling companies. 

McLeod is asking for class-action status for the lawsuit, which if granted could extend widely. The complaint, first reported by Polygon, doesn’t give a specific request for damages and doesn’t spell out exactly how much money McLeod lost by betting on the site. 

The suit comes two months after Bloomberg published an investigation into the rise of so-called “skins” gambling, an increasingly prominent part of professional video gaming. Though it’s poorly understood by people outside the gaming world, bettors will wager some $7.4 billion this year, according to a recent estimate from Eiler & Krejcik Gaming and Narus Advisors.

They do so — and skirt existing gambling laws — by betting with virtual goods (decorative weapons called skins) that they can earn by playing “CS: GO” or can buy directly from Valve. The company allows those goods to serve as chips on independent websites that take bets on the outcome of professional video-game matches or that run various casino-style games. 

Players can redeem their winnings for cash through other independent websites. While Valve doesn’t facilitate that exchange itself, it has been criticized for turning a blind eye to those that do. According to the complaint, Valve provided money, technical support and advice to such websites as CSGO Lounge and Diamonds, which take bets, and OPSkins, which runs a market where virtual goods are traded and can be redeemed for cash.

Other video-game companies have taken steps to avoid this trade, and Chris Grove, the author of the Eilers & Krejcik report, says Valve could do the same. The company hasn’t responded to a request for comment.

“I think what everyone will be watching for is Valve’s response. They haven’t had much to say publicly on the topic, and this suit could change that,” said Grove. “I don’t think this suit alone will be that damaging — although if it advances further towards class-action status, then things get trickier to handicap.”