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CSGO skinsLocal gaming company Valve this week responded to claims made by the Washington State Gambling Commission that it facilitates the use of textured digital weapons, known as “skins,” as collateral in online betting, saying it has nothing to do with these transactions.

In a strongly-worded letter to the commission, Valve says it has worked to stop players of games like Counter Strike: Global Offensive from using skins and other in-game content to gamble through third party websites. Valve said it has sent cease-and-desist letters to more than 40 third-party sites using the company’s Steam gaming marketplace to facilitate gambling. It also shut down the Steam accounts used by those sites.

Valve, which is based in Bellevue, Wash., maintains that it has no relationship with third-party gambling sites, does not profit off skins betting and its Steam marketplace and trading of in-game content like skins are legal under Washington state law.

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“We were surprised and disappointed that the Commission chose to publicly accuse Valve of illegal activity and threaten our employees with criminal charges,” Valve legal counsel Liam Laverly wrote. “There is no factual or legal support for these accusations.”

The company said it wants to work with the commission on the issue, but it does not plan to shut down its Steam marketplace.

In the letter, Laverly writes that shutting down gambling activity is difficult because third-party sites come and go frequently and new ones can pop up without Valve knowing. Bot accounts that facilitate illegitimate transactions are hard to tell apart from regular users making above-board trades of Steam items.

The commission first reached out to Valve in February in regard to the skins. In a press release issued earlier this month, the commission demanded Valve stop third party websites from facilitating transactions that allow players to engage in skins betting. The commission gave Valve until Oct. 14 to respond.

All third party gambling sites have Steam accounts and use the Steam platform to conduct their gambling transactions. These gambling transactions are automated and performed by a software program or “bot,” and have proliferated so much that a recent market report by Esports Betting Report indicates that one specific gambling website, CSGO Lounge, brought in approximately $1 billion in “skin” gambling between January 1st and, August 1st this year alone. Based on the information it has gathered, the Gambling Commission directed Valve Corporation to stop facilitating the use of “skins” for gambling activities through its Steam Platform.

Valve’s crackdown on third-party betting sites over the summer came after a gamer from Connecticut filed a lawsuit one month prior, alleging that Valve enabled unregulated online gambling. Earlier this month, a federal court ruled in favor of Valve.

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