In the summer of 2016, CS:GO skin gambling went from a corner of the community to a mainstream news story. Within a few weeks Valve published a statement saying gambling sites were breaking its rules, sent cease-and-desist letters, and found itself defending a class action and answering a state regulator. A year later the Federal Trade Commission brought its first case against individual influencers, over a CS:GO gambling site.
This is a dated record of what Valve, the courts and the regulators said. It reports their positions and isn't legal advice.
How the sites plugged into Steam
Steam trading arrived in 2011, as Valve itself recalled in 2016, and CS:GO skins became tradable with the Arms Deal update in August 2013. Third-party gambling sites built on top of that. Valve later described the setup in two parts:
- Login. Sites used Steam's OpenID API, a sign-in system that lets you prove which Steam account you own, and read anything else from public profiles or from what users told them.
- Bots. Sites ran automated Steam accounts that "make the same web calls as individual Steam users", which let them take in and pay out skins through ordinary trades.
Valve's position was that none of this went through any Valve system for cashing out. In its words, "Steam does not have a system for turning in-game items into real world currency."
July 13, 2016: Valve's statement
The statement came from Valve's Erik Johnson in a Steam post titled "In-Game Item Trading Update". It denied any link to the sites: "We have no business relationships with any of these sites. We have never received any revenue from them." It then drew the line. Using OpenID and bot accounts "to run a gambling business is not allowed by our API nor our user agreements", and Valve would "start sending notices to these sites requesting they cease operations through Steam".
The timing wasn't random. The Verge reported the next day that the statement followed revelations that two popular YouTubers, Trevor "TmarTn" Martin and Tom "Syndicate" Cassell, owned CSGO Lotto, a gambling site they had promoted in their videos. The same day, Twitch said streamers could not broadcast themselves breaking a game's terms of service.
July 2016: the cease-and-desist letters
Valve's notices went out on July 19. Ars Technica and Polygon both reported a letter from Valve general counsel Karl Quackenbush to 23 sites, telling them that their "commercial use of Steam accounts is unlicensed and in violation of the Steam Subscriber Agreement". The sites had ten days to stop, after which Valve said it would pursue "all available remedies", including terminating their accounts. Several sites shut down or changed how they worked, and Polygon noted that CSGO Lotto had already been offline since July 8.
The class action in federal court
Valve was already being sued. On June 23, 2016, Michael John McLeod filed a proposed class action against Valve in federal court in Connecticut, alleging, as The Verge summarised, that Valve "knowingly allowed, supported, and/or sponsored illegal gambling". That case was voluntarily dismissed in August 2016, and a version with many more plaintiffs went ahead in the Western District of Washington, with CSGO Lotto and Trevor Martin added as defendants.
It didn't get far. Judge John C. Coughenour granted CSGO Lotto and Martin's motion to dismiss on October 4, 2016, and issued an amended order on November 22. The only federal claim was under RICO, the US racketeering law, and the judge found no injury that the law recognises: "a disappointing gambling loss after receiving what was paid for is not injury to property sufficient for RICO standing." He relied on an earlier Ninth Circuit case about trading card packs. The state-law claims were dismissed because the federal court lacked jurisdiction over them, and Valve's motion to send the case to arbitration became moot. Polygon reported that the plaintiffs' lawyer expected to refile in state court.
October 2016: Washington's gambling regulator
On October 5, 2016, the Washington State Gambling Commission announced that it had ordered Valve to stop allowing skins to be used for gambling through Steam. It gave Valve until October 14 to explain how it complied with state law, and warned of possible civil or criminal action. Commissioner Chris Stearns called skins betting on esports "a large, unregulated black market for gambling".
Valve's reply, sent by its lawyer Liam Lavery on October 17, said there was "no factual or legal support" for the accusations and that Valve did not "facilitate" gambling. Valve declined to switch off trading or OpenID, which it said had "substantial benefits" for customers and game makers, and offered to help identify Steam accounts run by illegal sites. It also asked: "If there is a specific criminal statute or regulation you believe Valve is violating, please provide a citation."
The FTC case against CSGO Lotto's owners
The clearest outcome came from the FTC. On September 7, 2017, it announced that Martin, Cassell and CSGOLotto, Inc. had settled what it called its first-ever complaint against individual social media influencers. The case was about deceptive advertising rather than gambling law:
| FTC document | What it said |
|---|---|
| Complaint, Sep 7, 2017 | Martin and Cassell each owned 42.5% of the company and promoted CSGO Lotto as if they were ordinary users, without disclosing it |
| Complaint, Sep 7, 2017 | They paid other gamers between $2,500 and $55,000 in cash or skins to post about the site, and barred them from saying anything that would harm its reputation |
| Complaint, Sep 7, 2017 | CSGO Lotto stopped operating in July 2016, shortly after their ownership became public in late June |
| Final order, Nov 29, 2017 | No presenting endorsers as independent users, and clear disclosure of any material connection with an endorser |
What followed on Steam
Valve kept tightening trading around automated accounts. In March 2018 it gave traded CS:GO items the same seven-day cooldown as Market purchases, saying that "some of these third party services have become a vector for fraud or scams". Our Steam Community Market history puts that change alongside the other holds and limits.
The legal focus has since moved from third-party sites to Valve's own containers. On February 25, 2026, New York's attorney general sued Valve, alleging that loot boxes in Counter-Strike 2, Team Fortress 2 and Dota 2 are illegal gambling, and Valve has asked the court to dismiss the case. For the European rules that already restrict case opening, see our article on loot box rules in Belgium, the Netherlands and France.
Sources
- In-Game Item Trading Update — Steam News
- Valve cracks down on gambling sites after accusations of profiteering — The Verge
- Valve lawyers send cease-and-desist letters to Counter-Strike gambling sites — Ars Technica
- McLeod v. Valve Corp., amended order granting motion to dismiss — US District Court, W.D. Washington
- Valve fires back at Washington State Gambling Commission over CS:GO betting — Polygon
- CSGO Lotto owners settle FTC's first-ever complaint against individual social media influencers — Federal Trade Commission
- FTC approves final consent order against owners of CSGO Lotto website — Federal Trade Commission
- Attorney General James sues game developer for promoting illegal gambling through video games — New York Attorney General
